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Ascending channel pattern sets Polygon (MATIC) up for a potential 30% rally

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Ascending channel pattern sets Polygon (MATIC) up for a potential 30% rally

Polygon prices look poised to rise by at least 30% in the wake of a key Jan. 18 upgrade that would push a considerable portion of its native MATIC token out of circulation.

Dubbed EIP-1559, the improvement proposal originally came to light as part of Ethereum’s so-called London Hard Fork upgrade on Aug. 5. The proposal effectively started destroying, or “burning,” a part of the fees paid to miners via Ether (ETH).

Traders and investors raised their bids for Ether before and after the EIP-1559 upgrade, noting that it made Ether a deflationary asset for the first time in history. For example, a model created by Ethereum co-founder Justin Drake claimed that EIP-1559 would reduce Ether’s annual supply by 1.6 million ETH.

MATIC looks for new record highs

Polygon, which acts as a layer-two protocol built to scale Ethereum’s prevailing scalability issues, rolled out a testing implementation of EIP-1559 on Dec. 14, 2021. After the test net launch, MATIC price rallied by almost 30% to $2.35, which includes a brief run-up to its record high near $3.

MATIC/USD daily price chart. Source: TradingView

In theory, a lower supply against a rising demand would make the asset more valuable in the eyes of its bidder.

This classic economic reference has assisted in boosting demand for cryptocurrencies like Bitcoin (BTC) before. Issuance would be halved every four years against a limited supply cap of 21 million units. This begs the question, could the MATIC price rally in the same way? Mineplex co-founder Alexander Mamasidikov thinks yes.

Mamasidikov told Cointelegraph that EIP-1559 would impact MATIC price positively, adding that it could easily rally toward its current record high following the technical upgrade.

“In periods of price recovery, investors are often on the lookout for both technical and fundamental features to hang onto in order to back a coin, and Polygon brandishes both,” he said, adding:

“While Polygon remains a better version of Ethereum in terms of lower transaction costs, it is also the delight of retail investors with respect to its low price at this time when compared with Ethereum or other smart contract networks.”

What do Polygon’s technicals say?

MATIC has been trending higher inside an ascending channel pattern since July 2021, confirmed by at least two reactive highs and two reactive lows.

The token recently retested the channel’s lower trendline around $1.89 as support, a move that was followed up with a bullish retracement toward $2.50. It is now acting as resistance and the $2.50 level also turned out to be near the 1.00 Fib line near $2.44.

MATIC/USD daily price chart featuring ascending channel pattern. Source: TradingView

That being said, MATIC may attempt a break above the $2.44-resistance around the EIP-1559 upgrade on Jan. 18. The move would set itself on a course to test its interim upside target near $3, which is approximately a 30% jump.

Related: Polygon network activity spikes as NFT sales reach new height

Meanwhile, if the EIP-1559 factor plays out any longer than anticipated, MATIC price may even attempt an extended run-up toward the 1.618 Fib line around $3.52. Conversely, a rejection at $2.44 could have Polygon retest the ascending channel support for a negative breakout.

Such a move would risk invalidating the bullish setup, as discussed above. All of this is in conjunction with exposing MATIC to a correction toward $1.77 or lower.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

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El Salvador’s Bitcoin wallet onboards 4M users with Netki partnership

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El Salvador’s Bitcoin wallet onboards 4M users with Netki partnership

Chivo, El Salvador’s official Bitcoin wallet, has managed to onboard 70% of the unbanked population in El Salvador, partner says.

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El Salvador’s Bitcoin wallet onboards 4M users with Netki partnership

El Salvador, the first country to make Bitcoin (BTC) a legal tender, has onboarded 4 million users for its government-backed BTC wallet Chivo in partnership with digital identity provider Netki, according to an announcement.

Netki has announced that Chivo wallet onboarded over 4 million new users in 45 days using the company’s flagship Know Your Customer (KYC)/Anti-Money Laundering (AML) product, OnboardID. The platform also claimed that it had facilitated the compliant onboarding of 70% of the country’s previously unbanked population. 

El Salvador passed the Bitcoin bill in June of last year and officially made Bitcoin a legal tender in September. Nayib Bukele, the president of the small Central American nation, made it clear that the goal was to offer digital banking facilities to more than 70% unbanked population in the country. To promote BTC use and ease of transactions, the government launched a national crypto wallet named Chivo and a $30 airdrop in BTC.

Major financial institutions, including the World Bank and the IMF, shared drastic forecasts while warning El Salvador of unwarranted economic consequences. However, President Bukele continued to promote Bitcoin use in the country and rebuked all the fear-mongering. After the IMF rejected $1 billion financial aid, the El Salvador government launched Bitcoin volcanic bond as Bitcoin proponent Max Keiser advised.

Earlier today, President Bukele also responded to Moody’s recent downgrading of El Salvador’s sovereign debt and said, “BREAKING: EL SALVADOR DGAF”

BREAKING: EL SALVADOR DGAF https://t.co/VuJ25PcvQL

— Nayib Bukele (@nayibbukele) January 17, 2022

Related: El Salvador’s dollar debt dives on Bitcoin bond plans

Chivo has been instrumental in making El Salvador the first country to make using Bitcoin as easy as fiat. Apart from transferring money worldwide, Chivo wallets are being used for daily transactions at restaurants, cafeterias, malls and every other retail market.

The government has also deployed hundreds of Bitcoin ATMs across the country that facilitates millions in cross-border remittance. Chivo has managed to do what banks haven’t been able to do in decades. 

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Bitcoin miners’ resilience to geopolitics — A healthy sign for the network

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Bitcoin miners’ resilience to geopolitics — A healthy sign for the network

Considering that Bitcoin (BTC) is a blockchain network that uses a proof-of-work (PoW) consensus mechanism, miners are a highly significant part of the market dynamics of the network and the community itself. On Jan. 5, it was revealed that Kazakhstan shut down its internet services due to unprecedented political unrest sparked by rising fuel prices in the country.

The protests in Kazakhstan began on Jan. 2 in the town of Zhanaozen to fight against the government doubling the price of liquefied petroleum gas (LPG), which is widely used as car fuel in the country. This change in pricing came as a result of the gradual transition to the use of electronic trading of LPG in order to abolish the existing state subsidies for fuel and allow the market to discover the price of the asset.

However, protests in the region soon snowballed, gaining more momentum and continued despite the country’s government announcing that the prices of LPG would be brought down to a level lower than before the increase. Soon, this led to the country’s presiding cabinet resigning and the state-owned telecom company, Kazakhtelecom, shutting off the country’s internet services. Network data provider Netblocks reported that the normalized network connectivity fell down to 2%, with the government attempting to limit coverage on the escalating anti-government protests.

As a result, the Bitcoin network’s mining hash rate declined over 13% in the hours after the shutdown in the country from 205,000 petahash per second (PH/s) to 177,330 PH/s. Over the past year, the country grew to account for 18% of Bitcoin’s mining activity. A report from the Data Center Industry & Blockchain Association of Kazakhstan estimated that cryptocurrency mining would bring in $1.5 billion in revenue for the country in the next five years.

This is not the first time that Bitcoin mining in the region has received the spotlight. Despite being an energy-rich country, the Kazakh government announced last year that it planned to crack down on unregistered miners that were straining the country’s energy supply after the mining migration from China.

Kazakhstan’s mining market share

The Central Asian country became a hub for Bitcoin mining after the Chinese government banned mining operations and cryptocurrency services in 2021. This led to the migration of mining companies like BIT Mining to relocate their operations from China to Kazakhstan. BIT Mining is one of the largest BTC mining companies in the world. 

The mining company has indicated that it is unlikely to flee Kazakhstan to relocate to North America amid the political upheaval. The firm is closely monitoring and evaluating the situation in order to decide its next move with respect to mining. 

However, countries like Spain have had their eyes on Kazakhstan’s mining market share. The Deputy for the Spanish Ciudadanos political party, María Muñoz, proposed to make the country a mining hotspot amid the current situation, stating in a tweet, “The protests in Kazakhstan have repercussions all around the world but also for Bitcoin. We propose that Spain positions itself as a safe destination for investments in cryptocurrencies to develop a flexible, efficient, and safe sector.”

Rob Chang, the CEO and director of Gryphon Digital Mining, a digital assets mining company, told Cointelegraph:

“Bitcoin mining will continue to grow and the need for viable locations will always be necessary. Countries with the foresight to make themselves Bitcoin-friendly will stand to do quite well as Bitcoin continues to establish itself as a legitimate alternative to fiat.”

As a result of China’s mining ban, the mining dynamics have shifted globally, with the United States leading the charge with over a third of the mining rate. Chang said that one benefit of this migration includes rehomed miners’ shift to a larger mix of carbon-free energy sources.

Additionally, some of the hash rates has gone to more transparent entities operating the mining machines, leading to increased security for the network and a higher level of public trust in Bitcoin miners.

Illia Polosukhin, the co-founder of the NEAR Protocol, a decentralized development platform, told Cointelegraph that in addition to China’s ban leading to a loss of investment, the loss of talent is another major factor:

“Chinese citizens living on the mainland and abroad are banned from working in the crypto sector, and that’s a big loss for the blockchain industry as a whole. It will stifle innovation and, eventually, leave Chinese citizens behind as more users begin to adopt Open Web technologies. It’s possible that more mining operations shifting to the United States could push the issue of blockchain and sustainability more fully into the public eye.”

Thriving amid geopolitical risks is rare for financial assets

The mining hash rate for the Bitcoin network recovered quickly from the drop to 168 million TH/s, according to data from YCharts. In fact, the network has taken a step forward with the hash rate hitting a new all-time high of 215 million TH/s on Jan. 13.

We’re officially building an open bitcoin mining system ✨ https://t.co/PaNc7gXS48

— jack⚡️ (@jack) January 13, 2022

This new all-time high was driven by the statement from ex-Twitter CEO Jack Dorsey, announcing the creation of an open Bitcoin mining system. Thomas Templeton, the general manager of hardware at Square, said, “We want to make mining more distributed and efficient in every way, from buying, to set up, to maintenance, to mining. We’re interested because mining goes far beyond creating new bitcoin. We see it as a long-term need for a future that is fully decentralized and permissionless.”

This new all-time high is evidence of how resilient the Bitcoin network and its community are to ensure that the network thrives at all costs. 

However, it’s important to remember that such risks are not exclusive to Bitcoin. Chang said, “Geopolitical risk is a common issue for many industries, and Bitcoin mining is not immune. While there will be some that will take the risk and operate in these countries for the sake of lower costs, they do run the risk, such as those experienced in Kazakhstan or others such as the government deciding one day to take all of your machines. Operators will need to understand the risk/reward tradeoff.”

Related: A new intro to Bitcoin: The 9-minute read that could change your life

Polosukhin explained that no matter how distributed or decentralized a blockchain network is — Bitcoin or any other — it’s still intertwined with many legacy systems: energy grids, energy prices, regulation and the laws of nations. Bitcoin mining has either been banned or is facing uncertainty in many countries including Iran, Lebanon, Iceland and Sweden.

Being an energy-intensive PoW network, the Bitcoin network is expected to continue to thrive as long as miners are incentivized economically to continue to remain miners. A report from Fidelity Digital Assets, the crypto wing of Fidelity Investments, indicated that the Bitcoin cycle is far from over, and with the high financial incentives for miners, they are in it for the long haul

While Bitcoin is in a price slump, currently trading around the $42,000 range with a market capitalization of $791 billion, the fact that miners — the core aspect of the network — have shown resilience to adverse situations over the 13-year history of the network reinforces the belief and trust the community puts on the flagship blockchain network.

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Solana-based DeFi protocol Hubble raises $10M, prepares for mainnet launch

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Solana-based DeFi protocol Hubble raises $10M, prepares for mainnet launch

Crypto heavyweights including Three Arrows, DCG, Delphi Digital and Crypto.com Capital joined Hubble Protocol’s funding.

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Solana-based DeFi protocol Hubble raises M, prepares for mainnet launch

The Solana (SOL) network is ready to see the mainnet launch for another decentralized finance (DeFi) protocol, aimed at Web3 development and backed by bigshots from the crypto industry.

Hubble Protocol, a project aiming to develop a censorship-resistant crypto-backed stablecoin among other DeFi services, has raised $10 million from Three Arrows / DeFiance Capital, Delphi Digital, Digital Currency Group (DCG), Crypto.com Capital, ParaFi, Jump Capital, Decentral Park Capital, CMS, Spartan, DeFi Alliance and Mechanism Capital.

Hubble plans to expand its team and DeFi products with fresh funds, starting with its scheduled mainnet launch on Jan. 28, according to the announcement. The first item on Hubble’s roadmap is the launch of its zero-interest borrowing platform that mints USDH, a censorship-resistant crypto-backed stablecoin that’s “positioned to become a building block for other protocols” on the Solana ecosystem.

From a decentralized stablecoin to an innovative borrowing marketplace to undercollateralized lending, the Hubble team is building “core DeFi primitives for the Solana ecosystem,” according to DCG director of investments Matthew Beck. He added:

“These are critical components of the Web3 financial stack on one of the most prominent networks in the crypto market.”

Seeing stablecoins as a multi-trillion dollar market opportunity, ParaFi Capital vice president Anjan Vinod stressed that crypto users will want access to both centralized and decentralized stablecoins, where Hubble comes into play. “We see Hubble’s low transaction costs and USDH network effects as compelling features to drive liquidity to the protocol,” he added.

Related: Solana could become the ‘Visa of crypto’: Bank of America

Following its mainnet launch, Hubble users can stake the platform’s native token, HBB, to earn the majority of the protocol’s fees from minting USDH. According to the announcement, Hubble aims to develop undercollateralized lending services in the future and “explore further DeFi innovations laying the foundations for a global and open financial system.”

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