Cryptocurrency
Blockchain Should Go Back to Basics Before Leaping Forward (Opinion)
The crypto and blockchain industry begs for innovation to move forward. As new trends continuously arrive in the digital asset landscape, one hidden gem using a core mechanic of blockchain can become a key driver for linking crypto to the real world.
By Asif Kamal, Founder of Artfi
The crypto ecosystem is on the verge of its next big breakthrough, and blockchain holds the key to pushing the industry forward. Tokenization, a basic feature of blockchain, will play a major role in bridging traditional finance with DeFi while building an intersection between the crypto industry and a trillion-dollar market.
Let’s take a quick step back and put the evolution of the ecosystem in chronological order:
It feels like an eternity ago when the total market capitalization of cryptocurrencies was closing in on $3 trillion. The crypto ecosystem was focused on the price action of coins and tokens instead of building the next big thing, with double-digit gains occurring daily across the digital asset market.
Then arrived the infamous “crypto winter.” Triggered by the collapse of a major stablecoin -a special type of cryptocurrency that’s supposed to stay at $1 in value- the market downturn was only accelerated when FTX, the then-biggest U.S. crypto exchange, went down in flames.
At its lowest point, more than $2 trillion was erased from the crypto space. Interest coming from traditional finance vanished (along with the capital inflow), and newly-born trends – such as non-fungible tokens (NFTs) – have basically turned into an internet joke. It was at that point that the industry realized that it needed more than price action to thrive once again.
Decentralized finance craves innovation, development, and non-stop building, and this is especially true when price tickers are no longer in focus. Thankfully, the crypto ecosystem has a sound foundation. With its transparency, immutability, and traceability, blockchain provides the necessary infrastructure to build the next best thing. Its core functionality, the ability to prove digital ownership, has become vital in the search for innovation.
Important Realization
Another realization that occurred to DeFi during the long crypto winter was the fact that – one way or another – DeFi needs traditional finance to survive. A decentralized finance system completely disconnected from the rest of the world is a utopia. There’s no real value in trying to avoid governments and established laws to create a new market in uncharted territory. The sooner crypto and DeFi find their way to work alongside TradFi, the better.
The search for DeFi use cases that have their roots in traditional finance gave birth to a new trend named asset tokenization. It basically involves creating a digital twin of a traditional asset in a blockchain environment. Unlike standard digitization, though, tokenization of an asset enables true digital ownership —a verifiable privilege that can be transferred or fractionalized.
Soon, it became clear that most of the assets from traditional finance, including real estate, fine art, and even intellectual property, can be considered “real-world assets” (RWAs) that can be tokenized on blockchain.
Facilitated by the core principles of blockchain (tokenization), this new form of ownership has the potential to become the most active bridge between traditional finance and the crypto ecosystem. It already shows that the RWA category has the fastest growth across decentralized finance in 2023, with the total value locked across RWA-related DeFi platforms jumping by 1,000% in a year and surpassing $5 billion.
It’s a Win-Win
For traditional finance, asset tokenization dramatically lowers the barrier of entry for markets previously impossible for the general population to be a part of. Just like how anyone can own or trade a tiny fraction of one Bitcoin, they can now do the same with a fraction of a million-dollar building or an art object tokenized on blockchain.
For the crypto ecosystem, RWA tokenization can bring much-needed capital back to the market. As of November 2023, it’s safe to say that the crypto market has already started dusting itself off. With its capitalization moving toward $1.5 trillion, the crypto industry has doubled its value from the lowest point in less than a year. However, it’s also clear that the next $1.5 trillion won’t be achieved without innovation. Connecting the digital asset market to real-world assets via tokenization can become the catalyst we’re looking for.
Author bio
Asif Kamal is the founder of Artfi, an art technology company harnessing the power of NFTs and blockchain to allow collectors to own a stake in works of art.
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This week, we take a closer look at Ethereum, Ripple, Cardano, Shiba Inu, and Polkadot.
Ethereum (ETH)
Ethereum finally woke up this week after testing the support at $2,800 and closed with a 7% price increase. Nevertheless, ETH made a new yearly low against Bitcoin.
The resistance is at $3,350 and if this momentum continues, it could be tested by the bulls in the coming days. Ideally, Ethereum will break higher soon and return on an uptrend.
Looking ahead, ETH could be making a local bottom at this price level, and a relief rally may start after a long correction that began in early March.
Ripple (XRP)
Ripple continued to range in a channel and closed the week with a 4% price increase. Buyers appear keen to test the key resistance at 54 cents. If they are successful at a breakout, then they could hope to see the price rally again.
The daily MACD has turned bullish in the past week, hinting that this cryptocurrency is ready to move higher. A decisive breakout above 54 cents is needed to confirm this.
Looking ahead, XRP has a real opportunity in the coming week to bring back volume and buyers. If successful, the next target will be found at 68 cents.
Cardano (ADA)
ADA finally broke the resistance at 46 cents and is currently looking primed to move towards 60 cents next. The price increased by 7.5% this week.
The 46 cents level was not yet confirmed as support and this could take place as buyers and sellers test their strength. The overall bias on this action is bullish, but continuation is needed to be confident ADA can move higher.
Looking ahead, the momentum favors bulls in the coming days, but don’t dismiss a possible pullback.
Shiba Inu (SHIB)
Shiba Inu mirrors the XRP chart and appears keen to break the resistance at $0.000025. If successful, then buyers can hope to see the price go towards $0.000030 next.
The price found good support at $0.000020 and managed to bring bulls back, but a clear breakout of the current resistance still needs to happen.
Looking ahead, the buy volume for SHIB has increased in the past few days, which suggests optimism that the next leg up could be about to start. Watch the key resistance for confirmation of a bullish bias.
Polkadot (DOT)
Polkadot remains in a range between $6.3 and $7.6. However, buyers seem to have the upper hand lately as the market is turning bullish. The price also closed the week with a 6% price increase.
On the daily timeframe, DOT did a MACD bullish cross in the past few days which has materialized with higher highs in price. The true test will be the resistance at $7.6 which is also the current target for this price action.
Looking ahead, DOT’s consolidation in this range could be coming to an end, and a clear breakout from this level may see the price approach double digits again later this month.
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Cryptocurrency charts by TradingView.
TL;DR
- Santiment reports that Decentraland (MANA) leads in development activity among NFT-linked tokens.
- Although interest is returning, assets like Axie Infinity (AXS) remain well below their historical peak values, highlighting the ongoing volatility in the NFT market.
Here are the Leaders
Non-fungible tokens (NFTs) and cryptocurrencies related to them were a huge trend a few years ago. During the 2022-2023 bear market, their popularity declined, but recently, they started capturing the attention of industry participants again.
The crypto market intelligence platform – Santiment – outlined the top 10 NFT-linked tokens in terms of development activity in the last 30 days. Decentraland (MANA) leads the ranking with a ratio of 267.57. The second place belongs to Flow (FLOW) with 234.7, while Metaplex (MPLX) is third with 40.43.
Enjin Coin (ENJ), which witnessed a substantial trading volume increase in the past 24 hours, follows next with 14.97, whereas The Sandbox (SAND) rounds up the top 5 club with 14.9.
The Bottom of the List
While the sixth spot is held by a lesser-known cryptocurrency, Aavegotchi (GHST), this is not the case when observing the asset placed at number seven. This is Axie Infinity (AXS), the governance token of the eponymous gaming universe.
It is among the most-popular coins in the niche, with a current market capitalization of nearly $1 billion. Still, AXS is far from its glory days in November 2021 when its market cap surpassed the $10 billion mar and its price touched $160.
Monavale (MONA), NFTX (NFTX), and Punk (PUNK) are the NFT-related cryptocurrencies at the bottom of Santiment’s ranking.
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TL;DR
- XRP trades around $0.52, with some analysts predicting potential rises to $5.85, $18.22, and even up to $100, although extreme targets are unlikely.
- The ongoing lawsuit between Ripple and the SEC significantly affects the asset’s price, with the company’s partial court wins boosting optimism for a potential bull run.
The Odds of a Ridiculous XRP Rally
Despite a brief price surge above $0.70 in mid-March, Ripple’s XRP has not positioned itself among the best-performing cryptocurrencies this year. It currently trades at around $0.52 (per CoinGecko’s data), which is a minor increase compared to the figure witnessed a month ago.
Numerous analysts believe the asset can break out of its current price position and head toward somewhat outrageous targets. One example is the X user Dark Defender, who thinks XRP can rise to $5.85 and later to a whopping $18.22:
“As long as these are maintained, our 5 Elliott Wave structure targeting $5.85 & $18.22 remains the same. And any further moves between $0.3917 to $0.6649 are side moves and are normal.”
Earlier this year, the analyst set an ever more ambitious target of $20, while EGRAG CRYPTO warned the XRP army to “stay steady” since a price “ignition” might be on the horizon.
One of the most bullish price predictions this year was outlined by JackTheRippler, who forecasted an ascent to a whopping $100.
Still, none of the aforementioned can be compared to CryptoBull’s analysis from 2023. Back then, the X user suggested that XRP may skyrocket to a staggering $470 sometime in the future.
It is worth mentioning that this level would most likely remain a mirage since the asset’s market capitalization should explode above $200 trillion for this to happen. Currently, the entire market cap of the crypto industry stands at “just” $2.5 trillion.
The Impact of the Ripple v SEC Lawsuit
Many consider the lawsuit between the two entities a major factor contributing to XRP’s price movements. The case, which started in December 2020, recently entered its trial phase, and some view the US SEC as the underdog due to Ripple’s three partial court wins secured throughout 2023.
The legal battle has undergone numerous developments recently, and according to the American lawyer Jeremy Hogan, both parties now expect the judge’s ruling.
A decisive victory for Ripple may resonate into a bull run for XRP, while the opposite scenario could halt the asset’s upward movements as it did back in December 2020 when the agency initially went after the company. Those curious to learn more about the lawsuit and its specifics, please take a look at our dedicated video below:
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