Altseason and Associated Risks

The Intelligent Insurer #16 — Ethereum and altcoins move from strength to strength leaving digital asset investors exposed to various risks

Bitcoin took center stage during the first quarter of 2021. Ethereum and the broader altcoin market is leading the charge in Q2.

Several altcoins are recording phenomenal upside price action. Ethereum is at the vanguard of such movements and has continued to record a series of all-time highs.

In the latest Intelligent Insurer, we highlight the recent price movements and developments in Ethereum. We consider the bullish movements in the broader altcoin market and the risks that might surface as a result.

Altseason Arrives

(Source: Tradingview.com)

Ethereum recently recorded an all-time high of $4380 which would represent a 511% year-to-date (YTD) price rise. After a long stint of bullish price action, the leading altcoin recorded a significant 2-day retracement and currently trades at roughly $3,800. The bullish movements of Ethereum are accompanied by a broader rise in the altcoin market.

Lark Davis, a popular cryptocurrency trader and analyst, believes that the altcoin market will gain up to 27,000% over 2021. His prediction is based on the fact that some key historical resistances have been broken, leaving significant upside for the altcoin market.

Corroborating this outlook are several fundamental developments that have further strengthened the bullish market sentiment. Apart from Ethereum, several other decentralized computing blockchains have been pushing the altcoin market to greater heights.

Binance Smart Chain (BSC), Polkadot, TRON, and EOS are some of the blockchains that are attracting significant trading volume. All of these platforms enable the creation of decentralized financial solutions that provide services that have hitherto been confined to traditional banks and other financial institutions.

The decentralized nature of these DeFi solutions goes a long way to lowering the barriers encountered by users of the traditional financial system. As a result, we have observed a heavy influx of users and funds into blockchain-based solutions. Data from Glassnode Studios reveal that there is a steady growth in the number of Ethereum addresses with a non-zero balance. The figure has increased by roughly 20 million over the past year alone.

(Source: Studio.Glassnode.com)

Ethereum Innovation

Despite innovations across multiple decentralized computing blockchains, Ethereum still stands as the undisputed leader. The creation of Ethereum in 2016 brought the blockchain and cryptocurrency industry into a whole new dimension.

The recent wave of DeFi creation on the Ethereum platform is further propelling the Ethereum ecosystem. This has reignited the debate and comparison between Bitcoin and Ethereum.

According to billionaire investor Mark Cuban, the number of transactions and the diversity of transaction types along with the development efforts in Ethereum make it superior to Bitcoin. He is also of the opinion that the utilization of Ethereum is much higher than that of Bitcoin.

As attention shifts to altcoins, Ethereum especially, cryptocurrency investors also begin to move capital across ecosystems. According to Raoul Pal, every investor he has spoken to is shifting allocation to Ethereum.

https://twitter.com/RaoulGMI/status/1391035543845285889

This is unsurprising given the multiple positive developments that have been happening in Ethereum since 2020. The DeFi explosion has attracted numerous projects to Ethereum and an ongoing upgrade to Ethereum 2.0 is expected to bring a lot of improvement to the platform.

Risks Inherent to a Growing Market

The current market sentiment certainly tilts towards Ethereum and other major altcoins. This is attracting a lot of investors and speculators into the market. However, despite the abundant opportunities in the altcoin marketplace, risks are still present.

DeFi exploitations have become rampant in recent times, One of the options to tackle such risks is digital asset insurance. Currently, there are several platforms offering insurance solutions in the crypto space. Only a few offer insurance for a wide range of potential attacks. Insured Finance is the most comprehensive platform with a marketplace that allows users to secure tailored insurance.

About Insured Finance

Insured Finance is a decentralized, peer-to-peer insurance marketplace. Built on the Polkadot blockchain, Insured Finance users can request customized insurance on a wide variety of digital assets. Those that fulfill requests earn premiums and can earn a competitive return on their capital. Claims are fully collateralized and settled instantly.

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A decentralized P2P insurance marketplace with easy claims and instant payouts. Powered by Polkadot.

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Insured Finance

Insured Finance

A decentralized P2P insurance marketplace with easy claims and instant payouts. Powered by Polkadot.

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