Why BTC Goes Deeper Than Altcoins?  WBTC Depeg and Solana FUD?!!!

Why BTC Goes Deeper Than Altcoins? WBTC Depeg and Solana FUD?!!!

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2023-02-18 03:02:41

Market situation

Bitcoin is still holding around $16,500. Looking at the past one month, BTC has dropped more than 20%. Many altcoins are down around 20%, but there are also altcoins that have grown despite BTC’s decline in the past month.

This could be because altcoins have dropped so much in the past six months that people who want to withdraw from altcoins have already withdrawn or switched to BTC. Investors who decide to hold still continue to hold and see this as an opportunity to invest in average prices. Any investors who want to leave the market at this time may leave BTC.

Litecoin for Pros

Litecoin (LTC) is one of the three coins besides BTC and ETH that Thuan is very fond of at the time of 2017. Compared to the time of October 2017 with the present, LTC is only up about 40% and fluctuates around $75 compared to the current time. at a price of 55 USD. Meanwhile, BTC has increased more than 3 times and ETH has increased more than 4 times over the same period.

Litecoin was once an important altcoin in the crypto market, being born in 2011, just two years after the first cryptocurrency was born. Developed by Google software engineer Charlie Lee, Litecoin is the first major attempt to overcome Bitcoin’s main shortcomings such as faster transaction processing and scalability. Litecoin is also open source derived from the source code of BTC and modified. And it also has a halving similar to BTC.

The simplicity and the message “Litecoin is silver, Bitcoin is gold” is always mentioned before 2018. This message is prominent and easy to understand for investors as well as the community that supports it. LTC is also one of three cryptocurrencies listed and traded on a very large exchange in early 2017 which is Coinbase.

However, there was an incident that caused LTC to go down from there. In December 2017, Charlie Lee, a fairly private person, announced on Reddit that he had sold almost all of his Litecoin due to a conflict of interest. And that was also the time when the price of BTC plummeted and crypto went into winter. The decision at that time by the founder of LTC made the community and investors extremely dissatisfied and outraged. They criticized Charlie Lee for knowing inside information, so he dumped the amount of LTC he had on the token’s supporters. Criticism is even higher as crypto goes into winter.

Besides, an important reason why Thuan does not continue to invest in LTC is because the development orientation of LTC has changed a lot since 2018. Thuan used to like LTC because it was simple but LTC has moved to update. added MimbleWimble feature, allowing users to choose anonymous mode when sending LTC. It makes LTC harder to trace. This is the point that governments do not like because of its anonymity and difficulty in retrieving transactions.

When the market goes down, the community and direction of LTC change. Compared to the original simple and with BTC as the “brothers”. But when winter 2018 arrives, LTC insists that it is better than BTC, faster and with more new features.

The changes of LTC itself as well as the orientation of the community have been different from the points that made Thuan choose to invest in LTC before. Therefore, at this time, Thuan still decided not to invest in LTC. Thuan can still invest back into LTC if its community has a direction of development that Thuan sees fit.

WBTC loses peg temporarily

WBTC stands for Wrapped Bitcoin, simply an ERC-20 token that represents Bitcoin. Since BTC and ETH are two different networks, when users want to use their BTC on the Ethereum network, they can collateralize BTC in exchange for WBTC and use this token on this network. WBTC brings the liquidity of Bitcoin to DEXs and decentralized financial applications, most of which reside on the Ethereum network.

Users can exchange BTC for WBTC and vice versa through retailers such as exchanges. And exchanges get WBTC through custodian companies (Custodians) by sending BTC to these companies. When demand increases, exchanges will activate smart contracts to generate WBTC, the custodian company will check the amount of BTC sent by the exchange, if there is enough BTC according to the smart contract, they will execute the contract and the exchange receives WBTC.

Normally, when the amount of WBTC is guaranteed to be equal to the amount of BTC, the peg (the fixed rate between WBTC and BTC) is always 1:1. However, there are times when WBTC loses its peg temporarily. Over the past day, according to WBTC data, the number of guaranteed BTC is slightly larger than the amount of WBTC in the market.

Also, one of the companies that print or burn WBTC the most is Alameda Research. But Alameda is only a retail company, so it needs to have enough BTC as collateral for the amount of WBTC to be printed. Also, WBTC is not related to the event of FTX and it can be supported on a lot of different exchanges. Therefore, investors do not need to worry about this issue with Alameda.

What worries investors is that on November 24, there was a time when WBTC lost its peg temporarily. This is possible because some units burn WBTC to get back their BTC while Alameda is also printing large amount of WBTC. It is possible that due to network congestion, transactions are not processed immediately. Until yesterday, there were still some transactions that were suspended for a few hours. In the end, the transactions are still processed and the peg is back to normal.

If there is no need to use on decentralized exchanges or decentralized services on the Ethereum network, investors should hold BTC directly instead of WBTC. Because WBTC is just co-collateral and holding BTC directly is still better.

Rumors about Solana?

After FTX collapsed, investors were very worried and confused about Solana. The price of SOL has also been affected by the event of FTX and investor sentiment. Faced with this situation, Solana Foundation has repeatedly reassured the community and investors.

They emphasized that Solana is a separate network from FTX and that Sam Bankman-Fried is just an investor in their network. As a result, Solana continues to move forward even without Sam or FTX investing.

The Solana Foundation also provides data showing that its network is still up and running. The number of transactions on the network is still above 2 thousand transactions per second and shows no signs of slowing down despite the FTX bankruptcy.

Transaction processing speed per block from November 8 to now has averaged 0.61 milliseconds, which is faster than previous times and shows no sign of congestion.

The number of applications has been slightly lower than in previous months. But this change is not significant and is still average.

With all the evidence given, the Solana Foundation sends the message that they will continue to grow. And the FTX event will not make them falter.

Although the above good news was given, investors were still worried by the information shared by Ben Armstrong. Popular crypto YouTuber Ben Armstrong shared on Twitter that there will be information in the next two weeks that the Solana network is used to launder money. When the Solana network is down, FTX/Alameda uses the network to launder money.

Ben Armstrong was one of those who warned about problematic FTX, and it was true. Therefore, many investors are very confused and do not know whether the above information is true or not. Let’s wait for more new updates in the coming days.

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#BTC #Deeper #Altcoins #WBTC #Depeg #Solana #FUD

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