Crypto market update: 3nd week July 2020

In previous articles we have highlighted that the BTC price has lost its volatility and has anchored near its $9,000 support line against many miners' predictions that it would increase after May halving. In response to this expectation, investments in equipment for BTC mining have increased sharply, although the volume of traffic began to fall, possibly due to the transmission of disruptions from traditional markets and the pandemic crisis. At the present it seems that it is cheaper to mine Etheriums than Bitcoins and this situation was extending since several weeks ago.

The correlation between the BTC and the “Standard & Poor's index, which is currently 95%, can be one of the reasons why the disturbances from traditional financial markets were transmitted to the crypto markets. Another very interesting index is “the Fear and Greed index which, according to analysts, is staying at the crypto side more than at the traditional financial side. This may explain the falling bitcoin prices and the classic altcoins’ ones such as Etherium (ETH) and Bitcoin Cash (BCH) which have lost 5% and 8% respectively.

Another possible reason why to explain what's happening with the price of bitcoins may be because of the massive hacking that has been carried out against the social media platform Twitter where it has placed scams on the twitter accounts of high-profile people such as Elon Musk, Joe Biden and Bill Gates asking for donations of bitcoins with a promise of returning double. Unfortunately, many greedy investors wanted to take advantage of those false promises and sent more than US$ 100,000 in BTC to the specified addresses with the hope of having such incredible reward in return. Hackers accessed more than 130 twitter accounts and demanded for ransom in about 45. A widespread scam given the lack of prudence of many investors.

The altcoins with the best performing last week despite the general downturn are as follows Tezos (XTZ), Waves (WAVES), Stellar (XLM), ZCash (ZEC) and Cardano (ADA), with a good performance and interesting increases exceeding 20% respectively and in order of increasing values as shown in the table below.

Tezos (XTZ) reached its highest value on July 15 at US$ 3.30 and is preparing a roadmap for future milestones and developments, while also announcing the launch of its new non-custodial mobile wallet called Magma. Although its "White Paper" was published in September 2014, its ICO was not offered until 3 years later in 2017 raising about USD 232 million at that time and its beta network was launched in July 2018. We will talk more about this token in coming articles since it has very interesting features and promising future. 

Waves and Stellar have not been left behind with a remarkable performance, also exceeding 20% revaluation. Behind Waves' rise it could be the fact that its CEO, Alexander Ivanov, sold his shares in the Smart City Data Management project to Mark Garber, enabling Waves to open an office in Berlin. In the Stellar case, after issuing the 2nd semester report highlighting its upgrade that offers lower transaction costs, better assets control, and improved account categories, the price of its native cryptocurrency just went up to 20%. It is also preparing business investments in platforms such as Abra and SatoshiPay. 

Below we briefly introduce some of these reasons that reflect the health of crypto market despite all the distortions experienced:

  • One of the most significant is the growth of active bitcoin wallets which has reached an unprecedented level since July last year.
  • The institutional demand for the main cryptocurrency is comparable to gold-backed EFTs. We also have a correlation between the gold and BTC market. We talked earlier about the correlation of the BTC with the S&P index, because that correlation is also growing regarding
  • The rise of decentralized finance platforms (Open Finances) such as DeFi which has experienced its peak last week of "locked balances" in crypto-lending with more than US$2 billions that were recorded in that platform according to DeFi Pulse, reflecting its enormously growing popularity.
  • A Great boom of bitcoin traffic in countries with monetary problems like Argentina that experienced a growth of 700% during the pandemic, as expressed by SatoshiTango founder, one of the most prominent exchange in that Latinamerican
  • Stablecoins and Open Finances at Defi have also made the number of active wallets in Etherium increase according to Coin Metrics.

Therefore there are reasons for a moderate optimism regarding the crypto market although there is still fear rather than greed according to the Fear&Greed indicator. Many projects and cryptocurrencies in the industry are making interesting moves and developments and new altcoins are entering the crypto scene with increasingly interesting and high value-added projects, while big cryptos are maintaining a low-volatility.