Ryze Recap 7/14: TikTok Pumps Crypto-Asset by 40%
Plus, Bitcoin Mining Difficulty All-Time-High
It's Tuesday, July 14. If you're new here— Ryze Recaps is a newsletter covering the biggest news Bitcoiners need to know in 2 mins or less.
We've got two quick stories for you today.
TikTok Pumps Obscure Crypto by 40%
We try to stick to Bitcoin-related topics in this newsletter, but this was too interesting to pass up.
Dogecoin was made in 2013 as a joke, it has no real use case. Last week, a coordinated pump by daytraders caused the asset's price to surge as high as 40% in 48 hours, with a 2000% increase in trade volume. The platform of choice to spread the word? TikTok.
For the unfamiliar, TikTok is a short-form video app similar to the now-defunct Vine, Users can record videos using green-screen backgrounds and recycle audio clips. It's insanely popular among Millennials and Gen Z.
A small subset of users on TikTok, like nearly every social platform these days, is centered around daytrading and stock picking. These TikTok traders began circulating videos like the one below, urging other traders to purchase $25 worth of Dogecoin at ~$0.0023, and if it went to $1, they'd all be rich.
Why it matters:
While we've been talking a whole lot about increasing institutional investment in Bitcoin, it’s clear that the retail (everyday consumer) trading is on the rise across all markets. With millions of people stuck in their homes, risk-takers are turning to markets to get in their gambling fix. Massive user inflows across all brokerages, the meteoric rise in popularity of trading communities such as r/WallStreetBets, and personalities such as Dave Portnoy, are all evidence of this trend. To this demographic, crypto is just another market to gamble in, and we may see record participation from everyday investors in the next crypto bull run as long as this trend continues.
This pump is reminiscent of the pump-and-dump scams and paid shills we saw back in 2017. Back then, Twitter, Telegram, and Discord were the platforms used to pump various assets with tiny market caps. In 2020, it's TikTok, which may be dangerous given the demographics of its' user base. Young, inexperienced investors in their late teens/early 20's heeding TikTok financial advice hoping to catch the next moonshot, can result in thousands of people getting burned and having a bad experience in crypto. Even if TikTok is banned in the US, these traders will likely find another platform on which to amass their pump-and-dump army.
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Bitcoin Mining Difficulty Hits All-Time-High
Yesterday, the mining difficulty on the Bitcoin blockchain reached a new record high of 17.35 Trillion, up almost 10% from 15.78 Trillion two weeks ago. This correlates to record-high hashrate on Monday, indicating that more computing power is being used to secure the Bitcoin network than ever before.
Earlier this year, Bitcoin underwent its third Halving, in which the block reward (newly minted Bitcoin that miners receive in return for securing the network), was cut in half from 12.5 BTC to 6.25 BTC roughly every 10 minutes. We're still seeing the mining industry adjust to this reduction in what is essentially their revenue.
Mining difficult adjustments are a mechanism that the network uses to automatically self-balance the computing power on the network vs the network's usage. This difficulty adjustment could be a result of the upgraded, more powerful, mining rigs that many firms have begun to use. It may also mean that more miners are participating after many of them shut off post-Halving.
That's all for today! We'll be back again with another Ryze Recap.