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After a few weeks of wild price swings, cryptocurrencies have calmed. The latest highs in Bitcoin and Ethereum came on Nov. 10, when the leading crypto rose to just shy of $70,000 per token. Ethereum flirted with over $4,900 on the day that both digital coins put in bearish reversal patterns on the daily charts.
Over the past years, whether cryptocurrencies rise or fall, the number of tokens populating the asset class continues to grow. It's approaching double the number at the end of 2021.
Loopring (LRC) is a top-tier cryptocurrency founded in 2017 that's headquartered in Shanghai, China. Ironically, the Chinese government has cracked down on cryptocurrencies, partially in preparation for its broader release of a digital yuan, now being tested inside the country but has not yet officially launched.
LRC is another crypto that proves the asset class transcends borders, flying above or below government radar as the price moved to a new all-time high in November.
On Nov. 10, Bitcoin and Ethereum tokens reached new all-time highs. The two leading cryptocurrencies turned lower on that day, putting in a pair of bearish key reversal patterns on the daily charts.
While both currencies remain substantially lower than their Nov. 10 highs, Ethereum has outperformed Bitcoin over the past month.
Source: CQG
The daily chart of December Bitcoin futures shows four bearish reversal patterns, on Nov. 10, 18, 26, and Dec. 3. Bitcoin continued to trend even lower, reaching a low of $47,215 on Dec. 5.
At $50,080 on the December futures contract, the leading crypto was over 28% below the Nov. 10 $69,830 high.
Source: CQG
The daily chart of December Ethereum futures shows bearish reversals on the same days. Meanwhile, Ethereum reached a low of $3,900 on Dec. 5, and at $4,405 on Dec. 9, Ethereum is almost 11% lower than the Nov. 10 $4,937 record peak.
Ethereum outperformed Bitcoin over the past month. While Bitcoin remains in a downward sloping trend, Ethereum is holding up better.
Indeed, since mid-November Ethereum has been outperforming as well as generally throughout 2021. Ethereum 2.0—whose roadmap was just released by the token's founder Vitalik Buterin—is a faster, greener protocol requiring far less energy than Bitcoin.
As the addressable market for cryptocurrencies grows, more traders and investors are looking for the next token to deliver Bitcoin and Ethereum-like returns. At the end of 2020, 8,153 different cryptocurrencies populated the asset class. As of Dec. 6, the number stood at 15,273, an 87.3% increase in just under one year.
Notwithstanding whether cryptocurrencies move higher or lower in value on any given day, the number of tokens competing for investment and trading capital continues to accelerate. Since the end of 2019, the number of tokens has more than tripled. By the time you read this article, it will likely be higher than 15,273.
As of Dec. 9, Loopring was the 50th leading cryptocurrency, worth more than 99.6% of all other tokens. At $2.51 per coin, LRC had an over $3.3 billion market cap.
Loopring’s website says the token:
“builds protocols, infrastructure, and user-facing products for the future of finance. We believe this future is built on Ethereum and specifically on layer 2 (zkRollups). Users of decentralized finance (DeFi) need not choose between security and performance. Loopring’s L2 provides a low-fee, high-speed platform for trading, swapping, liquidity providing, and payments- without sacrificing Ethereum security at all.”
ZkRollup is a project to help scale Ethereum with zkSnarks—a new form of zero-knowledge cryptography—to help Ethereum scale to 3,000 transactions-per-second. The Ethereum blockchain currently supports fifteen transactions-per-second. In comparison the Visa (NYSE:V) network now averages 2,000 transactions-per-second.
The Loopring token came to market in August 2017 at around 13 cents. After an initial rise to $2.122 in early 2018, it declined to just over two cents in late 2019.
Source: CoinMarketCap
The chart shows that LRC tokens took off on the upside in November 2021, reaching a high of $3.3797 on Nov. 24. The token is trading at the $2.51 level on Dec. 9.
Trading and investing involve different approaches and risks. Trading requires critical mass, which provides a sufficient market cap that creates liquidity to execute buying or selling orders on narrow bid-offer spreads.
Only the tokens with the highest market caps qualify for trading. LRC’s value at over the $3.3 billion level provides a cushion as well as justification for trading activity. However, bids and offers can evaporate during volatile periods and prices can rapidly spiral higher or lower, creating gaps where no transactional activity occurs.
Investing or buying tokens to tuck away with the hope of substantial price appreciation is another approach for many speculators in the asset class. Since risks are always a function of potential rewards, the asset class’s speculative nature puts any investment at risk of total loss.
Only invest capital you are willing to lose in this volatile market. Caution applies to every token, from the most liquid Bitcoin and Ethereum tokens down to the latest arrivals in the market that now has well over 15,000 different cryptocurrencies.
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