Decred (DCR) Goes Through Surprise Rally
Decred (DCR) is one of the earlier coins with the goal of offering veiled transactions. In the past years, DCR was mostly forgotten, despite the team’s effort to deliver features. For all purposes, DCR was considered a “dead coin” with little activity.
Then, within hours, DCR rallied from $50 to above $66, repeating a pattern seen several times in the past few months. DCR has been sliding since a peak above $246 toward the end of 2021, but the latest rally renewed hopes of the coin’s future potential.
The rally was very fragile and reversed almost as fast as DCR climbed to a weekly high. But the event showed the coin’s markets could react at least in the short term, and may be signaling a reawakening.
Soon after peaking, the DCR rally reversed, sending the asset down to $53. For some, this price move also resembles an “exit pump” or a short-term attempt to cash out at higher prices.
DCR remains risky and there is no guarantee a new bull market is in the making. However, the recent awakening of older blockchains may bring more attention and reassemble the relatively large Decred online community.
What Caused the DCR Rally
DCR has behaved in a similar pattern in the past months. One possible scenario is a concerted pump to test how high DCR can go.
The other possible explanation is renewed accumulation, as DCR has shown it can also move much higher. The recent positions around $50 offer a risky bid for a coin that has trekked above $200 and may do so again.
Interest in DCR picked up in the past few days, leading to the latest price spike.
During previous bear markets, DCR has also shown it is not forgotten and can break out of a downward trend. This opportunity also added to the recent price move.
DCR is also a coin with a governance element, with some of the assets locked for staking. Additionally, DCR has a total supply of 21M coins, with around 13M in circulation. This coin copied the Bitcoin (BTC) scarcity model, in hopes of future appreciation as sound money.
DCR is also seen as having potential to break out not only in dollar terms, but to revive its DCR/BTC pairs. DCR is down from 0.004 BTC to 0.0013 BTC in the past 12 months, but shows some signs of reversing the trend.
DCR only managed to climb to the top 85 of assets by market capitalization, and is far from the hotter coins and tokens that moved in the past year.
DCR sank after a series of delistings from Bitfinex and most Japanese exchanges. The fate of this coin followed the trajectory of Monero, ZCash, DASH and other coins with the potential to obscure the origin.
DCR More Liquid than Newer Coins
DCR has an almost perfect liquidity score on the Binance exchangemi. The DCR/USDT pair has a score of 916 points, accrued over time. Still, DCR trading only sees about $6M in volumes, so a 2% price slippage absorbs only about $37,000 in sales.
More than 22% of DCR activity is concentrated in one trading pair, making the token readily responsive to a concerted pumping effort. It also takes relatively small inflow of funds to drive the DCR price upward.
How Decred Combines Mining and Voting
The Decred network uses a combination of mining and proof-of-stake, where both large and small representatives vote and secure the network.
The Decred network attracts some of the biggest Bitcoin mining pools that set aside a different type of machine for DCR.
The Decred network allocates 60% of the block reward to miners, 30% to stakers and 10% go to the project treasury to support development. Initially the block reward was 31 DCR, halving every 21 days. This is one of the reasons for the slower production of DCR, due to speedily diminished rewards.
The Decred network has existed since 2016 and has some of the advantages inherent to an earlier arrival, including exchange listings and wider adoption. The Decred team has also looked for deliberate publicity in the past, though it has focused on governance and development.
The Politeia governance system makes decisions on how the treasury would be spent and on other network issues. The Decred network is now working on a more democratic distribution of mining, as large pools keep taking most of the rewards.
The decision on reward distribution will arrive in a few more days, until the target blocks are mined and the votes counted.
DCR remains a coin for online payments and has not given signs of participating in DeFi or other passive income hubs outside of staking.
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