14 July 2023

Hello there,

It feels like the good old times. The crypto market is up 6% overnight and everyone is wondering which altcoin to speculate next in. All thanks to a forgotten star – Ripple (XRP).

Ripple’s dramatic classification as ‘not a security’ for retail customers in the US has sent it soaring 60% in a few hours.

Drumrolls 🥁🥁

This wave has hit the ecosystem with Bitcoin crossing $31,000, Ethereum $2,000 and Solana $29.

Today, we analyse what this means for the altcoin ecosystem and, in special focus, Solana and Polygon. We use technical analysis, ecosystem development and regulatory impact in making our case.

Let’s dive in.

Top-3 stories of the week:

1

Google Play has updated its app store policy, allowing developers to incorporate digital assets like NFTs into their games. The revised policy emphasises transparency about digital assets and asks developers to refrain from promoting earnings from trade or play activities.

2

Called POL, Polygon has dubbed the token a "3rd generation token" after Bitcoin and Ethereum. In terms of function, the new Polygon token will let POL holders also become validators within the network, allowing them to validate any number of chains and networks that Polygon is seemingly spawning every day. Importantly, this token is an upgrade from the MATIC token, which will be deprecated as part of the move.

3

Venture capital behemoth Andreessen Horowitz (a16z) has raised the largest-ever crypto venture fund: $4.5 billion. The vehicle, the firm’s fourth, brings a16z’s total crypto and Web3 holdings to $7.6 billion. The launch makes good on a plan unveiled in January, when the company published a now-updated investment thesis predicated on the “power of software” as “the encoding of human thought, and as such has an almost unbounded design space.”

The newsletter is put together by Giottus Crypto Platform. You can read all the previous issues of Cryptogram here.

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WEEKLY MACROS

• Total crypto market cap - $1.26 trillion - UP 7.1%

• Bitcoin price - $31,443 - UP 4%

• The dollar index (DXY) - 99.65 - DOWN 3.4%

• Bitcoin Dominance - 50.12% - DOWN 2.7%

• Crypto Fear and Greed Index - 60 - the market is in greedy state

ICO calendar

• 17 July – HATOM

• 17 July – Spin.fi

THE HOT TAKE

How Ripple’s win will benefit Solana and Polygon?

After a 3-year battle, Ripple (XRP) has won (partially) the lawsuit by US SEC confirming it to be not a security for retail investors in the US market. This is a significant milestone for key altcoins who were termed securities by the SEC last month – especially Solana and Polygon.

Coinbase, US based listed exchange, has announced a restart of XRP trading on its platform as a result.

This month, even before the court’s decision was announced, SOL and MATIC have been doing relatively well. Today we track key trends on these particular altcoins.

1. Strong price action leads to a stronger rally for SOL and MATIC

In the last few weeks, SOL and MATIC have performed considerably.

MATIC broke a key resistance zone and has tested it as support (yellow line) before it zoomed ahead today. It is currently encountering another resistance at its 20-week moving average (MA) that it must breach for continuation of the rally.

SOL, on the other hand, was already trading above its key moving averages and has now zoomed past its previous local high around $25 (yellow line).

The rallies in both assets have been accompanied by strong volume. The euphoria around today may eventually wean but both look good technically in the longer term.

2. Ecosystem development and partnerships have helped their case

The launch of Polygon 2.0, including a new governance token POL that will replace MATIC eventually, has excited Polygon investors. With Polygon 2.0 proposing features and capabilities that are poised to revamp and restructure the entire architecture of the Polygon ecosystem, market sentiments are largely bullish for network developers, Polygon traders, and crypto investors.

According to Santiment, the MATIC whales holding 10-100 million tokens have entered into an accumulation mode. These whales have collectively amassed close to 26 million MATIC since early July.

The catalyst for Solana seems to be their new partnerships and the upcoming launch of Firedancer, a validator developed by Jump Crypto.

Firedancer is highly anticipated due to the immense scalability benefits that it could bring to Solana. In a recent performance demo, validators running Firedancer were able to process more than 1 million transactions per second (TPS), far exceeding the processing capabilities of any blockchain in production today (including Layer 2s). A successful production rollout could position Solana as a go-to chain for building high-throughput, computationally intensive applications.

Solana’s NFT push has got bigger with its partnership with Coca-Cola in Serbia. Solana’s NFT ecosystem has remained a bright spot for the network despite a broader slowdown in NFT volumes. Per CryptoSlam, Solana facilitated $71.4 million in NFT trading volumes in June, the third highest of any network, behind Ethereum and, more notably, Bitcoin, which has seen a rapid explosion in interest with Ordinals. Solana Labs is also actively working on AI tools to aid prospective NFT buyers in deciding which collection best fits their preferences.

3. Regulations are expected to become favourable

If Solana and Polygon get sued by the US SEC, they have Ripple’s case as the example to fight them. The emergence of POL may have been a reaction to MATIC being termed a security. Solana’s devs ruled out something similar (a hard fork).

Now, both communities will be encouraged to spend their efforts on actual development than worrying about its regulatory impact. The US crypto investor base is significant – Ripple’s market cap grew $18 billion in a matter of hours today. The continued trade of these assets in US markets will strength its already strong ecosystem.

Key takeaway

These are promising signs for key altcoins and its investors who have lost a considerable value in the last 2 years. Solana and Polygon are leading altcoins which will benefit from a growing ecosystem in the medium term. However, the impulse rally today may already be in its last leg. A retracement back to lower levels in the upcoming weeks is likely for both assets.

In case you have been accumulating these altcoins – congratulations! Remember to take some profits.

Others, wait for key support levels to grab a position. As always, remember our key strategy – invest most crypto capital in Bitcoin and Ethereum while you dabble with these altcoins.

Disclaimer: Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.

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If you have any questions or feedback for us, write to us at [email protected]. You can check out the previous issues here.