After a brief attempt to recover, Bitcoin has fallen below $27,000, while Ether has decreased to $1,550. In the past week, the second-largest cryptocurrency has experienced a decline of 5.2%, contrasting with Bitcoin’s slight drop of 1.4%. Currently, Bitcoin is trading at $27,280, marking a 66% increase year-to-date (YTD), while Ether is priced at $1,576, representing a 32% gain this year. The underperformance of Ether relative to Bitcoin can be attributed to several factors, including recent sales of ETH by the Ethereum Foundation and a lack of excitement regarding Ether futures ETFs. Furthermore, a considerable increase in the cryptocurrency’s supply over the last month, driven by decreased transaction activity, has led to a reduction in the burning of Ether.
As a result, Bitcoin’s market dominance has risen to 51.2% as of Tuesday, nearing its 26-month peak of 52% achieved at the end of June. In positive news for the sector, Bitstamp, a crypto exchange, announced that it is in discussions with three major European banks to initiate crypto services by the first quarter of next year.
In parallel, a recent report from Fidelity Digital Assets (FDA) advocates for the distinct evaluation of Bitcoin when constructing crypto investment portfolios, given its fundamental differences from other digital currencies. FDA is the digital asset investment branch of Fidelity, the third-largest asset management firm with $4.24 trillion in assets under management (AUM). In their latest research, analysts Chris Kuiper and Jack Neureuter proposed that investors should adopt two separate frameworks for assessing investments in the crypto space: one for Bitcoin as an emerging monetary asset and another for other digital currencies with venture capital-like characteristics. The report highlights Bitcoin’s position as the most secure and decentralized monetary network, noting that its return potential is bolstered by the global expansion of the digital asset ecosystem and the possible instability in traditional macroeconomic conditions.
Crypto in the Current Economic Climate
Amid these developments, leading officials from the Federal Reserve have indicated that rising yields on long-term US Treasury bonds, which impact borrowing costs for businesses and households, may prevent further increases in the short-term policy rate. Fed Vice Chair Philip Jefferson remarked that the central bank is navigating a delicate phase of risk management, balancing the potential risks of insufficient tightening against the dangers of overly restrictive policies. He emphasized the need for caution in any future rate adjustments, acknowledging the tightening financial conditions caused by higher bond yields.
Although last month’s forecasts suggested policymakers were anticipating one more increase in the federal funds rate this year, the CME Group’s FedWatch has seen the likelihood of a rate hike at the upcoming FOMC meeting on October 31-November 1 drop from 30% at the start of the week to just 11.8%. The Federal Reserve typically raises rates to increase market-based borrowing costs, dampen demand for goods and services, and curb inflation. However, the central bank is also wary of raising rates too aggressively, which could harm the economy. The battle against inflation is ongoing, and the consumer price report expected this Thursday could still sway future policy decisions. Additionally, the ongoing conflict between Israel and Palestine is influencing market sentiments.
The current war in the Middle East has negatively impacted riskier assets, prompting investors to flock to safer havens like the US dollar and gold. Since the recent surprise attack by Hamas on Israel, Bitcoin’s price has dropped approximately 4%. Looking back to Russia’s invasion of Ukraine in early 2022, Bitcoin experienced a one-day loss of up to 7%. However, it rebounded sharply in March of the same year, highlighting a trend where investors typically seek the safety of gold during geopolitical crises, leading to declines in riskier assets.
Hedge fund magnate Paul Tudor Jones has pointed out that the combination of significant geopolitical risk—whom he describes as the “most threatening” he has ever encountered—and rising US government debt levels makes both Bitcoin and gold appealing investment options. Discussing the fiscal health of the US, Jones characterized it as the weakest since at least World War II. He noted that as interest costs rise in the US, a vicious cycle is created, where higher rates lead to increased funding costs, greater debt issuance, further bond liquidation, and ultimately more elevated rates, placing the country in a precarious fiscal position. “I can’t love stocks,” Jones stated, “but I love bitcoin and gold.” Having initially invested 1%-2% of his assets in Bitcoin in May 2020, he later expressed a desire to increase that stake to 5%. Earlier this year, he indicated that an unfavorable regulatory climate and the Fed’s commitment to controlling inflation could pose challenges for Bitcoin.
South Korean Interest in WAXP Token
As digital asset prices fell, the overall cryptocurrency market capitalization decreased by 1.8% to $1.09 trillion, down from a peak of roughly $3 trillion during the 2021 bull market. The market cap had previously dipped to around $820 million in November 2022 but rebounded in the first four months of 2023, surpassing $1.3 trillion before stabilizing near the $1 trillion threshold for the last two months. According to the Korea Financial Intelligence Unit (KOFIU), South Korea’s crypto market also saw a recovery in the first half of 2023, with the market cap increasing by 46% from January to June, reaching 28.4 trillion won (approximately $21.08 billion). However, this figure remains 48.5% lower than its peak of 55.4 trillion won (approximately $40.9 billion).
The KOFIU report surveyed 26 crypto trading platforms, revealing an average daily trading volume of 2.9 trillion won (approximately $2.19 billion) in the first half of the year, representing a 1.3% decline from the latter half of 2022. Ten of the exchanges surveyed reported operational challenges stemming from a lack of transaction fees, coinciding with a 3% decrease in the estimated number of crypto traders, which fell to 6.06 million from 6.27 million previously. South Korean traders are often characterized by their exuberance, leading to the phenomenon known as the kimchi premium, which reflects the price discrepancies between local and international exchanges. Moreover, when new crypto assets are listed on Upbit, one of the country’s largest exchanges, it frequently drives prices upward temporarily.
This week, the WAXP token has emerged as a beneficiary of this trend, with its price experiencing significant momentum despite a broader market downturn. On Sunday, the price of WAXP was around $0.0423, and by Monday, it had surged past $0.0491, reflecting a 16% increase before retreating to $0.0417. Following that, WAXP’s price rallied again by 15.6%, reaching $0.0482. At the time of reporting, WAXP, which has a market capitalization of $163.4 million, is trading at $0.0480, with approximately $15.4 million in 24-hour trading volume. In the first two months of 2023, WAXP saw a remarkable increase of over 116% in value, peaking at $0.090 in late February. However, it subsequently entered a downward trend, losing 60% of its value and dropping to $0.0365 by September 12. Over the past month, the token has been gradually recovering, posting a 32% increase, although it remains down 42% year-over-year and a staggering 98.25% from its January 2018 peak of $2.77, when it briefly approached $1 during the latest bull market.
This recent surge in WAXP’s price is notable as the WAXP/KRW pair has become the sixth largest trading pair on Upbit, accounting for 7.16% of the platform’s volume, close to the 7.58% share of the BTC/KRW pair, which ranks fifth. Currently, the WAXP/KRW trading pair constitutes 79.3% of all trading volume for the WAXP token, with WAXP/USDT on Binance holding the second-largest share at 11.63%. Moreover, the price of WAXP on Upbit stands at $0.0480, while on Binance, it is trading at $0.04749.
The Status of the WAX Network
The WAXP token serves as the native cryptocurrency for the WAX blockchain, which focuses on facilitating transactions related to NFTs. Established in 2017 by William E. Quigley (CEO) and Jonathan Yantis (COO), the Worldwide Asset Exchange (WAX) is designed to enable the trading of NFTs, collectibles, and video games on its platform. The blockchain operates using a delegated proof-of-stake (DPoS) mechanism and does not charge transaction fees. The WAXP token is utilized for staking, rewarding participants, and voting within the network.
The aim of WAX is to provide a comprehensive ecosystem that includes games, decentralized applications (dApps), exchanges, and marketplaces for brands to successfully launch NFT collections. Additionally, WAX aims to popularize vIRL NFTs, which allow users to earn physical items without the complexities of delivery. Regarding its resource model, users can often recover WAX (on the WAX network) or WAXP (on the Ethereum network) if they no longer require the associated bandwidth or storage resources. Thus, WAX does not generate revenue through gas fees but instead imposes a 2% tax on secondary sales of NFTs, supported by a “gentlemen’s agreement” with NFT marketplaces. The protocol burns 20% of its revenue and bridges the remaining 80% to Ethereum for distribution to liquidity providers. WAX mints tokens at an annual inflation rate of 5%, which is allocated to validators, delegators, and its treasury.
Earlier this year, the WAX blockchain unveiled its strategy for capturing the Web3 market, which includes financial backing and collaboration with the Antelope Coalition, enhancing token utility, and implementing Inter Blockchain Communication (IBC) for improved scalability. A significant upgrade to the Antelope protocol, which underpins WAX, is anticipated in Q4. In the third quarter of this year, the network introduced a new feature for its Cloud Wallet, enabling users to easily claim control over their admin keys and revamped its developer portal.
Notable brands, including Sony Pictures, the Saw movie franchise, Atari, and Mattel, are already collaborating with WAX. Furthermore, in the previous quarter, the Stranger Things collection by Funko, a company known for its licensed pop culture collectibles, achieved nearly $1.2 million in combined primary and secondary sales on its release day, representing the second-highest daily trading volume for any WAX collection in the last year. However, the average daily NFT buyers on WAX have decreased by 68% quarter-over-quarter to 1,400, while average daily NFT sellers have dropped by 51% quarter-over-quarter to 3,000.
According to Messari’s State of WAX Q3 2023 report, average daily transactions declined by 5% to 17 million, and average daily active addresses fell by 11% to 302,000 on the network. Both metrics reached their lowest levels in a year near the end of August, hitting 14.5 million and 237,000, respectively, before rebounding quickly. During this time, 877,000 unique active addresses were recorded, reflecting a 20% quarter-over-quarter decrease, while the number of average daily new addresses surged by 81% quarter-over-quarter to 2,900. Activity on the network has been primarily driven by play-to-earn games such as Alien Worlds and Farmers World.
Final Thoughts
Cryptocurrency prices have continued to decline since the onset of the Israel-Palestine conflict, as investors steer clear of riskier assets and gravitate towards safer options like the US dollar and gold. Similarly, the WAXP token is struggling amidst the broader market downturn. Additionally, key metrics for the WAX network, including average daily transactions, daily active addresses, and NFT sales volumes, have seen a decline in the past quarter, reflecting a trend that aligns with the overall state of the market.
