Investors are scrambling for somewhere secure to store their wealth in the current market climate. A new social currency called Uniglo (GLO) has experienced a spike in demand, and on-chain analysts report that it is Bitcoin (BTC) and Ethereum (ETH) whales that are buying up GLO en masse.
An investigation of Uniglo's whitepaper explains this behavior. Whales are eager to diversify with no bottom in sight for Bitcoin and further capitulations are expected. ETH whales suffer a similar fate, with a sharp drop in price expected just before the merge as the narrative dies and investors move out of positions to pump the next narrative.
Uniglo introduces basic principles of economics: scarcity and value-backing. But combines these with the programmability of blockchain technology to offer a new and improved store of value. This protocol acquires assets stored in a vault through buy and sell taxes. This vault represents a managed portfolio and holds a blend of physical and digital assets. This diversification smooths out long-term returns and allows Uniglo to weather the market downturn. With exposure to more luxury items such as fine art and gold, this protocol exposes investors to a broad range of assets.
The vault gives the native token GLO an intrinsic floor price, but a factor that cannot be ignored is the potential gains to be made by the vault. If the vault is buying digital assets at a highly depressed valuation, and these give GLO its floor price, what happens when the market reversal happens? The valuation of the vault will soar, and so will GLO.
Bitcoin investors are nervous, and rightly so. Bitcoin trades below the 2017 cycle peak and exists in uncharted territories. Jerome Powell's quantitative tightening continues to suck money away from high-risk assets, and with the continued strength of the DXY (U.S. Dollar Currency Index), further lows look likely. Where the floor will be, nobody knows.
On the flip side, investors with conviction in BTC as an asset should use the current period to accumulate, and it is likely an opportunity like this will not come again, at least not for the next four years.
Buy the rumor, sell the news. Narratives are incredibly potent in the crypto space, an environment driven by hype and future promises, and ETH 2.0 has been no exception. Time and time again, before a large announcement, coins pump, and then when the media hype dies down, traders sell-off, and the price corrects. And this looks to be the most likely outcome for ETH.
Again on the flip side, when ETH retraces post-merge, this will represent a great time to enter a long position.
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