After attempting a recovery, Bitcoin has faced a setback, dropping below the $27,000 mark, while Ether has slid to $1,550. In the past week, Ether has seen a decline of 5.2%, contrasting with Bitcoin’s more modest drop of 1.4%. Currently, Bitcoin is trading at $27,280, reflecting a year-to-date increase of 66%, whereas Ether is priced at $1,576, up 32% since the start of the year. Ether’s diminished performance relative to Bitcoin can be attributed to several factors, including recent sales of ETH by the Ethereum Foundation and a lack of enthusiasm regarding Ether futures ETFs. Furthermore, a significant increase in the supply of Ethereum over the past month, caused by a decrease in transaction activity, has led to less Ether being burned.
As a result of these developments, Bitcoin’s market dominance rose to 51.2% on Tuesday, nearing a 26-month peak of 52% recorded at the close of June. In related news, crypto exchange Bitstamp announced it is in discussions to assist three major European banks in launching crypto services by early next year.
Additionally, a new research report from Fidelity Digital Assets (FDA) advocates for Bitcoin to be assessed separately when constructing cryptocurrency investment portfolios, citing its fundamental differences from other digital assets. FDA is the cryptocurrency-focused division of Fidelity, which manages a staggering $4.24 trillion in assets. In the report, authors Chris Kuiper and Jack Neureuter emphasize the need for two distinct frameworks for evaluating investments in the crypto landscape: one for Bitcoin, viewed as an emerging monetary asset, and another for other digital currencies that exhibit characteristics akin to venture capital investments. “Bitcoin currently stands as the most secure and decentralized monetary network,” the report states, highlighting that BTC’s return profile is supported by two significant factors: the global expansion of the digital asset ecosystem and the potential instability in traditional macroeconomic conditions.
Crypto Against the Uncertain Macro Backdrop
Amid these developments, senior officials from the Federal Reserve indicated this week that increasing yields on long-term US Treasury bonds, which directly affect borrowing costs for both businesses and consumers, may hinder the Fed’s ability to raise its short-term policy rate further. “We are navigating a delicate phase of risk management, balancing the need for tightening against the risk of being overly restrictive,” stated Fed Vice Chair Philip Jefferson. He also advised that the central bank should proceed cautiously with any future rate hikes, noting, “I will be mindful of the tightening financial conditions due to rising bond yields as I evaluate the future direction of policy.”
Last month’s projections suggested that policymakers were anticipating one more increase in the benchmark federal funds rate this year. However, the CME Group’s FedWatch tool has shown that the probability of a rate hike at the upcoming Federal Open Market Committee meeting on October 31-November 1 has dwindled from 30% at the start of the week to 11.8%. The Fed typically raises rates to elevate market-based borrowing costs, curtail demand for goods and services, and lower inflation. Nevertheless, the central bank must be cautious not to impose excessive rate hikes that could harm the economy. The battle against high inflation continues, and the consumer price report set for release this Thursday could have significant implications. Additionally, the ongoing conflict between Israel and Palestine is also likely to influence market sentiments.
The turmoil in the Middle East is currently weighing on riskier assets, prompting investors to seek refuge in safer options like the US dollar and gold. Since Hamas initiated a surprise attack on Israel, Bitcoin’s price has dropped by approximately 4%. Reflecting on past geopolitical events, such as Russia’s invasion of Ukraine in early 2022, Bitcoin experienced a decline of up to 7% in a single day. However, it rebounded sharply in March, demonstrating that during such geopolitical crises, investors often gravitate towards gold as a safe haven, leading to declines in riskier assets.
Hedge fund manager Paul Tudor Jones has expressed that the combination of significant geopolitical risks, which he describes as the “most alarming” he has ever witnessed, alongside escalating US government debt levels, renders both Bitcoin and gold appealing investment options. He characterized the US fiscal situation as the weakest since at least World War II. “As interest costs rise in the United States,” Jones remarked, “a vicious cycle emerges, where higher interest rates lead to increased funding costs, necessitating more debt issuance, which in turn triggers additional bond liquidation and further rate hikes, ultimately placing us in an untenable fiscal position. I am not enthusiastic about stocks, but I find Bitcoin and gold to be attractive investments.”
WAXP Token Attracts South Korean Interest
As digital asset prices declined, the total market capitalization of cryptocurrencies fell by 1.8% to $1.09 trillion, down from its 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 early 2023, exceeding $1.3 trillion. Since then, it has stabilized near the $1 trillion threshold for the past two months.
The Korea Financial Intelligence Unit (KOFIU), a government body responsible for overseeing the nation’s anti-money laundering efforts, reported that South Korea’s cryptocurrency market also recovered during the first half of 2023. According to a KOFIU study released this week, the country’s crypto market cap surged by 46% from January to June, reaching a valuation of 28.4 trillion won (approximately $21.08 billion). However, the Korean crypto market remains down 48.5% from its peak of 55.4 trillion won ($40.9 billion).
The authorities surveyed 26 crypto trading platforms, revealing an average daily trading volume of 2.9 trillion won ($2.19 billion) in the first half of this year, reflecting a 1.3% decline from the latter half of 2022. Ten of the surveyed exchanges reported challenges in sustaining operations due to a decrease in transaction fees, which coincided with a drop in the number of crypto traders, down 3% to 6.06 million from 6.27 million in the prior period. South Korean traders are known for their impulsive behaviors, which previously led to the phenomenon known as the kimchi premium—the price discrepancies between crypto assets on South Korean exchanges and those abroad. Additionally, the listing of new crypto assets on major exchanges like Upbit often results in a temporary surge in prices.
This time, the WAXP token is experiencing such a rise, with its price gaining momentum this week despite the overall market decline. On Sunday, WAXP traded at around $0.0423, rising to $0.0491 on Monday—an increase of 16%—before dipping back to $0.0417. However, the price has since surged again by 15.6%, reaching $0.0482. Currently, the crypto asset has a market cap of $163.4 million and is trading at $0.0480, with a daily trading volume of approximately $15.4 million. Earlier in 2023, WAXP experienced a remarkable 116% increase, peaking at $0.090 in late February, but subsequently fell by 60% to $0.0365 by September 12. Recently, WAXP has been on a slow recovery path, showing a 32% increase over the past month. However, it remains down 42% year-on-year and an astounding 98.25% from its peak of $2.77 in January 2018. In comparison, WAXP only managed to approach $1 during the most recent bull market.
This recent price movement for WAXP comes as the WAXP/KRW trading pair has become the sixth largest on Upbit, accounting for 7.16% of the platform’s trading volume, closely trailing the BTC/KRW pair, which holds 7.58% of the volume. Additionally, WAXP/KRW represents 79.3% of all trading activity for the WAXP token, with WAXP/USDT on Binance holding an 11.63% share. The price of WAXP on Upbit stands at $0.0480, while on Binance, it is trading at $0.04749.
The State of WAX Network
WAXP serves as the native token for a smart contract-enabled blockchain network known as WAX, which primarily focuses on non-fungible tokens (NFTs). Established in 2017 by CEO William E. Quigley and COO Jonathan Yantis, WAX—short for Worldwide Asset Exchange—is designed to facilitate trading of NFTs, collectibles, and video games across its network. The blockchain operates on a delegated proof-of-stake (DPoS) consensus mechanism and does not impose fees on users. The WAXP token is utilized for staking, rewarding participants, and voting within the ecosystem.
The WAX platform aims to provide a comprehensive range of services, including games, decentralized applications (dApps), and marketplaces to assist brands in launching successful NFT collections. WAX is also focused on popularizing vIRL NFTs, which enable users to earn physical rewards without the hassle of delivery logistics. In terms of its resource model, WAX can often be recouped by users who do not need bandwidth or storage resources anymore. Instead of charging gas fees, WAX imposes a 2% tax on secondary sales of NFTs, based on a “gentlemen’s agreement” with NFT marketplaces. The protocol burns 20% of its revenue and bridges the remaining 80% to Ethereum for distribution among liquidity providers. WAX is minted at an annual inflation rate of 5%, which is allocated to validators, delegators, and the network’s treasury.
Earlier this year, the WAX blockchain revealed its strategy for dominating the Web3 landscape, including plans for funding and collaborating with the Antelope Coalition, enhancing token utility, and implementing Inter Blockchain Communication (IBC) to improve horizontal scalability. The Antelope protocol, which powers WAX, is anticipated to undergo a significant upgrade in the fourth quarter of this year. In the third quarter, the network also introduced a new feature for its Cloud Wallet, allowing users to easily reclaim control over their admin keys and revamped its developer portal.
WAX has already gained partnerships with major entities, including Sony Pictures, the Saw movie franchise, Atari, and Mattel. In the previous quarter, the Stranger Things collection from Funko, a company known for its licensed pop culture collectibles, generated nearly $1.2 million in total primary and secondary sales on its launch day, marking the second-highest daily trading volume for any WAX collection in the past year. However, the number of average daily NFT buyers on the WAX platform fell by 68% quarter-over-quarter to 1,400, while average daily NFT sellers decreased by 51% quarter-over-quarter to 3,000. According to Messari’s State of WAX Q3 2023 report, average daily transactions dropped by 5% to 17 million, and the average daily active addresses declined by 11% to 302,000 on the network. These metrics reached their lowest levels in a year towards the end of August, hitting 14.5 million transactions and 237,000 active addresses, although they rebounded quickly. During this period, there were 877,000 unique active addresses, reflecting a 20% quarter-over-quarter decline, while the number of average daily new addresses surged by 81% quarter-over-quarter to 2,900. Activity among active addresses was primarily driven by play-to-earn games such as Alien Worlds and Farmers World.
Concluding Thoughts
The decline in cryptocurrency prices has persisted since the onset of the Israel-Palestine conflict, leading investors to avoid riskier assets in favor of safe havens like the US dollar and gold. The WAXP token is struggling alongside the broader crypto market, and key metrics for the WAX network—such as daily transactions, daily active addresses, and NFT sales volume—have all seen declines in the past quarter, aligning with the overall market trends.
