AvaTrade, a forex and CFD broker that offers trades in more than 250 financial instruments, has added Dash to their platform, which enables enhanced price discovery.
[tweet https://twitter.com/AvaTrade/status/1074677211108659201 align=’right’] AvaTrade does not enable individuals to actually purchase Dash, but to simply trade the Dash/USD pair. Their website cites that Dash “has the same features as Bitcoin or Litecoin with a few additional features such as instant transactions, enhanced private transactions, and a decentralized governance system” as competitive advantages. The website continues to list some of the distinguishing features of Dash such as being “the first digital currency to have a 2-level network”.
The platform enables investors to gain greater exposure to the Dash ecosystem without taking on the responsibility of being fully exposed to the ecosystem. They also do not have to learn about the ways to store Dash, which has been a barrier to adoption for some.
Cautious financial adoption
One major concern with adoption by a de facto derivative market that trades the price of something without actually owning the underlying asset is the creation of risk that the assets’ real price will be influenced by the derivative, rather than vice versa. This phenomenon, commonly known as the ‘tail wagging the dog’, has been seen in much larger financial markets and can cause significant economic domino effects. The risk becomes more significant when it is considered that the cryptocurrency market is still in its infancy so market volume is relatively small and can easily be influence by individuals making relatively small bets compared to other financial markets.
Source: CoinMarketCap
For much of cryptocurrency’s history, most coins’ price movements have followed in lockstep with Bitcoin’s price even though many coins are vastly different from Bitcoin. As more markets come online, including derivative markets, it increases the chances for prices to diverge from one another as more individuals factor in their own decision making and education.
Source: CoinMarketCap
Nevertheless, derivative markets can significantly help cryptocurrencies achieve less volatility by allowing more actors to place bets on exchange prices by factoring in numerous data points. Some may make bets solely on momentum and technical analysis, but others will factor in core fundamental data, such as a coin’s adoption levels and technological advancements. A derivative market also allows investors to hedge their bets, which prevents large exchange price swings because if an investors can avoid large losses then they may not have to liquidate all positions causing massive swings in price over a few minutes.
Dash has potential to gain from more investor attention
Since Dash has focused significant resources on improving its technology, such as Automatic InstantSend and ChainLocks, along with focusing on real life usability, Dash stands to benefit from investors focusing on fundamental analysis. Investors looking for coins that are poised for long-term adoption rather than speculation plays will gravitate towards Dash and help it discover its true price and gain more recognition.
Dash is able to fund organizations with its unique DAO Treasury to not only help create these innovations and adoption methods, but also educate the public about how it is more advantageous than other coins and provide educational resources. This will help investors and consumers learn about Dash rather than lumping it together with other coins that are not that similar. As more investors and consumers learn how Dash is better suited for real, long-term adoption and usage, a positively reinforcing circle will form that creates even more adoption and usage, along with exchange price appreciation.
