Welcome to our July 2023 monthly crypto market recap!

July proved to be a captivating month for the crypto market, demonstrating resilience and presenting ample opportunities. Bitcoin traded within a narrow range for much of the month, with investors eagerly anticipating the potential approval of Bitcoin ETF applications filed by various financial institutions. Fortunately, noteworthy progress has been made toward these ETF approvals, as traditional finance giants have chosen Coinbase as the “Surveillance Sharing” entity, and a review deadline has been set by the Federal Register. Notably, cryptocurrency majors remained largely unaffected by fluctuations in traditional markets and the economy, showcasing their strength and independence during the month.

The cryptocurrency sector also saw significant advancements in the area of regulation. Ripple’s lawsuit victory against the US Securities and Exchange Commission (SEC) not only boosted XRP’s valuation but also established a potentially pivotal precedent for other crypto projects mired in legal disputes with the SEC. This decision has rejuvenated investor confidence, destabilizing the SEC’s broad authority over cryptocurrency tokens by challenging its viewpoint that many of these tokens should be classified as securities.

The DeFi 1.0 narrative is also undergoing a revival, with pioneering DeFi projects unveiling fresh enhancements to their offerings and venturing into previously untouched arenas. This revitalization has reignited investor enthusiasm and fostered heightened market activity. As we conclude July, the enduring resilience and adaptability of the crypto market shine brightly, hinting at exciting developments in the days to come.

Join us for our comprehensive monthly market recap, where we explore the highs, lows, and key narratives that shaped the crypto market in July! Stay informed with our comprehensive monthly market recaps at Treehouse Insights and our daily market analysis with Treehouse Daily, providing you with valuable insights and analysis to navigate the dynamic world of cryptocurrencies!

XDC Network (XDC) ▴83.35%

XDC is a hybrid blockchain network; the public state is a part of the network that is easily accessible to all participants, while institutional participants can run private sub-networks. Their innovative approach provides a solution that removes the trade-off between the decentralization and transparency of public blockchains and the performance and privacy of private ones.

The XDC Network has announced a staking fee-free campaign commencing on 13 Jul 2023 to mark the launch of its new staking service. Eligible participants, namely those holding XDC in July and August 2023 including reserves-acquired XDC, can participate in XDC staking without incurring fees. At the end of each business day within the staking period, participants will obtain staking rewards based on the average amount of XDC they hold. This campaign, slated to run from 13 Jul to 1 Sept 2023, offers considerable benefits to customers as it allows participants to stake their XDC without deductions.

On the other hand, another reason that XDC’s value saw a significant rise was due to a completely unexpected event, a rebranding of Twitter by its owner, Elon Musk, to the letter “X”. As a result, several cryptocurrencies whose names include the letter “X” experienced a significant price surge, with XDC being the frontrunner among them as a top 100 crypto project by market capitalization.

Ripple (XRP) ▴49.62%

Ripple is a blockchain-based digital payment system, accompanied by its native cryptocurrency, XRP. Viewed as an alternative to SWIFT, a global payments messaging network, Ripple aims to facilitate faster and more cost-effective cross-border transactions through its “On Demand Liquidity” (ODL) feature, which employs XRP as a bridge asset for banks and financial entities converting between different currencies. As Ripple Labs evolves, so does its reach into different areas of DeFi. For example, Ripple Labs now supports the development of central bank digital currencies (CBDCs).

XRP’s surge is largely attributed to a significant legal triumph for Ripple Labs in the United States. At the end of the case, the court determined that Ripple Labs had not breached federal securities regulations by offering its XRP token on public platforms. This monumental decision not only immediately bolstered the valuation of XRP but also has the longer-term effect of setting a potentially influential precedent for crypto enterprises entangled in legal confrontations with the US Securities and Exchange Commission (SEC). The court’s verdict has reignited confidence among investors, giving them more incentives to invest in XRP.

Following the favorable court ruling towards Ripple, major exchanges like Coinbase and Kraken relisted XRP. While the threat of an SEC appeal remains, Ripple’s chief legal officer and its community largely remain undeterred. Joseph Edwards of Enigma Securities emphasized that this legal clarity reinforces Ripple’s ambition to serve as a key settlement layer in financial transactions.

Stellar (XLM) ▴42.97%

Stellar is a decentralized open-source blockchain network that focuses on integrating with the existing traditional financial system. Since its inception in 2014, it has earned a reputation as a reliable platform for a broad spectrum of users, from large corporations to small startups. Stellar’s substantial growth can be attributed to its strategic partnerships and technical integrations. Among the wide array of partnerships, the most important ones are with MoneyGram and the HoneyCoin app, which enables digital asset cash-outs using USDC across multiple countries, like Nigeria, Ghana, Tanzania, Kenya, Uganda, and the UK. This collaboration underlines Stellar’s commitment to promoting financial inclusivity while also giving itself the potential for scalability. Their commitment to these two principles is further evidenced by another partnership with Fonbnk which aims to provide payment solutions to Africa’s unbanked population, further highlighting Stellar’s dedication to financial inclusion.

Regarding technical advancements, Stellar achieved interoperability with various other blockchain networks, including Ethereum, Solana, Celo, and Polygon. This development is due to the implementation of Allbridge’s solution, which expands Stellar’s presence in the DeFi sector.

Reflecting on Stellar’s historical trajectory, the platform gained significant momentum in Q2 2023 when it integrated the Stellar network with several institutions and exchanges through its Anchor Platform. This integration simplified on and off-ramp services, making it easier for projects to build on Stellar and increasing Stellar’s social dominance.

The Stellar community is also set to gain more attention through its upcoming annual event – Meridian, with renowned actor Idris Elba as a speaker scheduled for 26 September 2023, emphasizing the positive sentiment surrounding the platform and its future potential.

Maker (MKR) ▴40.36%

MakerDAO is a pioneering project in the DeFi ecosystem, particularly known for its collateralized lending services. It mints the DAI stablecoin on the Ethereum network by using various crypto assets as collateral, as a result, Maker has become the third largest DeFi platform, amassing $5B in TVL. The MKR token serves as a governance token and a utility token used in DAI stability maintenance and governance rewards.

The recent surge in $MKR price can be linked to several significant factors. One of the key contributors is the unveiling of the ‘Endgame’ proposal, which promises substantial changes to the MakerDAO ecosystem. Other contributing factors consist of the recent surge in their revenue and the introduction of the Smart Burn Engine proposal.

According to Makerburn, MakerDAO’s profitability has seen an incredible surge. The annual profit estimate has quadrupled, rising from $20M at the beginning of May 2023 to a remarkable $88M as of 26 July 2023. This significant growth in profitability can be largely attributed to a shift towards RWAs as collateral. In 2022, MakerDAO took a significant step by allowing US Treasuries and Investment-Grade Corporate Bonds to be used as collateral for minting DAI. This move enabled Maker to generate additional income, which contributed heavily to a substantial profit increase. One of the noteworthy RWA vaults, Monetalis Clydesdale, currently holds 1.13B DAI and generates an impressive $45.5M in annual fees for Maker. As such, MKR’s P/E estimate has been on a consistent downtrend since May and is currently hovering around the 11x range.

Elsewhere, MakerDAO’s recently announced the Smart Burn Engine proposal buyback program that will utilize surplus DAI from the ‘Surplus Buffer’ to purchase MKR tokens from the UniV2 DAI/MKR market. These repurchased MKR tokens will first be combined with DAI and later added to a Uni v2 LP pool. Overall, this gives promising prospects to MakerDAO in the upcoming months, particularly concerning its revenue potential and the buybacks which are likely to exert further upward pressure on the token price.

Kaspa (KAS) ▴36.26%

Kaspa is a Layer 1 blockchain that focuses on scalability and security as its core strengths. Its GHOSTDAG consensus mechanism enables high concurrency in transaction processing, facilitating a high throughput of transactions, and making Kaspa the optimal choice for applications that require fast and efficient processing.

Kaspa gains attention as speculation surrounding the launch of smart contracts on the platform grows. Meanwhile, Chainge Finance introduced a custodial bridge that allows the transfer of Wrapped Kaspa (wKAS) to Ethereum. This bridge allows Kaspa users to engage in Ethereum’s DeFi ecosystem, including yield farming, lending, and borrowing. The transformative bridge benefits both Kaspa and Ethereum, offering an inclusive and dynamic blockchain experience, leading to an increase in Kaspa’s price.

Kaspa has made significant progress through a series of upgrade proposals. KIP-3 focuses on enhancing mining efficiency and fairness through “Block Sampling.” Meanwhile, the latest proposal, KIP-4, takes center stage as it addresses concerns regarding managing the Block Per Second (BPS) rate and the difficulty verification process. By selecting specific blocks at regular intervals instead of random sampling, KIP-4 optimizes complexity adjustment, resulting in improved efficiency and network stability. The upcoming testnet release and potential mainnet integration of KIP-4 indicate positive developments for the Kaspa protocol.

Solana (SOL) ▴30.43%

Solana is a high-performance, monolithic blockchain that aims to provide fast, secure, and scalable decentralized applications. Solana can theoretically handle 65,000 transactions per second without the need for layer-two scaling solutions, thus it distinguishes itself from many other blockchains in terms of speed and transaction cost. With a current TVL of >$300M, Solana is the biggest non-EVM L1 and contender to Ethereum.

The recent surge in Solana’s value is heavily correlated with XRP’s victorious outcome in the SEC lawsuit. As the landmark ruling offered a positive outlook for other cryptocurrencies that faced similar classifications during the lawsuits with Binance and Coinbase in the previous month. Consequently, SOL demonstrated an impressive surge of over 50% in less than 24 hours following XRP’s victory announcement.

However, analyzing fundamental metrics reveals a less rosy picture, with no significant improvements over the last 30 days. Data from Token Terminal indicates a slight drop in both core developers count and daily active users during this period despite the price pump which suggests that changes in Solana’s underlying fundamentals may not necessarily drive the recent price pump.

However, Solana has recently obtained a notable partnership in the past month between Coca-Cola in Serbia and Solana’s NFT platform, SolSea. This partnership involves a unique NFT offering during a music event, where Coca-Cola will distribute 100 limited edition hoodies, each accompanied by an NFT, to select participants. This venture exemplifies the growing intersections between mainstream brands, event marketing, and blockchain technology.

Chainlink (LINK) ▴24.72%

Chainlink (LINK) is the most widely adopted decentralized oracle network that facilitates secure and reliable data transfers between blockchains and external systems. By utilizing independent oracles, it ensures data validity for DeFi applications when triggering smart contract execution, eliminating centralized vulnerabilities.

The primary catalyst for LINK’s surge was the mainnet launch of the Cross-Chain Interoperability Protocol (CCIP). CCIP represents a significant stride in blockchain interoperability, enabling message transmission between different chains and empowering developers to build on Chainlink whilst unifying various blockchain networks.

CCIP is now open to Avalanche, Ethereum, Optimism, Arbitrum, and Polygon. Leading DeFi protocols such as Synthetix and Aave have also commenced their integration with CCIP. Chainlink whales have acquired approximately 11M LINK tokens worth $77M in the past month. According to Santiment data, transactions valued at $1M or more are rising this year evidenced by wallets holding 100,000 to 1,000,000 LINK accumulating rapidly, nearing a 7-month high.

Regarding CCIP, Chainlink has recently made strides in the TradFi sector by integrating with Swift, the world’s leading provider of secure financial messaging services. This collaboration will rope in a dozen prominent TradFi institutions, including Citigroup, The Bank of New York Mellon, and Lloyds Banking Group, to the Chainlink network. By using Chainlink as an enterprise abstraction layer, Swift can securely connect its network to Ethereum Sepolia, leveraging Chainlink’s Cross-Chain Interoperability Protocol (CCIP) for seamless interoperability between blockchains.

Compound (COMP) ▴24.63%

Compound Finance is a decentralized lending protocol that allows users to earn interest on their digital assets by depositing them into the protocol. The algorithmic, open-source protocol allows for creation of money markets on the blockchain. Lenders can deposit funds in exchange for a return on their investment and borrowers can gain access to credit in exchange for depositing collateral. COMP is a reward and governance token, that allows holders to vote on various protocol improvement proposals.

In recent months, Compound has experienced significant developments. The project’s founder, Robert Leshner, resigned as CEO to launch Superstate Trust, a new venture to bridge traditional financial markets with the blockchain sphere. Despite Leshner’s departure, COMP’s price has shown resilience, indicating investor confidence in Compound’s strong foundation. Leshner’s move away from Compound is revealing itself as beneficial for COMP. His new project has the potential to diversify the crypto ecosystem and bring long-term benefits to COMP. Additionally, there are rumors of a potential airdrop from Superstate for COMP holders, adding to the token’s speculative value.

In June, Compound Finance introduced Compound Treasury, a streamlined gateway for institutions to engage with DeFi by offering a direct USD on-ramp via the protocol. The deposited USDC tokens earn a guaranteed 4% interest on Compound — a rate far surpassing traditional savings accounts or certificates of deposit. This move highlights Compound’s aim to connect traditional financial institutions with DeFi money markets.

Looking forward, Compound is likely to become an increasingly important player in the DeFi space. Not only has it pioneered significant advancements in the sector, such as the introduction of yield farming, the team at Compound shows no signs to slowing down their innovation.

Synthetix (SNX) ▴21.30%

Synthetix is a derivatives liquidity provisioning protocol for synthetic assets known as “Synths.” These Synths can be traded on various derivatives platforms, including Synthetix’s decentralized exchange, Kwenta. Synths replicate the performance of underlying assets and enable a wide array of derivatives and on-chain financial instruments, encompassing cryptocurrencies, indexes, inverses, and real-world commodities such as gold. SNX is the governance token for Synthetix and is also used as collateral for issuing Synths. The Synths are backed by a minimum collateralization ratio of 600%, providing stability and security to the system.

SNX’s surge was bolstered by the DeFi 1.0 narrative. Amid this momentum, Synthetix also unveiled Infinex, a perpetual DEX on Optimism. This project is tactically poised to challenge not only other perpetual DEXs but also major centralized exchanges like Binance. Synthetix’s founder, Kain Warwick, aims to set Infinex apart by enhancing user experience. Similarly to Kwenta, which is another perpetual DEX built on top of the Synthetic protocol, trading on Infiniex is facilitated through loans in Synthetix’s sUSD. In addition, instead of the conventional public and private key pair system, Infinex simplifies the process by using a familiar username and password mechanism for transactions, reserving private key signing solely for fund withdrawals. Should there be any issues with the network, Infinex has also built an emergency withdrawal option for potential downtime with the Optimism Account Relayer.

In light of regulatory uncertainties, Warwick has noted that Infinex will reduce its proprietary components, diminishing the risk of regulatory scrutiny. The platform will continue to be governed by the existing SNX token, with no intentions of introducing a separate Infinex token. Revenues from trading fees, integration fees, and SNX liquidity provider fees will be channeled to acquire more SNX. By offering an intuitive interface and prioritizing users, Infinex aims to attract a fresh wave of users to DEX trading, further advancing the maturation of the crypto market.

Dogecoin (DOGE) ▴15.07%

Dogecoin (DOGE) is a peer-to-peer, open-source cryptocurrency launched in 2013 as a playful alternative to Bitcoin, featuring a Shiba Inu dog as its logo. It is a distant fork of Litecoin, both leveraging a scrypt-based PoW consensus algorithm. Dogecoin has gained popularity thanks to its supportive community, and it is often referred to as the tipping currency on social media platforms. Despite starting as a parody, Dogecoin’s value surged during the 2017 and 2021 market cycles and gained further recognition through endorsements by figures like Elon Musk. As of July 2023, Dogecoin ranked 7th, with a market cap of $11B.

DOGE surged amid speculations that the token could play a larger role on Twitter’s rebranded platform, now known as X. Elon Musk, the owner of X and Tesla, has hinted at its potential integration on the social media platform. Analysts believe Twitter might soon accept DOGE for ad payments and other uses, much like Tesla’s acceptance of DOGE for purchasing merchandise. This positive sentiment has driven a $2.3B trading volume for DOGE. As Twitter Blue continues to explore payment options, the possibility of DOGE adoption remains a focal point for the cryptocurrency community.

Another factor boosting price speculation is the recent release of version 0.1.2 by core developer Michi Lumin, introducing improved functionalities such as executable utility and transaction verification for users. Meanwhile, version 0.1.3 promises further enhancements while maintaining the blockchain’s lightweight nature and cross-compatibility. Additionally, Dogecoin has successfully addressed major security vulnerabilities after the development team remediated the bugs identified by Halborn. These updates and security enhancements hold promising potential for DOGE’s future developments and performance.

Closing Remarks

Bitcoin’s unyielding dominance waned in July as discussions surrounding its ETF filings from June subsided. In its wake, altcoins have begun to shine, with several “OG” projects, including Ripple, Chainlink, and other DeFi 1.0 projects, delivering standout performances. This has led to a marked increase in their collective market presence. This evolving landscape not only highlights the fluidity of the cryptocurrency sector but also reinforces the importance of diversification within this constantly changing digital asset realm. As we progress, the potential and allure of alternative digital currencies remain undeniable.

The verdict in Ripple’s favor marked a pivotal moment in the crypto market. However, with the SEC hinting at potential appeals and expressing reservations about the final ruling, the broader issue of regulatory clarity remains unresolved, underlining the tension between crypto innovations and traditional regulatory structures.

In addition, it is heartening to see a resurgence in interest for many of the original DeFi protocols. As these pioneering projects rejuvenate their offerings with innovative concepts and solutions, their evolution and sustainability will be closely watched. It is exciting to see how these new concepts will withstand the test of time and continue to contribute value to the ever-evolving DeFi landscape.

As the narrative unfolds, it’s essential to be vigilant about market shifts, potential regulatory evolutions, and the strategic positioning of various tokens. The crypto story will be shaped by regulatory developments, market dynamics, and ongoing innovation from emerging and established DeFi projects. Stay tuned for our in-depth analysis in the upcoming months, as we help you navigate the ever-changing world of cryptocurrencies.

Yours sincerely,
Treehouse Research 🌳


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