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Is investing in classic stocks always safer than defi? Not exactly

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Disclosure: The views and opinions expressed here belong solely to the author and do not represent the views and opinions of crypto.news’ editorial.

In 2011, a 9.1 magnitude earthquake struck the seafloor of Japan, causing a massively destructive tsunami. In the following days, Japan’s Nikkei stock market fell by 6.2%, reflecting the market’s reaction to an unprecedented disaster. 

Thirteen years later, cryptocurrencies, which have surged in popularity, face criticism for their extreme short-term fluctuations, often perceived as even more volatile than traditional stocks. While this volatility can appeal to some risk-tolerant investors seeking high rewards, it represents a red flag for more loss-averse, conservative traders.

However, as outlined above, the situation with the Nikkei highlights a shifting narrative. Increasing economic uncertainties and market disruptions have led to a heightened price variability in stock markets, sometimes rivaling that of cryptocurrencies.

For instance, since the beginning of August, the Japanese stock market experienced its biggest one-day drop since 1987, with the US also seeing the Dow Jones fall by more than 1,000 points. These significant declines highlight the growing unpredictability in mainstream markets, reflecting broader economic uncertainties and market disruptions.

Now, investors are left questioning: Are the volatility risks associated with defi truly worse than those associated with traditional investing? 

Historically, classic investing options like purchasing real estate or stocks and bonds have been viewed as a cornerstone of a stable financial plan and are often considered less volatile than cryptocurrencies due to their backing by tangible assets and earnings of the companies they represent. Yet, the recent trends in global markets suggest this stability is being questioned.

The upcoming 2024 presidential election in the United States is forecasted to throw in an additional layer of uncertainty. Political developments can heavily impact financial markets, influencing investor sentiment and contributing to market instability. The growing volatility of stock markets is compounded by various factors like trade conflicts, changes in interest rates, and inflation concerns that contribute to market turbulence, leading to rapid and often unexpected fluctuations. 

Given the rising uncertainty in traditional markets, some investors are reevaluating if the risks associated with defi are worth taking. This is especially true as new developments in the sector rise in popularity.

Restaking, for example, is a concept that enhances capital efficiency by allowing assets like Ethereum (ETH) to be utilized more effectively across various networks. Pioneered by EigenLayer, a protocol built on Ethereum, this concept involves letting users take ETH staked within Ethereum and then “restake” it beyond the primary blockchain, unlocking additional utility and earning potential while maintaining its security and value. 

While some critics have raised concerns about financial stability and technical risks associated with restaking, it is important to approach these advancements with an open mind. Recently, the web3-focused VC firm DFG published a report highlighting the significant potential of restaking and liquid restaking, an offshoot of the sector that has grown exponentially alongside it. The report highlights that, despite the critiques, the sector’s innovations are reshaping financial models and offering new opportunities for staking to contribute meaningfully to the growing defi space.

Embracing these advancements with a balanced perspective while keeping in mind the inherent risks could provide a path forward for investors seeking new opportunities in an evolving financial landscape. The developments emerging from the defi space have the potential to unlock different avenues and attract a new wave of investors eager to explore the benefits of a dynamic and adaptive investment environment.



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BONK hits new all-time high following Upbit listing

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BONK has emerged as the top gainer among the leading 100 assets following a major announcement from the South Korean crypto exchange Upbit.

Bonk (BONK), the first Solana-based meme coin, surged 18% on Wednesday to hit a new all-time high of $0.000058. Its market cap soared to over $4.1 billion when writing, flipping Dogwifhat’s (WIF) $3.2 billion market cap to reclaim its position as the largest meme coin on the Solana blockchain.

Why is BONK going up?

The altcoin’s price uptick coincided with a jump in the meme coin’s futures open interest. According to data from CoinGlass, OI for BONK’s futures market rose to an all-time high of $53.5 million, more than 7 times its monthly low of $6.3 million, suggesting a growing demand from investors.

Bonk’s recent rally followed its listing on South Korea’s largest crypto exchange, Upbit. BONK’s daily trading volume shot up 95% amid the listing, hovering over $3.5 billion when writing.

Another key factor driving the altcoin’s gains is Bonk DAO’s announcement of a massive 1 trillion token burn scheduled for Christmas Day, which is set to reduce the total number of tokens in circulation, thereby increasing scarcity.

Whales have also been interested in the meme coin lately. According to data shared by Lookonchain, a whale with a history of profitable meme coin investments has spent 3.4 million USDC to buy 65.4 billion BONK tokens. Last week, another whale was seen picking up 29.32 billion BONK at $0.0000387.

Whale buying typically boosts retail investor confidence in an asset, potentially driving FOMO (fear of missing out) among those seeking quick gains.

Bullish momentum to continue

BONK’s rally hasn’t lost strength despite surging over 72% in the past week alone. On the 1-day BONK/USDT price chart, BONK’s EMA lines show a strong bullish trend, with the short-term 50-day EMA above the long-term 200-day EMA and the price staying above both lines. 

BONK hits new all-time high following Upbit listing - 1
BONK price, 50-day EMA and 200-day EMA — Nov. 20 | Source: crypto.news

Based on this setup, the bullish trend is expected to continue in the short term as the buyers remain in control. However, the Relative Strength Index showed a reading of 82, which confirms the bullish momentum but puts the meme coin at overbought levels.

BONK hits new all-time high following Upbit listing - 2
BONK RSI chart — Nov. 20 | Source: crypto.news

Despite the overbought status, an analyst suggests that BONK is undergoing a ‘Blue Sky breakout,’ which could sustain its upward trajectory in the coming days. 

This speculation is supported by strong catalysts driving the uptrend and the current hype around meme coins. Separately, Bitcoin’s recent rally to new highs has amplified market-wide sentiment, further boosting interest in the meme coin sector, which gained 2.3% over the past day.



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DeFi

Ethena Sees $1B Inflows as Crypto Rally Brings Back Double-Digit Yields

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The protocol’s rejuvenation is driven by elevated perpetual funding rates, with more catalysts ahead for growth.



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Uncertainty Looms For Crypto As SEC And CFTC Leadership Transitions Unfold Under Trump

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Este artículo también está disponible en español.

As Donald Trump prepares to take office for another term, speculation is intensifying regarding the future of crypto regulation, particularly concerning the leadership of the US Securities and Exchange Commission (SEC). 

Recent social media posts by FOX journalist Eleanor Terret suggest that SEC Chairman Gary Gensler may be on the verge of resigning, possibly before Trump’s inauguration in January 2025.

Pro-Crypto Candidates In The Running To Succeed Gensler

According to sources close to the situation, Terret says Gensler’s resignation, which would leave his term, set to expire in 2026, uncompleted, is expected to be announced after Thanksgiving. 

However, while Gensler has faced heavy criticism during his tenure for his strict regulatory approach to the crypto industry, the identity of his successor remains uncertain.

Former Commodity Futures Trading Commission (CFTC) Chairman Christopher Giancarlo has dismissed rumors regarding his nomination, while several other candidates are being considered. 

Among the names in the mix are Dan Gallagher, Chief Legal Officer at crypto exchange Robinhood; Bob Stebbins, a partner at Willkie Farr; former SEC Commissioner Paul Atkins; and Paul Hastings lawyer Brad Bondi. 

Terret suggests that Gallagher, while initially reluctant to leave Robinhood, may reconsider as the dynamics of the administration’s appointments shift. 

Stebbins, who has close ties to Jay Clayton, a former SEC chairman, is rumored to be a favored candidate, though he lacks a crypto background. Still, sources suggest he would follow the Trump administration’s lead on digital assets.

Atkins and Bondi are both known for their pro-crypto stance, advocating for a “lighter regulatory touch.” Atkins serves on the board of the Digital Chamber of Commerce and co-chairs its Token Alliance, focusing on token issuance growth. Bondi has been involved in advising decentralized finance (DeFi) projects, indicating a commitment to fostering innovation in the crypto space.

Trump Plans Resource Allocation For CFTC

Other names circulating in crypto circles include former CFTC Chair Heath Tarbert, former Acting Comptroller of the Currency Brian Brooks, and former SEC Investment Management Director Norm Champ. Champ recently expressed his willingness to serve if asked, signaling his interest in a potential role in the upcoming administration.

In addition, pro-crypto SEC Commissioner Mark Uyeda is reportedly open to taking the chairmanship, possibly as acting chair, while fellow Commissioner Hester Peirce, dubbed the “crypto mom” of the agency, has privately indicated her disinterest in the role.

With these leadership changes on the horizon, Terret anticipates that the new SEC chair will be pro-crypto, while also being equipped to handle the broader responsibilities of the agency, which include oversight of public companies, the stock market, the bond market, private funds, and the consolidated audit trail (CAT).

Compounding the speculation is the expectation that the Trump administration may also increase the CFTC’s role in cryptocurrency regulation. Terret asserts that the administration is considering allocating more resources to the CFTC, although the specifics of how this will be implemented remain unclear and would likely require additional funding.

Crypto
The daily chart shows the total crypto market cap valuation at $2.9 trillion. Source: TOTAL on TradingView.com

Featured image from DALL-E, chart from TradingView.com



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