 | In this article, we take a look at what’s behind the recent parabolic rise in the Tezos price and analyze at what point it might be worth getting into the XTZ Coin. Ethereum (ETH) is currently the dominant layer-one protocol for smart contract adoption and active users. There’s no question about that. However, the competition between protocols in this niche is as fierce as it has ever been. One of the challengers looking to get its slice of the big pie is Tezos (XTZ). Tezos is now a long-established project, but one that is rarely in the spotlight. However, this week it behaves differently. Because while the Ethereum price has hardly moved from the spot compared to the start of the week, the Tezos price has risen by around 100% in the last 30 days. The Tezos chart shows that XTZ’s price has risen 243% from its low of $3.29 on Aug 19 to a high of $8 on Sept 14. Meanwhile, its trading volume of the last 30 days increased by over $1 billion avegare. This shows that the XTZ price has been pushed up under high volume, especially in the last few days. Which in turn means that there has been a lot of buying interest here. Reason for us to take a closer look at the Tezos Coin to find out what is behind this sudden interest in the altcoin. What is Tezos? Tezos, just like Cardano (ADA) and Solana (SOL), is a proof of stake (PoS) blockchain. However, it is designed to evolve without the need for what is known as a hard fork. What is a hard fork? In the context of blockchain technology, a hard fork is a radical change to a network’s protocol that makes previously invalid blocks and transactions valid or vice versa. In a hard fork, all nodes or users must update to the latest version of the protocol software. Otherwise, there is a split in the network and community. For example, Bitcoin Cash (BCH) was created from a hard fork of Bitcoin (BTC). Tezos is a self-modifying decentralized platform for creating dApps. Thus, it is similar to Ethereum in that both blockchains support dApps created with smart contracts. However, Tezos has some unique features that set it apart from Ethereum. The most notable is the network’s on-chain governance, which allows holders of XTZ, the native Tezos Coin, to vote on the future direction of the network. However, the recent rise in the Tezos price results from 3 reasons that occurred within the last week. These include the “Granada” upgrade, the acquisition of the Tezos network by several major banking institutions, and the attractive staking premiums that entice token holders to deposit their XTZ in the network. Below, we’ll take a closer look at all 3 reasons before looking at the current trend in the Tezos share price.
As mentioned earlier, the Tezos network is a self-modifying blockchain that can be upgraded over time without a hard fork. The Tezos network has undergone seven successful upgrades since its inception, three of which occurred in 2021. The most recent “Granada” upgrade took place this month, on August 6. According to the development team, improvements in this latest upgrade include a reduction in block time from 60 seconds to 30 seconds and a reduction in smart contract gas consumption by an average factor of 3 to 6. The new upgrade also introduced “liquidity baking,” which incentivizes large amounts of decentralized liquidity between XTZ and tzBTC by minting a small XTZ on each block and depositing it in a smart contract. (Higher transactions, but lower gas fee by Granada)
A second development that helped boost the Tezos price and awareness was the adoption of Tezos by digital asset company Crypto Finance AG and Swiss business-to-business transaction bank InCore. Both plan to launch a new tokenization tool on the network. In a tweet, Crypto Finance AG writes:
The two companies have also developed a new Tezos token standard for asset tokenization. This new standard is called the DAR-1 token standard and will enable the unlocking of new smart contracts-enabled features that will support anti-money laundering functions and asset governance. InCore also announced that it would launch institutional maintenance, staking, and trading services for XTZ. Among other things, these will enable financial institutions to provide staking services for their clients’ assets. Staking of XTZ Coin Reduces Circulating Supply The Tezos price also seems to benefit from attractive staking opportunities. Indeed, these have led to much of the XTZ being removed from circulation to encourage consensus in return for staking rewards. According to StakingRewards data, the current annualized rate for token holders delegating their XTZ is 7.85%. Those who are more tech-savvy can also launch their own “Tezos Bakery” and earn 8.73%. The process of delegating XTZ Coin is simple for the average user and can be done from any wallet interface suggested by the project. In addition, several exchanges also offer staking services for a small fee. These include Coinbase, Kraken, and Binance, among others. As Figure 2 shows, 77.65% of the total XTZ supply is actively deployed on the network. This alone significantly reduces the number of tokens available on the market and thus also reduces the potential selling pressure tremendously.
These reasons have undoubtedly provided for the positive momentum currently inherent in the Tezos Coin XTZ. But is this reason to jump blindly into the market? Certainly not. Of course, none of this is financial advice, but anyone thinking of buying Tezos should be aware that the potential top of the recent price rally in the XTZ price is not the best entry point. Tezos price is currently struggling with the resistance zone between around $6 and $7. The parabolic rise of the last few days makes a correction very likely at this point. Accordingly, we would be interested in price levels where the Tezos price could find support again in case of a correction. Should the entire cryptocurrency market segment remain positive, interesting medium-term chart patterns could emerge from this, such as a cup & handle. However, we do not want to get carried away with a Tezos forecast at this point. Medium Author: ???? Lukas Wiesflecker [link] [comments] |
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