Waves price has rebounded but it is a risky crypto to buy

Waves  price has made a cautious recovery in the past few days as cryptocurrencies rebound. The token is trading at $6.50, which is the highest level since June 27th. It has risen by about 50% from its lowest point in June, bringing its total market cap to about $614 million.

What is Waves and why is it rising?

Waves is a smart contract platform that aims to become a major alternative to Ethereum. It uses a leased proof-of-stake (PoS) framework that improves its speed and lowers transaction costs. Waves can process about 100 transactions per second (tps), making it much faster than Ethereum.

Waves is usually compared with Terra because of the importance of Neutrino. Neutrino is an algorithmic stablecoin that is used in applications in its ecosystem. According to CoinGecko, it has a total market cap of more than $743 million.

Analysts believe that Neutrino has the power to bring down Waves and its ecosystem just like TerraUSD brought down Terra’s ecosystem. Indeed, a few months before Terra USD imploded, Neutrino managed to lose its peg. This happened because of the aggressive selling in Curve Finance and the liquidity crisis in Vires Finance.

As a result, the developers unveiled proposals to revive the ecosystem. Some of the fixing processes include defining the maximum swap amount and setting the liquidation threshold to 1. This means that borrowers must return 99.98% of their loans to prevent liquidation of their positions. They also reduced the rate at which users need to pay their loans from 80% to 40%. 

There are other limits that were introduced to save the USDN stablecoin such as a daily withdrawal limit for USDT and USDC to $1000. While these measures have helped stabilize Neutrino, there are still risks since the stablecoin is not backed by any hard assets. 

As a result, the total value locked in Waves has crashed from over $4.4 billion to $852 million. Worse, Vires Finance, which contributed to Neutrino de-pegging has a dominance of about 76.43%.

Waves price prediction

The four-hour chart shows that Waves has been in a cautious recovery in the past few days. Along the way, it has managed to move above the important resistance level at $5.75, which was the highest point since July 8th. The coin has risen above the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved to the overbought level.

Therefore, there is a likelihood that the coin will keep rising in sync with the ongoing crypto recovery. However, in the long-term, I suspect that it will resume the bearish trend. This is in line with my previous views on Waves and Neutrino.