American
crypto exchange Coinbase is launching its own second layer blockchain under
Base brand. The network is operating within the Ethereum ecosystem using the Optimism
protocol. Such add-ons allow users to complete transactions much faster and
cheaper than in the first layer blockchain, while also gaining access to all its
advantages.
Base
network is thought to be populated by 110 million verified clients of Coinbase
in 100 different countries that have $80 billion on their accounts. Native
token Base is unlikely to be issued, as U.S.-based Coinbase will hardly be
allowed by the Securities and Exchanges Commission (SEC) to do this after considering
BUSD as a security. Binance itself will no longer offer BUSD trades starting from
March 13. Instead, the price of Optimism coin is rising on the news that part
of the Base transaction commissions will be stored in the Optimism Collective
community. More of such L2 (second layer) blockchains on Optimism technology
are expected to emerge in the future, as this technology allows user to easily
relocate their assets inside the ecosystem without any extra costs.
The crypto
market situation is worsening as many traders are betting on a wider and
stronger rebound, while it appeared to be weaker in scale than in 2019. Active
traders are pumping altcoins increasing their market cap by $100 billion during
the recent rebound. Some of the altcoins are priced at 100-200% above January
2023 levels, and may be interesting for short trades.
Mixed
economic development in the United States has put additional pressure on risky
assets, including crypto. Durable goods orders dropped by 4.5% month-on-month
in January, while so called Core durable goods orders rose by 0,8%, the most for
the last ten months. Suggestions about the nearing recession for the United
States and a weaker Dollar in this regard seem to be premature before the
release of the U.S. labour market and inflation data for February. It is interesting
to see that the U.S. economy is looking more resilient, as was expected given the
Federal Reserve’s (Fed) aggressive tightening actions and rhetoric. High
consumer activity, which includes activity in the real estate sector, may only
extend the period of high prices, making it possible to likely compare the
current situation to that of the 1970s, when the Fed kept its high interest
rates in place for quite a while. Morgan Stanley agrees with this as it does
not expect a U-turn in the Fed’s monetary policy before March 2024.
Thus, the
recovery of the crypto market in 2023 should not be expected. Risky assets are
simply not in demand amid expensive borrowing as investors prefer to deal with
high-grade assets like bonds or value stocks. BTC prices are expected to tumble
below $21,000 per coin towards $17,000.