IOTA's Rebased upgrade is stirring some serious buzz in the crypto community. The price has shot up, and the whole thing is making a splash among seasoned investors. With the voting process kicking off, we're looking at full decentralization, better staking rewards, and possibly lower transaction costs. So, what's cooking for IOTA and the broader crypto landscape? Let’s dig into this transformative upgrade and see how speculative trading and smart contracts might be steering IOTA's course.
Unpacking IOTA's Rebased Upgrade
On November 3, IOTA topped the list of the 100 largest cryptocurrencies by market cap as the developers began voting for the Rebased upgrade. The price soared 46% in 24 hours to hit a six-month high of $0.504, pushing its market cap over $1.7 billion. This jump added to its monthly gains, now exceeding 350%, with daily trading volume boosting 83% to around $705 million.
The altcoin's recent rally was backed by a surge in futures open interest. CoinGlass data shows open interest in the futures market hitting a record high of $87.89 million, up more than threefold from last week's low of $26.27 million.
Speculation Driving IOTA's Rise
The IOTA rally kicked off as the developers opened voting to upgrade the IOTA L1 mainnet to the Rebased protocol. This is IOTA's biggest upgrade yet, bringing some major changes: the chance to earn IOTA staking rewards, a starting inflation rate of 6-7%, Move-based smart contracts, and complete decentralization of the IOTA ledger.
With the voting process lasting seven days and counting taking another seven, this upgrade is poised to cut transaction costs and introduce an adaptive fee-burning mechanism, along with sponsored transactions that would hide fees from users.
All this comes as the altcoin market starts to catch fire, as shown by the Altcoin Season Index clocking in at 81, suggesting many altcoins are outpacing Bitcoin. It's a time of rising optimism, with the Crypto Fear and Greed Index reaching 76, signaling strong bullish sentiment.
The Role of Speculative Trading
Speculative trading is a key factor in the price movements of IOTA and other cryptocurrencies, especially during major upgrades. Speculators often make trades based on the anticipated future value of the asset rather than its intrinsic worth.
Sentiment Influencing Prices
The anticipated effects of the upgrade can lead to big swings in price as traders expect future value changes. Media coverage, technological advancements, and the general mood can all fuel speculative trading.
Collective Actions and Leverage
Speculators tend to flock together, participating in herd mentality, which can lead to wide-scale buying or selling. Add in some leveraged trading, and you’ve got a recipe for amplified price movements.
Smart Contracts in the Mix
Move-based smart contracts come with both rewards and risks.
Benefits of Move
Enhanced Security: Move treats digital assets as independent objects, preventing issues like double-spending.
Static Dispatch: All calls are resolved at compile time, eliminating the risk of re-entrancy attacks.
Formal Verification: Move Prover provides mathematical proof of a contract’s correctness.
Scalability: Move-based chains optimize for scalability without losing decentralization or security.
Risks to Consider
Learning Curve: Developers may need to adapt to a new programming model.
Ecosystem Maturity: Move's ecosystem is still evolving.
Compatibility: Cross-VM interoperability can be challenging.
IOTA's Place in the Crypto Landscape
Following IOTA’s recent rally, some analysts hold a bullish view. Pseudo-anonymous analysts Team LAMBO Charts say IOTA has broken out of a falling wedge formation and surpassed a major resistance level at $0.40. They predict the altcoin could reach $0.70 soon, with a longer-term target of $2.60—a potential 430% increase.
Another commentator noted IOTA is breaking out after two years of accumulation, anticipating further gains as whales rotate profits into IOTA. He predicts a rise to $3.50, contingent on breaching the $1 mark soon.
Possible Pullback Ahead
On the daily chart, IOTA has surpassed both the 50-day and 200-day EMAs at $0.1914 and $0.1710, respectively, which recently formed a golden cross—often a bullish sign.
Yet, the Relative Strength Index and Stochastic Oscillator are in overbought territory, hinting a pullback may be near. IOTA may retreat to retest support at $0.30 before continuing its upward trend. The next major hurdle is at $1, a level IOTA has struggled to breach in the past. A breakout here could see it retest $1.49, its peak from December 2021.
Wrapping Up
IOTA's Rebased upgrade is setting the stage for full decentralization and could impact the crypto sector in terms of decentralization, scalability, programmability, and tokenomics. With speculative trading boosting prices and Move-based smart contracts revealing potential, IOTA seems well-placed to ride this wave. Investors and developers should watch closely as IOTA navigates this pivotal moment.
