ADA, DOT, ETH, and SOL Weekly Review – A Dovish Fed Delivers

Key Insights:

  • Crypto investor sentiment towards Fed monetary policy took a U-turn, with a dovish Fed rate hike and US economic indicators delivering support.
  • Network news updates were mixed. While Ethereum Merge updates were positive, the Cardano (ADA) Vasil hard fork got delayed.
  • Technical indicators are bullish, with the EMAs signaling more upside ahead.

It has been a bullish final week of July, with US economic indicators, the US Federal Reserve, and US Corporate earnings directing the broader crypto market.

On Wednesday, the Fed delivered a ‘dovish’ 75 basis point rate hike that drove demand for riskier assets. In response to Fed Chair Powell’s forward guidance, hopes of a slower pace of interest rate hikes delivered the shift in sentiment.

US second quarter GDP numbers added further support on Thursday. The US economy contracted by 0.9% following a 1.6% contraction in the first quarter, leading to the markets pricing out a 75-basis point rate hike in September.

At the end of the week, US inflation and personal spending figures left the crypto market flat-footed going into the weekend.

US corporate earnings drew plenty of attention, with Microsoft (MSFT), Walmart (WMT), Amazon (AMZN), and Apple (AAPL) in focus.

This week, Walmart spooked investors with a gloomy outlook before Microsoft, Apple, and Amazon delivered much-needed support.

All three delivered positive earnings outlooks, delivering the NASDAQ 100 the bullish end of the month.

The NASDAQ 100 rallied by 12.35% in July.

There was also more jostling in the SEC v Ripple case, with SEC filing its objection to the court ruling on the Hinman speech-related docs.

However, crypto network updates were mixed in the week. While progress towards the Ethereum Merge continued, the Cardano (ADA) Vasil hard fork got pushed into August.

This week, Polkadot (DOT) is leading the way, currently up 11.22%. While ETH (+6.20%) and SOL (+6.03%) also found strong support, ADA (+3.71%) trailed the pack.

Cardano ADA

For the current week, Monday through Sunday morning, ADA was up 3.71% to $0.5311. A bearish start to the week saw ADA slide to a Tuesday low of $0.4509 before striking s Saturday high of $0.5556.

Steering clear of the May 12 current-year low of $0.3919, ADA struck a new July high before easing back.

For Cardano, the Vasil hard fork delay limited the upside going into Sunday.

On a trend analysis basis, ADA would need to move through the July high of $0.5556 to target the June high of $0.6688.

ADA Daily
ADAUSD 310722 Daily Chart

Looking at the EMAs, based on the 4-hourly, it was a bullish signal. The 50-day EMA pulled away from the 100-day EMA. Following Friday’s bullish cross, the 100-day EMA also broke clear from the 200-day EMA, ADA price positives

A further widening of the 50-day EMA from the 100-day and 200-day EMAs would support a run at the June high.

However, ADA would need to hold above the 50-day EMA, currently at $0.5046, to support the near-term bullish trend.

Crypto ADA bullish EMAs
ADAUSD 310722 4-Hourly Chart

Polkadot (DOT)

Monday through Sunday morning, DOT is up 11.22% to $8.23. Tracking the broader market, DOT fell to a Tuesday low of $6.53 before striking a Saturday and a new July high of $8.84.

News of Moonbeam integrating with Axelar and Osmosis to support token transfers between Polkadot and Cosmos contributed to the upside.

Looking at the trends, DOT returned to $8.80 for the first time since June 11. A breakout from the week high of $8.84 would give the bulls a free run at the June high of $10.73.

In the event of an extended reversal, steering clear of sub-$6.00 and the June and current-year low of $5.99 remains the key.

Crypto DOT bullish
DOTUSD 310722 Daily Chart

Looking at the EMAs, based on the 4-hourly, the signal was bullish. DOT sat above the 50-day EMA, currently at $7.6871. Following the Friday bullish cross, the 50-day EMA pulled away from the 200-day EMA. The 100-day EMA closed the gap on the 200-day EMA, both DOT price positives.

A bullish cross of the 100-day EMA through the 200-day EMA would support a run at $10.00. However, DOT needs to avoid the 50-day EMA to deliver a breakout from 8.84.

Crypto EMAs bullish
DOTUSD 310722 4-Hourly Chart

Ethereum (ETH)

For the current week, Monday through Sunday morning, ETH was up by 6.20% to $1,697. Progress towards the Merge took a backseat this week. Apprehension ahead of the Fed monetary policy decision led ETH to a Tuesday low of $1,357.

The dovish rate hike and US economic contraction in the second quarter drove ETH to a Thursday high and a new July high of $1,788.

However, a pullback going into the weekend has left ETH at sub-$1,700.

For Ethereum, news updates on the Merge will remain the key driver, though price volatility may pick up ahead of US private sector PMIs next week.

Looking at the trends, ETH would need a breakout from the week high of $1,788 to target the June high of $1,972 and $2,000.

However, downside risks remain should developers announce a delay to the September Merge.

ETH bullish
ETHUSD 310722 Daily Chart

Looking at the EMAs, based on the 4-hourly, it was a bullish signal. ETH sat above the 50-day EMA, currently at $1,609. The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA also breaking out from the 200-day EMA, both ETH price positives.

A further widening of the 50-day EMA from the 100-day EMA would deliver another breakout week.

However, a fall through the 50-day EMA could see ETH test support at the 100-day EMA, currently at $1,500.

Crypto EMAs bullish
ETHUSD 310722 4-Hourly Chart

Solana (SOL)

Monday through Sunday morning, SOL is up 6.03% to $43.43. Tracking the broader market, SOL fell to a Tuesday low of $34.68 before striking a Saturday high of $46.68.

However, responding to a broad-based crypto pullback, SOL fell back to sub-$44.

Following the recent Solana Mobile updates, there were no key drivers to deliver additional direction.

Looking at the trends, Solana fell short of the July high of $47.45. A move through the July high would support a run at the June high of $46,10 to bring $50 into play.

For the bulls, a return to $50 would give SOL a free run at the May high of $95.17.

In the event of another extended reversal, avoiding sub-$25 and the June and current-year low of $24.84 remains the key.

SOL bullish
SOLUSD 310722 Daily Chart

Looking at the EMAs, based on the 4-hourly, it was a bullish signal. SOL sat above the 50-day EMA, currently at $40.95.

The 50-day EMA pulled away from the 100-day EMA, with the 100-day EMA breaking clear of the 200-day EMA, both SOL price positives.

The 50-day EMA would need to widen from the 100-day EMA to bring $50 into play.

However, SOL must avoid the 50-day EMA. A fall through the 50-day EMA would bring the 100-day EMA, currently at $40, and sub-$40 into play.

Crypto EMAs bullish
SOLUSD 310722 4-Hourly Chart

How Germany and the US Lead the World as Most Crypto-friendly Nations

Key Insights:

  • Global crypto adoption rose by over 880% in 2021. 
  • Germany and the US scored strongly across multiple metrics due to progressive regulatory environments and increased institutional adoption.
  • Switzerland came in third place, while Singapore ranked fourth having fallen from its top spot at the end of 2021. 

The adoption of cryptocurrency resembles the adoption of any other technology. The rate at which adoption occurs is gradual until there is an explosion upwards to mass adoption, exemplified by the “gradually, then suddenly” adage that is frequently cited when technological shifts take place.

Crypto went firmly mainstream in 2021, with many labelling this as the breakthrough year for the industry, as we saw increased global regulation, heightened institutional adoption and by November, the sector had reached a $3 trillion market capitalisation.

As such, global crypto adoption rose by over 880% in 2021, according to research conducted by Chainalysis and as of 2022, TripleA estimates that there are over 320 million crypto users worldwide. Which country leads the pack? Well, there’s two in fact.

According to Coincub’s latest quarterly global cryptocurrency rankings, Germany and the United States share the top spot as the most crypto-friendly nations on earth.

Joint First Place

While Germany topped the first quarter rankings for this year, the U.S. has risen to tie for first place. Both scored strongly across multiple metrics.

Their success in becoming the two most crypto-friendly nations on earth stems from progressive regulatory environments and significant Bitcoin (BTC) investments by mainstream institutions.

For example, Germany’s move to implement a zero-tax policy on capital gains of Bitcoin and Ethereum (ETH) held for more than a year has propelled it forward to the top of the rankings.

The U.S. moved up from third place to share the top rank due to President Joe Biden’s Executive Order on Ensuring Responsible Development of Digital Assets that was signed in March this year. The directive helps to create a path toward the regulatory clarity needed for mass institutional adoption of digital assets, whilst guaranteeing responsible development of the space and providing consumer protection and financial stability.

Biden’s order also tasks the Financial Stability Oversight Council (FSOC) to investigate illicit financial activities and puts urgency on the possibility of a new government-issued central bank digital currency (CBDC).

What’s more, Coincub cited Fidelity’s decision to include Bitcoin exposure as part of select American pension funds as a crucial reason why it climbed up the crypto rankings. More specifically, in April Fidelity became the first leading provider of retirement plans to enable such access to digital coins in the United States amid growing demand for cryptocurrencies.

Coincub’s rankings tally up points across nine overall categories, which focus on government, financial services, population, taxation, talent development and industry participants, trading, fraud and environmental potential. However, they have introduced new sub-categories too like crypto education courses and initial coin offerings (ICO) to offer a more comprehensive gauge.

An Exemplary Country

Although the U.S. has newly risen to the top spot, Germany has dominated this position due to a move by financial services firm Sparkasse that enables 50 million users to buy Bitcoin directly from their bank accounts.

Germany’s Finance Ministry also released new cryptocurrency tax guidelines in May this year which stipulates that there is no tax payable on gains from BTC and ETH sold 12 months after acquisition if a profit is made.

This means that tax practitioners, businesses and individual taxpayers now have clear direction on tax requirements for acquiring, trading and selling cryptocurrencies.

Overall, Germany has taken a proactive approach to cryptocurrency regulation and oversight after it adopted a national blockchain strategy in 2019. The purpose of this strategy was to harness the technology’s potential for advancing digital transformation and to help make the country an attractive hub for the development of blockchain, Web3 and metaverse applications.

In addition, since January 2020, any business (including exchanges and custody platforms) wishing to offer cryptocurrency services in Germany must first seek approval from the Federal Financial Supervisory Authority (BaFin). This licence scheme ensures that businesses operate at the same standard as traditional  financial service providers.

Findings

Overall, Coincub’s report placed Switzerland, which is home to more than 1,000 blockchain and virtual asset service providers (VASP), in third place, while Singapore ranked fourth, having fallen from its top spot at the end of 2021 due to increased regulatory restrictions introduced by the country’s financial regulator and the central bank.

Australia rounds off the top five of Coincub’s crypto rankings due to its high number of initial coin offerings, exchanges and transaction volumes, as well as numerous universities offering blockchain and crypto educational courses.

Coincub’s rankings combine quantitative data including trading or mining volumes with qualitative elements like government legislation and institutional attitude towards cryptocurrencies.

The Rise of Axie Infinity and the P2E Phenomenon

Key Insights:

  • Axie Infinity has become the highest-grossing non-fungible token game on the market. 
  • Last week, the project generated $1.3 million worth of sales from a total of 23,100 buyers.
  • Collective technology adoption coupled with an uptake of smart phones has fuelled an organic rise for Axie Infinity. 

It’s the chart-topping game that took the world by storm, reaching a market capitalisation of nearly $3 billion at the start of this year – Axie Infinity is the play-to-earn (P2E) phenomenon that has become the highest-grossing non-fungible token (NFT) game on the market.

Indeed, NFT-centric games have been around since 2017, with CryptoKitties being a pioneer in the field. Yet, P2E did not start gaining traction until much later when NFT games finally entered the mainstream.

In particular, the coronavirus pandemic introduced several economic, market and technological shifts, with the most pivotal being that consumers have changed the way they approach investing and asset ownership.

Collective technology adoption coupled with an uptake of smart phones has fuelled an organic rise for Axie Infinity and the play-to-earn phenomenon at large, where the amalgamation of blockchain, NFTs and digital currencies has led to complete ecosystems where assets are bought, traded, leveraged, and even borrowed against.

A New Virtual Labour Force

At its core, the P2E model enables participants to earn money by playing games but the underlying element to this is that such a framework opens up a new monetisation model that can change the way games generate revenue.

For instance, players can trade Axies for real money on the game’s marketplace and generate profit, while the project’s virtual economy is dominated by two cryptocurrencies; Smooth Love Potion (SLP) and Axie Infinity Shard (AXS). Notably, Axie quality increases in rarity with one rare mystic Angel selling for 300 Ethereum (ETH) or $130,000 in 2020 –  the most expensive Axie ever sold.

Where P2E games really excel at is in providing opportunities to low-income workers who lack financial mobility. As such, P2E has exploded in the Southeast Asia market where some Filipino or Vietnamese residents, for example, were making more money each month through blockchain-based games than they were in their pre-pandemic jobs.

The extraordinary uptake of Axie Infinity coincides with the ease of accessibility offered – all you need is a smartphone or computer with internet connection to enter into the metaverse and earn in-game rewards or engage with virtual communities that span continents.

This widespread inclusion means that even workers in low-income areas can participate in the democratisation of labour and finance. Some may even call it a new virtual manufacturer labour force.

Exponential Growth

While its virtual financial ecosystem has demonstrated demand, capability, and utility outside of traditional investing methods, Axie’s statistics speak even greater volumes. Last week, the project generated $1.3 million worth of sales from a total of 23,100 buyers – a 205% leap.

Yet, this is a small fraction of what Axie Infinity was selling last summer when it regularly topped $100 million in weekly sales.

The project launched staking support this month which would explain the recent heightened appetite for Axie Infinity Land NFTs. The staking feature enables Land owners to earn weekly rewards in the game’s native AXS token and roughly 91% of the 16,794 circulating supply has already been staked.

Another contributing factor is that the Ronin bridge relaunched on June 28. The bridge is a sidechain built for Axie Infinity which enables users to transfer assets between the game and the Ethereum mainnet.

In June 2021, the game generated nearly $780 million in sales within 30 days and the following month, it generated more fees than Bitcoin (BTC) or Ethereum during a seven day period.

In fact, further growth is expected since the project has launched its second phase of upgrades to its new game mode dubbed Origin, which boasted 600,000 sign-ups as of June. Origin is in early access mode ahead of an eventual global launch and implements a new battle system, visual upgrades, as well as other enhancements.

Origin, which enables users to collect, trade and battle each other with their playable Axie monster NFTs, has seen increased downloads with 90% of Axie Land owners having staked their NFTs to earn AXS tokens.

Overall, this model where players earn unique NFTs or cryptocurrency for participating in a game, as well as turning these rewards into real money and generating revenue, has transformed the gaming landscape. It has even given birth to the play-to-trade model where gamers earn a token and either sell or trade it for real money.

No longer can critics label P2E as a fad technology. If NFT sales figures are anything to go buy, Axie Infinity is only set to rise further. The game has opened doors to a new world of financial inclusion that did not exist a few years ago and as its metaverse ecosystem continues to expand with a transition to Origin, Axie Infinity will leave its imprint on the gaming industry, with P2E to thank for such a feat.

The Case Against Crypto: How Backlash is Growing

Key Insights:

  • Amidst the crypto market crash, sceptics have doubled down on their critique.
  • Bill Gates suggested that crypto and NFTs are shams based on a greater fool theory.
  • Warren Buffet and Christine Lagarde have labelled crypto as having no value. 

Crypto sceptics, or crypto catastrophists if you will, have been around since the advent of Bitcoin. They moan about BTC‘s ostensible worthlessness and band together in order to convince the world that crypto has no future as an industry mired with hacks, tax evasion and money laundering.

Amidst the turmoil of the crypto market crash, however, sceptics have doubled down on their critique.

Yet, there is a lot to say about an industry that achieved mass adoption, mainstream legitimacy and a $3 trillion market capitalisation in less than ten years – with no institutional backing, may I add. The usual spiel is that crypto has revolutionised and restructured outdated financial systems and increased financial mobility for the underbanked and unbanked. But, this isn’t a spiel because it’s true.

While the crypto sceptics’ voices get louder, real financial use cases have emerged. The fact that a labourer in El Salvador can pay his electricity bill instantaneously, avoiding the three hour arduous bus journey he would have had to take without the possession of a crypto wallet, proves that digital assets have real-world utility and value. But it’s rare to come across stories like this because we have been inundated with criticisms. Let’s take a deeper dive into what constitutes the current case against crypto.

Warren Buffet 

If you were new to crypto and came across the likes of Warren Buffet labelling Bitcoin as a “delusion” that only “attracts charlatans”, you may want to head for the hills. Yet, this is just one of the many attacks the long-time crypto critic has launched against Bitcoin.

During Berkshire Hathaway’s annual shareholders meeting in May, the world renowned investor said that he wouldn’t buy all the world’s Bitcoin for $25. Back in 2020, he labelled BTC as a “non-productive asset” during an interview with CNBC where he declared that cryptocurrencies, in fact, have no real value.

His major criticism is that although Bitcoin is intended to provide real value as a payment system, that use is still limited because its value simply originates from the optimism that someone else will be willing to pay more for it in the future than you’re paying today.

As some institutions flip flop on adoption and retail investors bear the brunt of Bitcoin’s price swings, one thing is certainly clear; Bitcoin has value. Put into perspective, in 5,000 years, gold went from a nickel to $1,850. In 10 years, Bitcoin went from zero to $57,000. The numbers say it all and upon closer examination, any asset that can skyrocket from $40,000 to over $60,000 in the space of a few months is worth paying attention to.

Bill Gates

Another prominent sceptic is Microsoft co-founder Bill Gates who once packaged the entire crypto movement as simply “mania”.

Last month, he suggested that crypto and non-fungible tokens (NFT) are mere shams based on a “greater fool theory”. This reference alludes to the notion that investors can make money on worthless or overvalued assets as long as people are willing to bid them higher.

Gates, who prefers old fashioned investing, added that he is “not long or short” on crypto whilst mocking Bored Ape Yacht Club (BAYC) NFTs as “expensive digital images of monkeys” that do not “improve the world immensely”.

He added: “I’m used to asset classes, like a farm where they have output, or like a company where they make products”. This is often the case with cryptocurrencies whereby people mistakenly link tangibility with utility – a rookie error in a world that is increasingly moving towards digitisation.