PTGR AUGUST HIGHLIGHTS
Dear valuable clients,
Please find the following key insights from our aggregated research:
Overall Take-Home Message:
The latter half of 2023 is picking up momentum, and it seems that the cryptocurrency market has done the same. The market has taken a quick reversal and achieved some excellent increases over the month of July after a disappointing month of May that saw hardly any discernible improvements. The controversial XRP litigation, which Ripple has partly won, is responsible for a large portion of this newly discovered energy.
Even while it’s hardly a spectacular success, the SEC found no evidence that Ripple Labs had broken any federal securities laws, which helped the larger crypto market soar throughout the month and isn’t expected to slow down in August. The mild 50 reading on the Crypto Fear and Greed Index indicates that the market is approaching a position of cautious expectation.
The overall crypto market has fared better in July than it did in May and June. Although there was polarity in July, certain cryptocurrencies, like XRP and XLM, saw significant gains while others, like BCH and LTC, trailed behind.
It should be noted that the SEC lawsuit against Ripple Labs, the company behind XRP, was finally resolved in July. It found that Ripple Labs had not broken any SEC regulations when it registered XRP as a security rather than a cryptocurrency, as was contested. The cryptocurrency community expressed great optimism in the wake of this announcement that the market would gradually turn around, allowing winners to improve their yearly gains and losers to make up lost ground from the previous 12 months of trading.
NEWS UPDATE OVERVIEW
1) What happened in July?
The whole cryptocurrency market is swaying from side to side, at ease in small ranges and with rounded curves. After the fallout from the FTX in 2022, confidence in such currencies was destroyed, and the market completely swung downward with no indications of moderating. Major digital currencies like Bitcoin and Ethereum, however, received a new start in 2023, and the crypto market has gradually begun to turn positive as a result of the relaxed macroeconomic environment and declining inflation.
However, the mood of the market has been shifting from “fear” to “greed” and now to “neutral”. The bitcoin market is notoriously unpredictable and volatile in this way. The cryptocurrency market, which showed some degree of firmness and stability last month, is once again exhibiting trepidation as markets are very agitated about the rate rises taking place in the U.S. and their effect on liquidity.
According to CoinMarketCap, the biggest cryptocurrency by market capitalization was now selling for $29,150, down 1% over the previous day.
The U.S. Federal Reserve’s position on interest rate rises is if there is one factor that is really upending Bitcoin and the wider crypto markets. After passing the $31,000 mark, Bitcoin is currently trading in a range that has been condensed, with investors showing signs of apprehensive anticipation.
If we look at the size of the digital market right now, it is $1.18 trillion as of this writing. The two biggest currencies in the world, however, Bitcoin (BTC) and Ethereum (ETH), which were unquestionably at the top of the charts until last month, are now exhibiting few indications of revival. Around the time of writing, Bitcoin is trading around $29,150, while Ethereum is fluctuating at $1,850, seeing a 1% decline.
According to crypto specialists, the situation is terrible right now and recovery will take a very long time. Because most currencies are still far from their all-time highs. For example, Ethereum, which is now trading at levels of $1,800, hit the all-time high levels of $4,000 way back in 2021. Bitcoin, on the other hand, is still more than 50% down than its all-time high level which was achieved in November 2021 at $69,000.
Having said that, the cryptocurrency market has undoubtedly responded favorably to the current state of the world’s financial uncertainties and has managed to stay strong despite tightening credit restrictions and shaky bond market volatility. However, since crypto cannot sail in this boat alone, all other financial assets must share the same sentiment in order to maintain a stable environment.
ETF applications still on full force
A clause aimed against cryptocurrency mixers, currencies that increase anonymity, and organizations that engage in cryptocurrency trading was included in a national defense measure approved by the US Senate.
Republicans and Democrats are blaming one another for the failure to advance a crucial piece of stablecoin legislation in the United States, and Grayscale has written a letter urging the US securities regulator to approve all spot Bitcoin ETF applications at the same time in order to prevent any of them from having a “first mover advantage.”
The $886 billion 2024 National Defense Authorization Act (NDAA) was approved by the US Senate on July 27. The measure has a clause that targets institutions dealing in cryptocurrencies, cryptocurrency mixers, and coins that increase anonymity.
The amendment will particularly call for the creation of cryptography examination criteria. This would aid in risk assessment and ensuring that companies abide by relevant sanctions and anti-money laundering legislation. In addition, it forces the U.S. Treasury Department to conduct a study with the goal of stifling anonymous cryptocurrency transactions. To keep transactions secret, this involves the usage of crypto mixers like Tornado Cash.
The Treasury imposed restrictions on the cryptocurrency mixer Tornado Cash in 2022 and forbade citizens from utilizing it. While the mixer was intended to help users anonymize their cryptocurrency transactions, bad actors often used it to protect illicitly obtained cryptocurrency from hackers and vulnerabilities. The mixer allegedly neglected to implement safeguards that forbade money laundering from criminals operating in the area.
Grayscale calls on the SEC to simultaneously approve all Bitcoin ETFs.
To prevent one from having an edge, Grayscale Investments is pleading with the Securities and Exchange Commission to approve all of the spot Bitcoin ETFs that are now being considered at once. Grayscale’s legal team sent a letter to the SEC addressing eight spot Bitcoin ETF registrations, including its own, stating that the agency shouldn’t choose “winners and losers” and should instead make a fair and orderly judgment, according to a post by Grayscale Chief Legal Officer Craig Salm on July 27. According to the letter, the SEC might approve the spot ETFs based on its approval of Bitcoin futures ETFs since the two fund types are “inextricably linked.”
ETF applications from Invesco, BlackRock, Valkyrie, VanEck, Wisdom, Fidelity, and ARK Invest, which were recently revised to incorporate SSAs with Coinbase, are presently waiting for SEC clearance.
The U.S. Securities and Exchange Commission’s (SEC) approval of a bitcoin spot ETF has the potential to inject an astounding $30 trillion in money into the bitcoin market, according to Bloomberg ETF expert Eric Balchunas. This huge quantity is an indication of the enormous amount of assets that financial advisers in the US are in charge of and that they are keen to invest in a regulated exchange traded fund that will provide them access to bitcoin.
Balchunas points out that the mere presence of BlackRock has greatly raised the anticipated 50% possibility of a bitcoin spot ETF getting authorized.
He emphasizes BlackRock’s intellect and strategic approach, stressing that they do not file applications at random. Their choice to pursue a bitcoin spot ETF demonstrates their keen perception of market dynamics and their conviction that they have a strong concept that will hold up under regulatory scrutiny.
The combined activities of these well-known financial organizations show that bitcoin is being more recognized and accepted as a viable asset class.
If the SEC were to approve a bitcoin spot ETF, it would represent a huge endorsement of bitcoin by conventional financial institutions in addition to offering investors a regulated venue to acquire it.
The flood of money that would follow from such permission might have a significant effect on the price of bitcoin, further establishing it as a popular choice for investors.
2) Where do we stand?
According to a recent survey, Switzerland is seeing increasing acceptance of cryptocurrencies. According to the most recent statistics, one in five Swiss people hold bitcoin.Switzerland became the most crypto-adopting nation in Europe in 2023 with a rate of 21%, which was 3% more than the previous year’s rate and higher than the average for all of Europe. The nation has higher rates of cryptocurrency usage than the Netherlands and Norway (19% and 17%, respectively), according to Statista. With adoption rates of 11% apiece, Sweden, France, and Italy are all farther behind.
The main attraction for blockchain aficionados in the European country is its progressive infrastructure and suitable legislative environment for the cryptocurrency industry. It also features the Zug canton’s Crypto-Valley, which is home to over a thousand blockchain and cryptocurrency companies, businesses, and communities. The area is becoming more well-liked among investors as a result of its advantageous tax rates, accommodating political climate, and advantageous legal system. The crypto-valley of Switzerland underwent a significant reset of its laws in March 2023, mainly in reaction to the many unpleasant incidents that had dogged the industry. Among the circumstances that led to the reset were the collapse of the FTX crypto-exchange, which started in November 2022, and the intense and protracted crypto winter that seems to have ended this year.
Dirk Klee, the CEO of Bitcoin Suisse, enumerated the unpleasant incidents that have occurred in the cryptocurrency industry and highlighted that all of them were solely the product of poor judgments, not technical issues. The cryptocurrency valley changed its stance to create a favorable environment for investments by new businesses, entrepreneurs, and communities. There is now a more welcoming institution in the area for blockchain entrepreneurs.
Not only is Switzerland becoming a pioneer in the use of cryptocurrencies, but it is also showing interest in ChatGPT and artificial intelligence (AI). According to a report released in April, Google searches for the initiative of OpenAI have increased by 3,700%.
With a score of 53, the canton of Ticino is ranked 18th in terms of ChatGPT interest. The top-scoring cantons are Geneva, Zurich, and Basel, with ratings of 100, 93, and 91, respectively. Just in May, Swiss Post released Crypto Stamp 3.0. It’s the third iteration of the stamp set that uses NFTs in both physical and digital versions. These stamps were designed by attendees of the Swiss Digital Days in 2022 using templates made by an AI system that had been taught to make graphics.
In a nutshell, Switzerland has the greatest rate of cryptocurrency adoption in Europe because of its kind regulatory environment, state-of-the-art infrastructure, and low tax rates. This has been greatly aided by the crypto valley’s resetting of the norms, which produced a more hospitable institution for cryptocurrency and blockchain entrepreneurs. Additionally, ChatGPT and AI are growing in popularity in the area. The introduction of Crypto Stamp 3.0 by the Swiss Post, which utilizes NFTs, further underlines the nation’s preparedness to accept the integration of cutting-edge technology in a variety of applications.
3) On Chain Data:
On the market, July has seen a lot of contrast: although some cryptocurrencies, like XRP and XLM, have recovered significantly and posted gains of on average 40%, others have not fared as well. The favorable resolution of the SEC’s action against Ripple Labs, as previously indicated, provided the market some much-needed momentum to recover some of its losses in what has been a somewhat difficult and turbulent year for international cryptocurrency traders and investors.
July might be a turning moment for major cryptocurrencies to reclaim some lost ground because of the strengthening economic climate and institutions investing more money in cryptocurrencies. Let’s start with Ripple’s XRP, which led the larger cryptocurrency market in July. Since the SEC launched its notorious investigation and lawsuit against Ripple Labs in late 2020, it has been a significant pain in the side for the majority of cryptocurrency investors.
According to the SEC, XRP is not a security and should be subject to the same regulations as other cryptocurrencies. After more than two years of litigation, Ripple Labs won a significant win in July, which caused the price of XRP to skyrocket by more than 75%. As was to be predicted, many traders decided to hold onto their funds rather than overextend as the price progressively dropped again, resulting in a gain of 44.6% for the month of July. As a result, 2023 has turned out to be an unexpectedly prosperous year for XRP investors, with the coin’s price rising 86.6% from the year’s beginning.
Next is Stellar, which gained almost 60% in a couple of minutes after the news of the Ripple Labs lawsuit’s resolution reached the market on July 14. Stellar also responded quite favorably to the conclusion of the case. Following a brief decline over the following days, XLM rebounded to the $0.18 level before declining once again. The overall monthly gain for XLM was 38%, translating into a 29% yearly price rise. All things considered, XLM has had a successful year, and with market sentiment improving, the currency may be ready for additional expansion soon.
The SEC revelation in July greatly helped the currency after what has been a difficult year for Solana investors. As we’ve previously said, the Ripple Labs case’s resolution sparked the cryptocurrency market, and Solana was no exception, with a rise of nearly 22% over the course of the month. The price of Solana dropped from $30 to under $23 after the revelation, a decrease of almost 23% from its high on July 14. However, the price decline after the news was clearly apparent. In terms of forecasts, Solana seems to have hit a support level around $22.7, which may be breached in the absence of significant purchasing. SOL may go as low as $20 as a result, virtually wiping out the gains from July 14. In any case, 2023 has been a very difficult year for Solana investors as the currency has fallen by 42% in value throughout that time.
The cryptocurrency market’s improving mood served as a signal for Chainlink bulls to break over the $8 resistance level that had been holding them back for so long. But after pulling off this accomplishment, LINK turned around and returned to the $7.5 region. The trading volume in Chainlink indicates that the bulls are attempting to strengthen their holdings in order to decisively pass over the $8 resistance level, retain their positions for the long term, and prevent further pullback below resistance. Chainlink has increased by almost 16% in July, and its annual returns are now just 7.3%. LINK, nevertheless, earns a position on our list of the top gainers for July 2023 despite the challenging market circumstances of 2023 and has a promising outlook for the short term.
Another major gainer in July was Uniswap, which increased by 16% throughout the month. Contrary to previous entries on this list, Uniswap grew even after the market was informed of the news from July 14. After a reversal on July 24, the price recovered pace and rose beyond $6.50, which brings down Uniswap’s yearly loss to 19.4%. While the year has been challenging for Uniswap investors, a steady uptrend for the whole crypto market may be in the works, which would help Uniswap make up some lost ground in the months to come.
On the other hand, certain long-time favorites, including Litecoin and Bitcoin Cash, have lost almost 18% of their respective values in July. Litecoin’s price decline was brought on by an expected halving event slated for August 2, this year, while the general market trend for other currencies has remained gloomy into 2023. Even while the market overall has experienced more gains than losses in July, some investors have seen their assets’ market values decline over that time.
Litecoin, which lost over 18.6% of its market value during July, is leading the decline. While the cryptocurrency market has been mostly driven by adverse trends since the beginning of the year, Litecoin’s sharp price decline may be related to its impending halving event on August 2. What has changed, though? Simple. The number of coins being mined decreases when a halving occurs, increasing the incentive to mine more coins in the time leading up to the event. This is exactly what has been happening, and the Litecoin whales have been building up their holdings throughout the months of May and June. As some whales choose to collect their profits before halves, the whales’ momentum has slowed, which has caused the price to fall. The statistics for July stand in sharp contrast to those for the whole year for Litecoin, which show a growth of 59%.
Bitcoin Cash has also had divergent monthly and yearly results. Following a severe drop that began on July 14, BCH has lost 18% of its market value. BCH has come a long way from its 2021 low of $86 compared to its yearly performance, which has seen the currency gain almost 82%. Following the drop, BCH has gradually made up some lost ground and is now trading at $237.6. We will have to wait and watch whether this correction is really transitory or if it heralds a larger bearish run on BCH. Analysts, however, believe that this is just a brief and necessary correction after a spectacular year for cryptocurrencies overall.
The Open Network, abbreviated as TON, saw a sharp decline that began on July 22 and led to a monthly loss for the token of over 15%. On the other hand, TON’s yearly performance has been fairly impressive, as it increased by more than 31% during the last 12 months. TON isn’t renowned for closely tracking the overall cryptocurrency market, which might prove to be a trap for investors as the coin loses out on some significant gains made by other coins while thriving in the face of market volatility. However, TON’s strong performance in 2023 could indicate a brief refractory phase, followed by a steady climb over the next months.
Another cryptocurrency that had an explosion on the announcement of July 14 was ATOM, but the coin was unable to maintain its positions for very long since investors were eager to liquidate their holdings and take their winnings home. The currency fell even farther than it had before the news had hit the markets, representing a decrease of more than 10% during the previous month. Although ATOM lost almost 10% during the previous 12 months of trade, its yearly performance is practically comparable to its monthly results.
Polkadot investors’ woes have become worse as the cryptocurrency plunged following the gains of July 14 – escalating yearly losses to almost 33%. It is important to note that Polkadot was able to replicate the high from July 14 within a week, which benefits short-term traders but leaves long-term investors with little cause for hope. Polkadot may be able to reclaim some lost ground if the market as a whole turns around, but as things stand, DOT has been among the worst-performing major cryptocurrencies in 2023.
4) What Could Happen?
After reaching a low of 39% in September 2022, the Bitcoin Dominance Rate (BTCD) has dramatically increased since then. In February 2022, the growth picked up speed, and soon after, the price crossed the resistance level of 48%. The resistance area had been in place for a while, so this escape was essential. Such a persistent resistance level is typically broken by sharp increases. As expected, BTCD climbed to a peak of 52.20% in June. There isn’t a definite horizontal resistance right now. However, there are indications that a potential local top may already be in place.
First off, the weekly Relative Strength Index (RSI) is rapidly approaching a new all-time high and is heavily overbought. Traders use the RSI, a momentum indicator, to determine if a market is overbought or oversold and whether to buy or sell a certain asset. When these levels have been reached in the past, there have been sudden downward swings. Second, BTCD encountered resistance at the 52% Fibonacci retracement level of 0.382 (red symbol). According to Fibonacci retracement levels, the price usually tends to partly retrace to a prior level after making a strong advance in one direction before continuing in that direction. Since the end of June, there has been a decline.
Therefore, it’s probable that BTCD will keep falling until it reaches the 48% level, which might then serve as a support. If this occurs, it will show that other cryptocurrencies might outperform Bitcoin.
However, the way the transaction is now set up suggests that the price may stay virtually unchanged not just until the end of the day, but also throughout the remaining weeks of August. The likelihood that the price will eventually hit the upper important objective of around $35,000 increases now that the market is exhibiting symptoms of a bullish breakthrough. The price of bitcoin is still fluctuating in little bands, but the popularity of the star cryptocurrency has increased. According to Glassnode statistics, the non-zero balance address and other on-chain characteristics are still high, indicating a heightened adoption rate. A new ATH of 47.9 million has been recorded by the non-zero address count, which is interesting.
The number of non-zero addresses has increased, but so have the BTC hash rate and total hashes. Although the new address momentum is still maintaining a consolidated trend, the bulls’ strength is shown by their ability to keep above the lower important support. The long-term owners have likewise flourished beautifully. The quantity of tokens that haven’t been used in the last year, two years, three years, or five years has been skyrocketing, which suggests that participants often keep onto the token for a very long time.
As a result, the likelihood of a negative retreat is decreased and the likelihood of a bullish breakout is increased now that the BTC price is attempting to consolidate gains. As a result, it is anticipated that the August trade will continue high throughout the month. As a result, in August 2023, may hit the temporary resistance at around $31,800 and then clearly increase beyond $33,000.
Disclaimer: All material in this market study, including the thoughts and opinions expressed in it, has been supplied in good faith. Readers must conduct their own due diligence and research. The reader solely assumes all risk for whatever action they may take.
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