October 7, 2021
A Taste of Altcoin Season – and Some Warning Signs
Introduction
Wow, that was fast: After BTC left the rest of the crypto markets in the dust yesterday, the “king” is taking a well-deserved break today… and what do we see? Some altcoins are popping off, namely DOT, FTM, ANY, and… meme tokens.
Bridge Protocols on the Rise
With the rise of different L1 and L2 ecosystems in the last months, we have seen bridge protocols like Anyswap thrive (exaaactly as predicted 😀).
This is what fundamentals-based investing should look like: ANY’s price has been rising hand in hand with the protocol’s fast-growing volume and TVL.
Fantom’s Ecosystem Is Exploding
A bit in the shadow of Solana and Avalanche, Fantom continues to gain massive traction. Just look at Fantom’s massive TVL growth…
The FTM price is reacting accordingly – another example of fundamentals and price aligning.
Other projects in the Fantom ecosystem are following suit, especially Popsicle Finance (ICE) and SpiritSwap (SPIRIT).
It’s Meme Token Season Again
Yes, it’s that time of the year again, when meme tokens pump like crazy. If you’re a close observer of the crypto markets, your spider senses call for caution right now – since meme token season has more than once preceded a market cooldown.
The most outstanding performer has been Shiba Inu which has been on a tear this week.
Source: U.Today
But other meme tokens are also enjoying a lot of green…
Is a Cooldown Imminent?
After the recent run-up, funding rates on futures exchanges have increased quite a bit. Could we be in for a brief but violent liquidation candle? This is certainly a possibility, however, the amount of people anticipating a shakeout now makes me believe that it might not come just yet…
One way or another, it’s time to be vigilant if you’re a trader. For investors, these short-term leverage-induced hiccups shouldn’t be more than welcome buy-the-dip opportunities. Taking some profits on positions you accumulated during the last months’ “mini bear market” is of course never wrong.
From an on-chain perspective, there is also reason to be vigilant, since we see some profit-taking activity from whales. Nothing to worry about just yet but we have to keep an eye on it.
Putting Things in Perspective
If short-term warning signs make you nervous as a crypto investor, it’s helpful to zoom out a bit and look at the bigger picture: When we look at where crypto has come from and where crypto prices were just a year ago, it’s easy to forget how small crypto still is compared to other assets.
“Breaking into” the financial world as an emerging asset class has been the biggest achievement of the crypto space in 2021. Solidifying and growing the size of the global crypto market will be a glorious theme in the next decades and lead to a generational wealth transfer.
ZK-Rollups Are Coming Faster than Expected!
Ethereum scaling has had a long arduous journey but in 2021 we are finally seeing the fruits of years of labor. With Arbitrum and Optimism, two Optimistic Rollup solutions, we now have two fully functional Layer-2 solutions that help scale the Ethereum ecosystem.
However, the holy grail of L2 scaling are ZK-Rollups. They offer enhanced security and scalability and are a technically superior solution to Optimistic Rollups (if you want to know more about the different Rollup-solutions, check this article)
While everyone thought ZK-Rollups with full smart contract functionality would take a lot more time to build, StarkWare is now pleasantly surprising us with an earlier launch date – something we are not used from the Ethereum developer community. 😉 This is exciting news for everyone in the Ethereum ecosystem!
While ZK-Rollups being just around the corner is exciting, what if I told you that ETH2 is also only months away? 🤯
Get Ready for the First Polkadot Crowdloans
While we don’t know an exact start date yet, signs are mounting that after a successful series of Kusama parachains auctions, Polkadot will be next soon.
Sub0, the biggest conference for Substrate developers, is happening next week, October 13 to 14. Maybe we get some news there…
Crypto analytics firm Messari has estimated how much DOT could be locked up during the first series of Polkadot parachain auctions. And what can you say… it's a lot! $7.9 billion in locked DOT would mean that almost a quarter of the DOT supply would be illiquid for up to 2 years. With progressing parachain auctions this could lead to a severe supply shock!
Model from @MessariCrypto estimates $7.9 billion USD to be locked in the first 10 parachain slot auctions on @Polkadot in support of layer-1 parachains like @AcalaNetwork 🤭 https://t.co/FwjGhAkFZIA model for forecasting the scope of @Polkadot parachains is KSM MC : DOT MC. $3.03B : $32.9B = 10.86 So, we can expect roughly $731M X 10.86 = $7.9B raised in the first DOT 10 auctions. https://t.co/55QFgYwNXy
Nick Garcia⏳ @NDGcryptoOne of the eagerly projects to win an early Polkadot parachain slot is Acala. Check the article below to find out how to get ready for the Acala crowdloan. Securing an early spot could pay off very well with all the anticipation for the project.
Rising ETH Price and Gas Fees Holding NFTs Back
While we have seen times where NFTs rose hand in hand with an appreciating ETH price, more often than not, strong ETH-pumps (coinciding with a rising ETH price) take the wind out of the sails of the NFT space in the short term. This type of “cycle” and interaction between the fungible and non-fungible world has become the new normal.
However, just as during previous “mini NFT bear markets”, low- and mid-tier NFT projects got hit the worst, while blue-chips remain largely unfazed.
… Thread continues
Especially for lower- and mid-tier NFT projects, moving to L2 should be a top priority. On the one hand, this takes some pressure off the congested Ethereum main chain, on the other hand, it would allow for more people to engage in the NFT space.
Avoiding Regulatory Crackdowns with NFTs?
While we haven’t seen any clear regulatory actions in the US yet, in other parts of the world, namely in South Korea, our theory of NFTs evading some of the regulatory crossfire is holding up.
