The crypto markets are undeniably encountering a challenging year. However, there is a silver lining to all crypto investors in the form of Bearcoin. Bearcoin, the first decentralized financial instrument, enables investors to gain profit when there is a fall in the price of bitcoin.
Simply put, the bear market describes a period wherein supply increases in comparison to the demand, prices fall, and market sentiments take a hit leading to traders selling assets in a panic. A deteriorating bear market is considered when there’s a dip of 20% or more. It denotes that the value of cryptocurrencies has dropped by at least 20% and is continuing to fall.
Over the last three months, with the risk of inflation looming large and concerns related to recession circulating, bitcoin has seen a reduction from a high of $48,000 to around $21,000.
The essentials of crypto, nevertheless, remain influential. The actual power of cryptocurrency is the underlying technology, blockchain, the foundation of the upcoming internet or web3.
Let us now dig into Bearcoin, a token that has been designed exclusively for bear markets.
What is Bearcoin (BTCBEAR)?
Bearcoin is uniquely designed and differs from various other tokens. The issue with other tokens is that they are still associated with conventional financial tools such as short selling on exchanges.
This implies that those tokens are not decentralized and can be expensive. Additionally, these tokens may impose high management fees compared to the BTCBEAR token. With bitcoin’s price dropping, Bearcoin rises proportionally in value thanks to the way it has been engineered.
How has Bearcoin Been Engineered?
Bearcoin is an immutable smart contract positioned on the Polygon blockchain. The contract of Bearcoin uses the BTC/USD price feed of Chainlink, the decentralized price oracle, to recognize bitcoin’s price movement.
This real-time information on price fluctuations is then applied to the supply of bitcoin with the help of which Bearcoin smart contract decides whether to deflate or inflate whenever bitcoin tokens change ownership. Additionally, deflation or inflation is capped at a maximum of 5% of the total transaction’s value.
It implies that when bitcoin prices rise, Bearcoin faces inflation by up to 5% per transaction. Then these freshly minted Bearcoins get paid out to an address that is randomly selected in the inflation pool. On the other hand, when bitcoin experiences a fall in its price, a small portion of each Bearcoin transaction is burned, causing the token price to rise.
The deflation and inflation mechanism that Bearcoin uses instead of a “fiat” system like rebasing results in efficient functions such as exchange-friendly swaps, inflation mining, and so on.
How does Bearcoin Work?
When the price of BTC rises, BTCBEAR generates up to 5% inflation per transaction, and when the price of BTC falls, BTCBEAR deflates by up to 5% per transaction until the correct price ratio of BTC/BTCBEAR is reached.
Additionally, Bearcoin rewards its users during inflationary periods by allocating the inflation produced during every transaction to a randomly chosen address within the inflation pool. Users holding a minimum of 100 Bearcoins are eligible to visit Bearcoin.io Dapp through Metamask, and participate in inflation mining.
Apart from enabling users to benefit from inflation mining, Bearcoin offers basic information and valuable trading statistics such as the latest rate of deflation/inflation, the recent total supply, and so on.
Bearcoin offers a new contrarian investment vehicle focused primarily on bitcoin but with the ability to inflate and introduce other tokens built on the same infrastructure. Also, it provides a new “inflation mining” mechanism to back trading volume and a new “DEX-friendly deflation” mechanism to enable feasible trading.
Thus, Bearcoin provides the investors with numerous strategies like buying when bitcoin is poised to deteriorate and selling when it rises or even choosing to hold them to mine inflation. During bear markets, even the most positive crypto investors take a step back, but with the launch of Bearcoin, it can be said that the market may witness the perfect token for those challenging situations.
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