In the past month, the cryptocurrency market has experienced significant and severe fluctuations.
Bitcoin (BTC) faced strong downward pressure after reaching a historic high earlier this year. Due to ETF fund outflows, insufficient market liquidity, and the spillover effects of the U.S. tech stock sell-off, Bitcoin once plunged by over 20%, nearly erasing previous gains, and market sentiment has been cautious.
Despite the large market volatility, Bitcoin's position as the 'king of cryptocurrencies' remains solid. Investors continue to pay attention to the scarcity value brought by its fixed supply (21 million coins), especially after the halving event in 2024, where the daily new output will be halved, and the long-term supply and demand relationship remains a core topic in the market.
Apart from BTC and ETH, mainstream cryptocurrencies like Solana (SOL) and Ripple (XRP) are still under attention. In a volatile market, the stablecoin yields offered by some exchanges (annualized around 5%-20%) have become options for hedging or earning returns.
As the blockchain ecosystem continues to evolve, Layer 2 solutions remain the focus of the market. Recently, I have been particularly focused on the plasma project because they have shown great potential in increasing transaction throughput and reducing transaction fees.
The core advantage of plasma lies in its unique off-chain computation mechanism, which not only alleviates congestion on the main network but also provides a smooth user experience for decentralized applications (dApps). As an investor, I believe that the token XPL plays a crucial role in its ecosystem, whether as a governance tool or an incentive mechanism, showing long-term growth potential.
Although the zero Gas stablecoin payments of plasma are highly attractive, investors still need to pay attention to its shortcomings. First, as an emerging Layer 1 network, the XPL ecosystem applications are still in the early stages, and the richness of DApps is far less than that of Solana or Tron, with user retention still to be verified.
Secondly, the pressure of token unlocking is a risk that cannot be ignored. The large supply release in the first year may cause fluctuations in the currency price. In addition, the core Paymaster payment system and the security of the cross-chain bridge also need to undergo high-load testing in the real market. While pursuing efficiency, the degree of centralization of the project and regulatory compliance will also be a long-term test in the future.
