If you’ve ever sent a transaction on the Ethereum chain you’ve probably heard of gas – it might have different names depending on the blockchain you use, but the end result is the same: someone’s taking a cut of your money!
But no more. Not after you read today’s article.
Top 5️⃣ Things You Need To Know About Crypto Today
💸 Gas Fees 101: How To Achieve the Best Gas Fees
🏦 Banks Adopting Crypto: Positive or Negative?
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Our Market Meditations are longer format educational segments. Each letter features a Market Meditation which will deep dive and analyse a relevant crypto event, theme or tool.
⛽ Gassed Out
Gas is basically a fee you pay for every transaction that is added to the blockchain. The block validators receive this fee to compensate them for the computer power required to process it. All signed transactions go into a pool, and there are two things that can lead to high gas costs:
The network is busy and other users are willing to pay higher gas costs to get preferential treatment
You are interacting with a smart contract that requires a lot more computation than a simple wallet transfer
With the explosion in DeFi and NFT popularity over the last year, the average Ethereum transaction fee has rocketed and some of the most popular dApps in the crypto world are absolute gas guzzlers! So what can we as individuals do to help minimise our costs?
Wait and C
Well of course we could just move to tokens on Binance Smart Chain and Solana, which have fees lower than a dollar. If what you need is there, problem perhaps solved.
But if you still want to transact on Ethereum, there are two simple workarounds to keep in mind that may be beneficial:
If you are purchasing relatively small amounts of popular tokens, the use of a centralised exchange may work out cheaper, as they are able to lower their average gas fees by batching transactions together
⚠ REMEMBER! Centralised exchanges come with their own security risk as you do not have ownership of your tokens until you withdraw them.
For high-frequency traders of certain altcoins though, waiting and using centralised exchanges is not an option. Thankfully, this is where Layer 2 solutions and bridges come in, including rollups, which we highlighted in August. The main aim of Layer 2 solutions is to send computation (and sometimes data) off-chain to increase overall transaction rate and lower gas fees.
One of the recent success stories on Layer 2 has been the decentralised derivatives exchange dydx, which has shot to the top of the DEX list on 24-hour trading volume, aided by a popular airdrop to its early adopters.
If you trade derivatives on dydx on:
Layer 1: the maximum fee is based on the “Higher of 0.2% or Variable Gas Cost”
Layer 2: the fees are between 0.05% - 0.1% and there is zero gas cost.
Many other dApps have either migrated to Layer 2 or are in the process of doing so, lured by the potential of rapid user growth by those seeking low fees. Keep in mind these tips and tricks to keep your fees down, and to learn more about the Layer 2 market and associated risks, check out L2 Beat.
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🕯️ Guess the Candle
On Tuesday we covered bullish reversal patterns, now it's time for the bears.
Can you guess which type of bearish reversal pattern is shown in the purple box above?
Dark Cloud Cover
🏠 U.S. Bank Launches Bitcoin Custody
On Tuesday, U.S. Bank announced that they would launch bitcoin custody for their investment managers. This news comes as no surprise since more and more banks and institutions are looking to get involved with crypto. While bitcoin custody will not be available for all, it is a step in the right direction toward mass adoption.
Is bank adoption a good thing?
There is no question that major bank adoption means that crypto will continue to undergo mass adoption - including HODLing and education surrounding it. More and more people are trusting it as a distinct, but trustworthy, asset class. Let’s now take a look at whether these developments are positive or negative!
More institutional adoption.
Crypto will be seen as safer and more secure.
Infrastructure and technological advancements will take place at a faster rate since more people are working toward improvements.
Crypto is supposed to get rid of a middle man but is bringing them in in this case.
By only allowing investment managers access, it excludes the majority of the population.
Financial order may appear to be simply recreated, instead of reinvented.
We must remain hopeful that this will lead to more awareness and adoption of bitcoin and other cryptocurrency.
3. Shooting Star
How do you identify this kind of candle?
A candle with a long upper wick, little to no lower wick, and a small body.
Technically, this type of candle occurs at the end of an uptrend and is confirmed when the high of the candle that follows the shooting star candle stays below that of the shooting star and closes below the close of the shooting star.
The distance between the highest price and lowest price must be at least double that of the candle body.
What does this candle mean?
We want to emphasise here that your focus should not be on trying to determine whether a candle is or is not a shooting star, but rather on the psychology of why it may work as a reversal.
A shooting star candle means that the bulls kept advancing until, during one candle, bears pushed the bulls back. The bears then continued to push back regaining full control.
⛔️ A word of caution. Candlestick patterns in isolation are not a buy or sell signal. Consider them one of many ways to look at market structure. We prefer the following tools: Moving Averages, Fibonacci Retracement or Volume and Open Interest.
Not financial or tax advice. The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. We are not financial advisors. Every investment and trading move involves risk. Do your own research when making a decision. See our important security disclaimers here.
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