16 June 2021 | ZebPay Trade-Desk
Bitcoin is the largest cryptocurrency by market capitalization and volumes, but there are over more than 5000 different cryptocurrencies currently in circulation. Various other cryptocurrencies have given higher returns than Bitcoin, in the recent past. Let’s take Ethereum as an example, it has risen by 750% since 2020, beating Bitcoin’s 600% returns during that same period. Many such digital currencies, known as altcoins, are now sharing the limelight alongside Bitcoin. The crypto space is a smorgasbord of groundbreaking and unconventional innovations in technology. Many altcoins with high functionality and utility are being introduced, and they are revolutionizing the crypto space.
To further understand what this might mean for some assets, namely UNI, LINK, and XRP, let’s have a look at some charts, and also understand what is fundamentally driving the interest investors have in the asset.
When it comes to Altcoins Ethreum has always been at the top of the game but there are other tokens that have set themselves up to dominate. We have picked 3 altcoins that have gained significant interest and traction this year, Namely, Uniswap’s UNI token, Chainlink’s LINK token, and Ripple’s XRP token.
Uniswap is a sought-after decentralized finance trading protocol, known for its role in easing automated trading of decentralized finance (DeFi) tokens. Its main aim is to keep the trading of tokens automated and completely open to anyone who holds a token, alongside improving the efficiency of trading.
Uniswap lives to create liquidity, hence trading and the value that trading provides for the DeFi sector. Its native token UNI is a governance token, which means it provides the holder the right to vote on new developments and changes to the platform, including changes to the fee structure, minted tokens distribution to the community, etc.
Chainlink is an abstraction layer of the blockchain that empowers universally connected smart contracts. The token protocol of chainlink is blockchain agnostic and is capable of running on different blockchains simultaneously. It helps developers connect their smart contracts to various things like the internet of things, payment solutions, cloud computing, etc. By a decentralized network of oracles, it enables blockchains to securely link events and payment methods, external data feeds providing the important off-chain information required by complex smart contracts.
LINK is an ERC-20 token with auxiliary ERC223 “transfer and call” functionality. The native token is mainly used to compensate the Node operator in Chainlink for retrieving data from external sources, turning it to a readable format of blockchain, uptime guarantees, and off-chain computation.
Ripple undertakes the work of a cryptocurrency and a digital payment network for transactions. The native token uses the ticker symbol XRP and acts as an intermediate transaction mechanism of exchange between two currencies or networks, like a temporary layer of settlement denomination.
DEX’s like UniSwap has grown significantly in the past few years. It would be unfair to compare them to centralized exchanges, as DEXs typically have a smaller trading volume than a centralized ones. However, the resilience of DEXs strengthened their appeal as the go-to place for crypto enthusiasts traders to swap DeFi tokens and skyrocketed to reach new all-time high volumes and prices. But, as most market cycles work, a major correction, set in with the market recently in mid-May, last month.
The price of the UNI token has fallen by 27.7% since the crash. The market stance on the asset is almost bearish leading to a fall in volumes by 39.8%. Even though the market capitalization came down by 23.7% the market sentiment towards the asset is positive since its ranking at number 10 in the market currently.
As we can see from the graph above, on May 3rd UNI touched its lifetime high of $45, but soon after the fall of other digital currencies it also plunged by 70% to a low of $13. Again it rallied on and rose by almost 130% from there to recent highs. Now it’s showing signs of recovery and has started moving upward. The asset faces immediate resistance at $25, but for it to further rally it would have to close and sustain above $30, convincingly.
Similar to its other DeFi siblings, LINK, the native token of CHAINLINK, couldn’t escape the downfall either. It has fallen by 31.9% since its market highs in early May. Even though the asset witnessed a significant market correction in the last few days, LINK’s volume has come down by 33.8%.
While the market stance is bearish but the number of whales continues to increase. With a rank of 13, in terms of market capitalization, it has seen a 30.6% fall. LINK coins in circulation among exchanges have decreased indicating that market sentiment is positive and investors are not eager to sell it, but in fact holding on to it, anticipating a strong reversal.
As we have seen in the graph above on 1st May the asset made a high of around $41 then it followed the trail of others, and came crashing down with the market to a low of $16. It plunged further by 20%. It rebounded and a sharp rise of around 131% was observed. The asset is trading at a range of $25 to $20 and upward trends can be noticeable. LINK finds multiple supports at $20 levels, while $32 acts as a key resistance level, which it would have to beat, for it to witness a strong rally.
XRP is a young and growing asset of Ripple.net. The crash had an outrageous effect on XRP too. The price plunged down by 56% soon after the slide-off along with other crypto brothers after touching high and being stable in the early weeks of May.
Since the crypto market as a whole has a mostly bearish stance XRP also becomes a part of it with volume falling by 58%. But XRP continues to dominate the crypto space and ranked as the 7th despite a reduction of 25% in market capitalization. The asset is getting more stable after the correction with the price range now between $0.95 to $0.85.
XRP rallied since the beginning of May and reached a high of $ 1.66 and later consolidated and corrected with a low of $0.652. XRP witnessed an all-time high price on 16th April of $1.8 but soon saw a downfall. The volume and the price of XRP have been down since 19th May.
The lawsuit results may have a huge impact on XRP price. XRP is currently range-bound, between $0.81 – $1, and it would have to beat the upper bound, alongside good volumes, post which it is likely to see another rally upwards.
May started off with a bang, for almost all assets. But the weekend sell-off carried on a market slide, and the market saw a major correction when CEO of Tesla Elon Musk suddenly announced his automobile company would no longer accept payments in Bitcoin due to environmental problems.
Few very bearish tabloids and news out of China regarding crypto speculation and mining of bitcoin made things grimmer. The damage showed us that when a crash is broad enough, no type of token is immune. Post this, some form of recovery was seen, with UNI, LINK, and XRP, all paving the way.
These altcoins offer eccentric services and functions compared with the mainstream ones. Bitcoin prices experiencing heavy turbulence investors are changing their assets to altcoins since they are relatively inexpensive, younger and offer higher growth potential. They just might be paving the way for the next crypto revolution.
Markets gained traction due to the latest announcement by Tesla CEO Elon Musk to allow purchases in BTC with reasonable 50% usage of renewable energy by miners. The never-ending legal battle between Ripple and SEC is like a dark cloud hanging over Ripple and prices are hugely influenced due to uncertainty and the verdict in favour of Ripple can lead prices to soar high.
The introduction of Chainlink has given investors yet another option to diversify their portfolio and was not amongst the hardest hit when the market crashed in May 2021. Uniswap, with its V3 upgrade, developed even stronger fundamental metrics, further enhancing its value proposition.
Disclaimer: This report is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any investor. All investors should consider such factors in consultation with a professional advisor of their choosing when deciding if an investment is appropriate. The Company has prepared this report based on information available to it, including information derived from public sources that have not been independently verified. No representation or warranty, express or implied, is provided in relation to the fairness, accuracy, correctness, completeness or reliability of the information, opinions or conclusions expressed herein. This report is preliminary and subject to change; the Company undertakes no obligation to update or revise the reports to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. Trading & Investments in cryptocurrencies viz. Bitcoin, Bitcoin Cash, Ethereum etc.are very speculative and are subject to market risks. The analysis by the Author is for informational purposes only and should not be treated as investment advice.