Tezos (XTZ) Breaks from Lows, $10 Potential
Tezos (XTZ) managed to move counter to the market, adding more than 12% to its price in the latest expansion.
XTZ moved up to the $6.50 range, with volumes above $1.1B in the past day. For XTZ, 2021 has been volatile, with several attempts at historical highs, but also significant backtracking.
XTZ remains one of the more volatile coins in the past weeks. One of the possible scenarios for the latest breakout is to recover the all-time highs close to $8, while creating trader expectations for prices above $10.
XTZ has lagged behind other assets, as interest was mainly concentrated on Ethereum DeFi. So far, XTZ remains one of the few decentralized platform coins that has not broken out to a higher price range similar to Terra (LUNA), Solana (SOL) and other coins and tokens that built a community of users much faster.
Tezos Catching Up with Decentralized Apps
Over the years, XTZ has been plagued by controversy. The network mostly dealt with staking and voting, existing for a long time with very few user-directed distributed apps.
But in September, Tezos showed signs of building up a DeFi ecosystem comparable to other platforms. If Tezos follows in the tracks of other projects, it has the potential of quickly building up at least $1B in value, similar to newly arrived platforms that built up their value locked within weeks.
The latest estimates show the Tezos network is still early, and ripe for fast growth. The Tezos network is starting to attract collateral and decentralized financial operations, so far locking in $100M in value.
The major source of DeFi growth is the potential for passive yield, as well as decentralized trading and new token issues. Tezos also joined the NFT collectibles trend with several operational marketplaces. Tezos wallet owners are already eligible for one of the many NFT airdrops, at a lower transaction price in comparison to Ethereum.
If Tezos follows the models of other decentralized platforms, the building of value can happen within weeks, accompanied by the growth of the native token price. Currently, the Tezos network is used more for gaming and NFTs, with DeFi activity still building up.
There are some signs that demand for XTZ is increasing as the basis for DeFi. Native tokens are used to build up collaterals for dollar-pegged coins, as well as for decentralized trading pairs in algorithmic market making.
TezosSwap, the newly created decentralized exchange, has not registered users yet and is yet to build up its information on trading pairs and Tezos-based tokens.
Currently, the Tezos network also carries TezosBTC, wrapped BTC coins that are held under the custody of the Tezos Foundation under Swiss jurisdiction.
DeFi May Boost XTZ Scarcity
The effect on XTZ prices may repeat that of Ethereum (ETH) in case of more demand for tokens. Currently, the total supply of XTZ is above 890M, with an inflationary expansion between 4-5% every year.
More than 670M of those coins are locked in various forms of staking. The “whales” on the Tezos network are also the so-called “bakers” that produce blocks.
The Binance exchange uses its XTZ deposits to produce passive income for users, and has several delegation wallets. Other known large “bakers” include Kraken, as well as Coinbase, and the Tezos Foundation.
The coins locked for baking may not immediately enter the market, and produce a predetermined scarcity. For retail owners, there will be a choice for allocating XTZ through either passive or active staking, or participation in riskier, but more lucrative DeFi projects.
Smart Contracts Boom on Tezos
There are signs that multiple smart contracts are being deployed on the Tezos network. More developers are expressing interest in building on the Tezos platform.
Recent statistics show exponential growth of activity on Tezos after years of relatively low usage.
The Tezos network is still open to new protocols that serve the well-established functions of DeFi. The coming months may see the equivalents of Curve Finance, Maker DAO and other staples of DeFi being deployed on Tezos.
XTZ Shows Relatively Low Liquidity
XTZ is barely within the top 30 of coins and tokens based on market capitalization. With a market cap of $5.6B, XTZ is still low on the chart, displaced by hotter assets.
XTZ is also relatively illiquid and potentially volatile. Its most active pair trading on Binance has a reliability factor of 500 points based on the Coinmarketcap methodology. This places XTZ as a still volatile coin with significant slippage.
XTZ has the advantage of being available through Coinbase, thus benefiting from inflows of USDC and access to US-based investors. XTZ is easily available and tradable through the Exodus wallet, as well as through the Temple wallet that connects to the entire XTZ ecosystem.
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