A monthly review of what's happening in the crypto markets enriched with institutional research on the most important topics in the industry in cooperation with the Swiss digital asset specialist, 21Shares AG.
August was a breezy month for altcoins; namely, Cardano (ADA), Solana (SOL), and Terra (LUNA) are breaking new highs, picking up where they left off since the market crash in May. While they’re doing better than the previous month, Bitcoin (BTC) and Ethereum (ETH) are still lingering below their peak levels. In other news, the non-fungible tokens (NFTs) are once again turning heads after electronic payments giant Visa made its first swipe on the cryptoasset when they bought one of Cryptopunks’ digital portraits for 150'000 USD.
The smart contract race
Dubbed “Ethereum Killers,” Cardano, Solana, and Terra are out to get Ethereum. These altcoins, which are essentially open-source blockchain protocols, are on a mission to take away from ETH’s market share. They plan to do so by capitalizing on improving at least one of Ethereum’s main shortcomings, that Ethereum itself is aiming to fix through a series of upgrades. While these upgrades are by nature expected to take a long time, they’re taking longer than planned. Ethereum’s Founder Vitalik Buterin said that while they thought the ETH 2.0 would take one year, they found out it would actually take six. These upgrades are expected to fix the volatility issue of gas fees, network speed and energy consumption via the Proof of Stake migration.
What does that delay mean for the killers in the smart contract race? It only buys more time for the altcoins towards the finish line. On this front, these are a few highlights of how things developed this month:
- Cardano, now the third largest token in the world with a market cap of over 90 billion USD, announced it will launch its smart contract functionality on September 12th.
- The currency that has only been around for 18 months, Solana, comes in eighth in the crypto market game with regards to market capitalization. It just reached it’s all-time high of 124 USD on August 31st, which made it quadruple in price in just one month.
- Terra on the other hand also reached its all-time high of 36.61 USD on August 29th, thanks to Solana’s Wormhole project opening a cross-chain pipeline between both SOL and LUNA which boosted confidence in the latter.
- Also capitalizing on NFTs and dApps, the smart contracts platform Avalanche saw its native cryptocurrency AVAX double in price by mid August. Moreover, the Avalanche Foundation is offering 180 million USD in liquidity mining incentives to bring more apps into its DeFi ecosystem. Avalanche has committed 20 million USD of its native token for Aave users and 7 million USD for Curve users over a three month period.
As mentioned in our latest newsletter, we at 21Shares believe this rise of Layer 1s outside Ethereum is predominantly driven and hyped by retail investors. Our research team believes the narrative will shift as Ethereum competitors continue to grow and the need for blockchain interoperability starts to surface.
The rise of non-fungible tokens (NFTs)
Following a burst of interest in the booming NFT (non-fungible tokens) market, trading volumes on the biggest NFT marketplace OpenSea have reached stratospheric heights for the month of August - according to an official announcement, OpenSea recorded a monthly sales volume of over 3 billion USD. This record-breaking volume outnumbers July's 325 million USD by more than 900 percent, indicating an exponential growth in NFT demand throughout the month.
These are the most important events that took place in the NFT market in August:
- Budweiser, the American beer company, bought an NFT of a rocket designed by NFT platform Rocket Factory, which they instantly turned into their new Twitter profile picture. In addition to that, they purchased a crypto domain name, Beer.eth, which indicates they might be incorporating NFTs in future marketing initiatives.
- Visa, the financial services giant, joined the NFT mania after announcing that it has bought a CryptoPunk 7610, one of 3'840 female punks, for around 150'000 USD. Following in the footsteps of early paper credit cards and zip zap machines, the decision to purchase the CryptoPunk artifact can be seen as a sign of approval for the role that NFTs could play in the future of commerce.
- Stephen Curry, the American professional basketball player, entered the NFT game by acquiring a Bored Ape Yacht Club (BAYC) NFT for 55 ETH (~180'000 USD).
- Sotheby’s, the famous auction house, announced that they will auction 101 Bored Ape Yacht Club NFTs for an estimated 12 million USD to 18 million USD. The digital collectibles will be available for online purchase from September 2-9.
Monthly crypto returns
Top performers of this month were the 4 "Ethereum killers" Solana, Terra, Cardano and Polkadot. The returns of the top 15 assets by market cap - excluding stablecoins - over the last month were as follows: Bitcoin (BTC) +13.37%, Ethereum (ETH) +35.37%, Cardano (ADA) +109.78%, Binance Coin (BNB) +39.21%, Ripple (XRP) +58.67%, Dogecoin (DOGE) +30.95%, Solana (SOL) +199.89%, Polkadot (DOT) +87.46%, Uniswap (UNI) +35%, Terra (LUNA) +192.17%, Chainlink (LINK) +17.03%, Bitcoin Cash (BCH) +15.88%, Litecoin (LTC) +18.23%, Internet Computer (ICP) +51.32%, Polygon (MATIC) +23.85%.
