Dear Friend,
June was a big month for the crypto market, with a number of developments from high profile projects and of course violent price swings.
At one point you could see bitcoin up over 10% on CoinMarketCap, at another you could see it down 20%.
The alt coins have been battered a fair amount during this volatility storm, creating attractive opportunities.
The upswings in BTC seem to have motivated people to reallocate capital towards the crypto major, while downswings resulted in frenzied bloodletting across the alt spectrum.
However, logic dictates that once bitcoin is able to establish a bull market and consolidates, the alts will start to catch up as they have done in the past. With attention grabbing news abound for projects, summer is set up to be anything but boring.
Market Analysis
Bitcoin continues to control the narrative, expanding its market dominance as the first summer month progressed. The market appears to be controlled by crowd stampedes - everyone buying then everyone selling then everyone buying again, with much after the fact rationalization.
The "one coin to rule them all" bitcoin enthusiasts basked in the troubles of the altcoins. However, with bitcoin growing so rapidly altcoins have started to look more attractive.
Bitcoin dominated the headlines during the month of June, surging past the psychological $10,000 level, before eventually meeting strong technical resistance within touching distance of the $14,000 level. Bitcoin also continued to outperform its nearest rivals, as it captured just over 63.3% of the entire market at its monthly peak.
The market capitalization of entire cryptocurrency market topped-out at around the $386,700,836,153 in June, which was much improved on the previous month's high of $285,000,00,000.
It is also worth noting that while the crypto market cap is trending higher, it still trades well below the all-time high, of $800,000,000,000, which was set at the start of 2018.
Bitcoin had a tentative start to the trading month, as it slipped back towards the $7,500 level, before settling back into its groove once again. The number one cryptocurrency then started to look rock-solid around the $9,000 level and eventually sliced through the $10,000 resistance barrier with relative ease.
The BTC/USD pair is now appearing increasingly comfortable in its overall uptrend and continuing to hold price above the $10,000 level. Bargain hunters are likely to stalk the cryptocurrency if we see any technical dips towards the $8,800 to $8,000 levels. The overall uptrend in the BTC/USD pair is in relatively little danger while price trades above the $6,500 level.
The move higher has also created a notable bullish pattern on the daily time, which suggests that the BTC/USD pair could be headed towards the $16,000 level, while a slightly larger bullish pattern points towards the $18,800 level as a possible target. A breakout above the $14,000 level may be the trigger needed to prompt the next wave higher in the BTC/USD pair.
Ethereum largely tracked Bitcoin to the upside this month, as it continued to outperform its nearest rival Ripple. Ethereum briefly moved above the $350.00 level, before slipping back toward the $300.00 level as traders booked profits. The ETH/USD pair shows strong upcoming support around the $280.00 level, which may attract dip-buyers. Analysis across the daily time frame still favors a move towards the $500.00 level over the medium-term.
Litecoin continued to grind higher, but not to the extent which many cryptocurrency traders and investors may have expected. The LTC/USD pair gained under ten percent on the month, after a fairly severe late month reversal. Bullish patterns littered across the daily time frame still project an eventual move back towards the $200.00 benchmark over the medium-term.
Chainlink had a fantastic monthly performance, as it raced to a new all-time price high and added over two hundred percent to its value on a monthly basis. The emerging cryptocurrency had gained close to four-hundred percent at one stage, before pulling back, leaving a bearish reversal candle on the daily time frame, which suggests that an interim top may be in place.
QTUM also deserves a mention, following an exceptionally strong monthly performance, alongside ZCash.
0X and Steem were amongst the worst performers, as they continued to slide down the rankings board.
Look ahead for the month of July, the cryptocurrency market may start to settle into a period of consolidation before the next directional move takes shape. Given that the market is trending higher, technical pullbacks may be fast and furious as players scramble to get back on the crypto bull ride.
Overall, Bitcoin is increasingly likely to lead the pack higher, given that it is currently trading in top-form and still shows considerable upside potential on the charts to further cement its position as the undisputed number one digital asset.
What is different this time The bull and bear cycles are not new to the crypto market and bitcoin in particular. Despite the painful nature of the crypto winter it was not the first time the price took a prolonged tumble, just the most publicized.
However, while the bear market may have been typical the recovery is offering signs that the space is taking a step forward.
Three things make this run up different.
1 - First, traditional blue chip companies, including once-vocal critics like JPMorgan, have become willing participants in the industry. While purists may want to discount centralized players, they bring an enormous amount of resources and awareness.
2 - Second, smart money is starting to jump in. The anticipation of Bakkt and the hope of an ETF are helping to cajole investors into putting money into the market. Naturally, Bitcoin is the first to see the benefits, but as Grayscale was noting after Q1, we may be seeing a "risk-on" move, which should be good news for altcoins.
3 - Lastly, projects are starting to deliver milestones as the space is looking to start moving from speculation to usage.
The other elephants in the room
While there is no escaping the fact that Bitcoin's price moves have a deep impact on the market as a whole it is not the only systemically important component of the crypto market. Key exchanges and custody players can make or break the day just as much.
This was especially evident when Binance has announced that it will no longer be servicing US clients. The news precipitated a wave of BNB selling with the asset dropping over 10% of its value. Alts were hurt and there was talk of people selling and converting into bitcoin in order to transfer out assets.
BNB Price and Market Cap (via Coinmarketcap.com)
Price recovered quickly as the market began to factor in the launch of Binance's US branch and the DEX opportunities, with BNB even crossing the $39.00 mark. Still, the situation made it painfully obvious that for all of the centralization talk and the opposition to big banks, the crypto industry has started to produce its own "too-big-to-fail" institutions.
On the other side, Coinbase is continuing to expand its services. The Coinbase Card is now available in Spain, Germany, France, Italy, Ireland, and the Netherlands, as one of the key gateway portals in the crypto ecosystem becomes more useful for consumers. As Coinbase expands the utility of its offerings, the value of its listing will continue to grow.
Much like the Binance effect we may see the Coinbase effect get more attention, especially after the meteoric rise of Chainlink following the listing announcement.
With Binance venturing out into US and setting up fiat ramps and Coinbase making a push into Europe we may start to see more direct competition between the two. However, what is already evident is that these two private centralized entities, hold an enormous amount of sway over what happens in the crypto market.
The Facebook question
All of the conferences, media publications and office watercooler chats of the later part of June, have in some way touched on the new Libra project. Some who have reviewed the whitepaper have denounced it as too centralized. The Founding Members of the Libra Association also bring about visions of centralization. Then there are regulatory and financial issues that could potentially generate more than a fair share of risk.
Moreover, with the number of scandals involving user data that Facebook has been involved in, it is hard to trust it as a champion of user privacy and individual control of data.
Optimist believe that despite its limitations, Facebook could become a gateway into crypto the likes of which the industry has not seen. After all, with 2.3 billion monthly active users Facebook has something most projects can only dream about.
Yes, according to a recent Coinbase survey, crypto awareness is growing in the US. There is already talk of Libra being listed on Binance and Binance potentially getting one of the permissioned nodes. However, there is still a big gap between knowing about crypto and using it. Facebook may be the antithesis of the crypto ideals, but it may still be able to serve as a catalyst for the industry.
The new (and not-so-new) projects One of the most anticipated blockchain projects of the year has been Algorand. Touting one of the most acclaimed academic teams in the space, and developing their product without much fanfare, the project has garnered a lot of expectations. It has emerged at a time when the time when new layer 1 projects looked to have been a thing of the past - and yet it still made a splash.
The project was able to successfully execute a Dutch Auction, selling 25 million coins at a clearing price of $2.40. The maximum supply for the project is capped at 10 billion, putting the fully diluted valuation of the project $24 billion.
(By comparison, Cardano, a comparable PoS project, with a maximum supply of 45 billion ADA, is looking at a fully diluted cap of $3.76 billion.) Cardano's Shelley update has been on the way for a long time, so one has to ask if they have missed their moment, or if they are getting things ready just in time.
Other long-running projects have started to make some noise as well.
Polkadot has supposedly completed its token sale, which could be a welcome sign for a once hyped project.
NEO, a project once considered to be a serious threat to Ethereum appears to be coming alive with a renewed focus on the developer community. Making life simple for developers has been a common theme for younger projects that are looking to bootstrap their ecosystem. It is encouraging to see an older projects adopt a similar approach.
As the effects of the crypto winter are starting to wear off, the narrative that 2018 was the year of quiet development is becoming more prevalent. The market appears to be eager to reward major milestones with a run-up in price, but the projects still need to deliver.
Speaking of projects delivering... :)
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Elsewhere, unfortunately the scammers are back
As the crypto market has started to heat up, the value proposition of illicit activity has also increased. Scams and hacks of all varieties are appearing in alarming quantities. There is the Monero botnet, which uses malware to hijack devices for mining purposes. With the rise in value of ASIC resistant networks these attacks may grow in numbers.
There were also SIM swap attacks. With the growing amount of value being tied to an individual's phone number it may be helpful for consumers if the telecom companies companies make it more difficult for something like this to occur. Two factor authorization was meant to make accounts safer not isolate a point of attack for malicious actors.
There were also more targeted attacks, like the one using the Firefox zero-day to target Coinbase employees and other crypto organizations. With centralized entities playing such a vital role in maintaining the operational state and health of the ecosystem, potential security vulnerabilities become that much more of a risk factor. This was again underscored by the hack of Bitrue. It is also interesting to note that despite continued loss of value from attack on centralized entities, DEX adoption continues to be timid.
Smaller networks continue to be a target for attackers. Recently, a malicious actor(s) exploited a bug in the Waltonchain code to mine many blocks at the same time. While the code was fixed, a roll back was required, which is hardly encouraging for a developing platform in this space. Over the past months news of network attacks have become more frequent. If alt prices continue to struggle the security concerns may only be exacerbated.
Finding numbers that you can trust There is a saying that "numbers don't lie", but in the crypto industry that has been proven to be... well, untrue.
With wash trading being a widespread phenomena, ecosystem are dedicating more resources and effort at identifying trustworthy parties. For example, CryptoCompare launched an Exchange Benchmark based on 7 weighted components.
CoinMarketCap, an industry staple when it comes to key market metrics has been moving forward with its Data Accountability & Transparency Alliance efforts. Phase 1 was completed with over 70% of the exchanges listed on the platform, complying with the new data collection requirements. While there is a lot of work left to be done, it is encouraging to see self-regulation efforts from key industry players.
(We would also like to note that Crypto Briefing has joined CoinMarketCap's DATA Alliance as their first media company partner. We will be working with all the participants in this Alliance to help drive more transparency and more accuracy in the industry. It's a proud moment for us!)
Similar issues are present in the dApp space. As the AnChain.AI report on bot activity on EOS gained awareness, there has been more discussion on the health of dApp ecosystems in general. With on-chain transactions becoming an important metric when it comes to evaluating projects bot activity on the networks becomes very dangerous. The statistics may be masking ghost networks.
Similar to the Bitwise report on fake volume, the report on bot driven dApp activity did not surprise many. However, it may serve as a necessary catalyst for industry players like DappRadar and State of the Dapps to move towards instituting quality standards in the space.
What does this all mean The crypto market is still very volatile and fragile. Bitcoin's surge while inspiring has been too quick and damaging for the alt market. The space is still in the midst of building a solid foundation for future growth, but speculators want to see quick profits now. These growing pains are to be expected given the history of this market.
Still, it is encouraging that the industry is starting to focus more on self-regulation and adoption. With major players from traditional markets entering into the crypto space and looking to leverage their customer bases, the question of real usage can no longer be ignored. For some time bots have been used to simulate real activity, be it trading or on-chain. However, soon keeping up an appearance will no longer be enough.
These issues are not new, but the fact that they are being highlighted and addressed shows maturity. It is a sign that tangible projects will start to get more attention and fundamentals will matter more and more.
The change will not happen overnight. Speculation will still be rampant and malicious actors will continue to attack while the prospects of profit are high.
What is important is that we are slowly starting to see the key question change from what projects may do in the future, to what are they doing now.
When that shift becomes more apparent we will see the industry take the next step.
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June Crypto Roundup (And What To Expect In July)