The cryptocurrency market is showing bullish signs heading into the last quarter of the year after a rough bear period in May and June. The market has however remained resilient during the brief bear market as new solutions were developed to reduce high fees on Ethereum, staking protocols such as YeFi.one were developed, and top corporations such as Google accepted cryptocurrency during the period.
In the following sections, we discuss the factors that have caused the latest market resurgence and the role decentralized finance (DeFi) plays in keeping the market healthy at all times.
What's causing the crypto market resurgence?
The transition from a bear market to a bull paradise has been swift and efficient. The crypto ecosystem hit an all-time high value of $2.55 trillion in market capitalization at the start of May, before collapsing in the following months to $1.2 trillion in July - representing the largest nominal value drop in crypto's short history.
In mid-June, crypto analysts were calling for new lows in the crypto market as Bitcoin (BTC) dipped below $30,000 for the first time since January. Now, less than two months later, Bitcoin is only $4,000 short of hitting $50,000 after a strong resurgence, which could soon skyrocket the top asset, and probably the rest of the market, to all-time highs.
While most analysts point to one single factor as the cause for crypto market recovery - Tesla resuming Bitcoin payments - the story is bigger and much larger. The rise of Layer 2 scalability solutions, developments of next-gen staking solutions such as YeFi.one, massive printing of Tether (USDT), the NFT market craze, and global acceptance from multinationals such as Google are just some of the reasons that have sparked the current bull market.
Tether's massive printing
The world's leading stablecoin issuer, Tether, minted a fresh round of one billion USDT tokens on the TRON network on August 9, 2021- increasing the total circulating supply to 62.8 billion USDT. In January, the total USDT in circulation was only 24.6 billion USDT, hence a 155% increase to the total supply.
Tether is the most common means of buying and selling cryptocurrencies for people who do not have USD or simply do not trust their banks, since it's banked 1:1 with the dollar.
It is interesting to note that since the start of May, the printing of Tether went completely flat and what followed is a trillion-dollar wipeout in the cryptocurrency market. Soon as the Tether printing machines went back on at the start of August, the market started to pump once again. Coincidence?
The Decentralized Ecosystem is Thriving
The market is finally back on a bullish track after a rough end to Q2 that saw the ecosystem collectively lose over 60% of its value, according to data from Coingecko. Despite the rough patch, DeFi projects grew massively in number as Layer 2 scaling solutions were implemented to solve the high transaction fees and low latency problems.
During the two-month bear period while the rest of the market stood still, decentralized finance (DeFi), was flourishing as developments soared in the space. Ethereum layer 2 scalability solutions such as Binance Smart Chain (BSC) and Polygon gained wide adoption setting an exodus from Ethereum main chain. This further set stage for a new era of farming and staking protocols with low protocol fees.
Staking quickly became users' favorite way to make passive income on their portfolios when the market was on its short bear run - allowing them an earning without having to trade off any of their assets.
Yefi.one, one of the leading staking DApps in DeFi, benefited from the rise of layer 2 solutions, providing users with real-life staking solutions with a passive income. Built on the BSC chain, YeFi staking DApp welcomed over 10,000 users during the first month it went live, offering users an easy-to-use and robustly secured platform to stake their digital assets.
The Google effect?
Finally, starting August 3, Google will accept crypto companies' advertisements on their platform. The latest revision follows the amendments in its policies in June, allowing "approved" crypto ads only.
The tech giant set a strict 'all-crypto' ban that imposed an overarching ban on almost every crypto product, including wallets, exchanges, DeFi products, and more. Now, Google is relaxing its policies but it will not be as open as before the ban was put in place. Under the new policies, users will not be able to advertise ICOs or DeFi projects and will be only open to crypto wallets based out of the US and registered with FinCEN.
The new laws, while restrictive, opens the crypto field to a more regulated stance ensuring only licensed companies are advertised.
As the market rises to newer heights, Tether's influence is expected to be even greater - with TRON finally surpassing Ethereum as the top blockchain with issued USDT. Additionally, new scalability solutions such as Optimism, Rollups, and Layer-2 protocols will be key in growing the DeFi and yield farming ecosystem by lowering the cost of transactions.
Buckle up, the 2021 bull market could just be starting and who knows how high it will go this time?