Crypto Corner - Summary of the Week 16/08/2021


Written by: Yves, Head of Trading at Wirex

The Bitcoin price showed resilience this week as the $44,000 support level held yesterday. A 7% price jump in the afternoon sent the BTC/USD pair back above the $47,000 levels despite a difficult week for the sector from both macro and legal perspectives.

The Federal Reserve (Fed) is expected to taper off its treasury and mortgage bonds purchase program as the economy is improving. Wednesday’s release of the Fed Minutes confirmed that the tapering should start this year: ‘most participants noted that, provided that the economy were to evolve broadly as they anticipated, they judged that it could be appropriate to start reducing the pace of asset purchases this year because they saw the Committee’s “substantial further progress” criterion as satisfied with respect to the price-stability goal and as close to being satisfied with respect to the maximum-employment goal’

Tapering the assets purchase program would most likely weigh on the cryptocurrency market, as it would on any ‘investment’ asset because of the resulting decrease in liquidity.

The legal context is also very uncertain after the US senate eventually rejected the bipartisan crypto tax amendment to the infrastructure bill last week. The infrastructure bill will likely restrict the crypto market’s growth in the US as stakers and miners would have to fulfil strenuous, or potentially impossible tax report requirements .

Despite the turning macro and legal environments, the total cryptocurrency market capitalisation reached the two trillion mark for the first time since May 18th. The performance is mainly attributed to alternative cryptocurrencies as the Bitcoin dominance lost another 2.6% this week. Among the top ten outperforming cryptocurrencies: Cardano, XRP, DOGE and Solana significantly outperformed.

Source TradingView - Top performers in the top 10 against BTC and ETH

For the Cardano project, the next hard fork, Alonzo, is scheduled to be released for testnet in three days. If tests are successful, the production update would follow on September 12th. The release will let the Cardano blockchain process smart contracts, and it is therefore meant to compete with Ethereum. The excitement around the upgrade sent the Cardano price up by nearly 135% in the past month.

For the Solana project, the total value locked exceeded $2 billion this week. It is now at $2.4 billion and it is slowing down today after a Solana-based project (Luna Yield) went dark: investors fear a ‘Rug Pull’ event might have occurred according to Cryptonews.

More generally, the ‘smart contracts’ competition is accelerating in the context of the ETH2 ethereum upgrade. The upgrade is a significant change for the Ethereum blockchain from the Proof-of-Work to the Proof-of-Stake protocol that will make it more scalable. Cardano (ADA), Solana (SOL) and Polkadot (DOT) are all fighting for the ‘Ethereum killer’ title. All three have the potential to capture a share of the booming non-fungible token (NFT) market. Indeed, NFT contracts representing $1.32 billion transacted in the past thirty days on the largest peer-to-peer NFT marketplace, namely OpenSea. And these transactions happened on the Ethereum blockchain. Mania comes in waves for digital art NFTs, and the latest craze is about sci-fi collectible cards (Parallel Alpha), penguins (Pudgy Penguins) or apes (CyberKongz or Bored Ape Yacht Club). For instance, Parallel Alpha cards have already transacted for a total of 22,600 ETHs since their creation in April. Most of them, 22,162 ETHs, transacted in the past 30 days only.

Cardano’s performance is also matched by Ripple (XRP/USD) this month. Although Ripple is still entangled in legal proceedings with the Securities and Exchange Commission (SEC), it announced on August 10th that a top Korean money transfer company, namely GME Remittance, recently joined Ripplenet. Ripplenet is a network of hundreds of financial institutions with the objective to facilitate cross-border payment and remittance. Its continued growth and its legal fighting stance are certainly giving investors hope.

data taken at 10:08 am 20/08/2021 - coinmarketcap

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The above is an opinion piece and therefore should not be taken as financial advice. Please do your own research thoroughly when looking at Cryptocurrency.
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Thanks @Ali_Wirex for this very impormative topic.

:hugs:

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Wirex token will be a hit on the blockchain on the next years, looking forward for that. :blush::blush:

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