Crypto Ecosystem

Is an altcoin season imminent, due to Ripple?

, July 20, 2023

In this week’s crypto highlights, we explore the price movements of XRP, BTC, UNI, and LINK. Additionally, this recap includes other notable industry news items that occurred over the last seven days. Without further ado, let’s dive into the latest market developments.

Noteworthy market events

Ripple scores partial win vs. SEC regarding XRP token status

It’s been 84 years… The legal WrestleMania between the U.S. Securities and Exchange Commission (SEC) and Ripple resulted in some intermediate conclusions.

On July 13, U.S. District Judge Analisa Torres ruled that Ripple did not violate federal securities law by selling XRP through exchanges and algorithms. However, according to the ruling, Ripple still violated securities laws when it sold $750 million worth of XRP tokens to banks, hedge funds, and other institutions. 

Despite the mixed result, Ripple CEO Brad Garlinghouse celebrated the decision, viewing it as a “step in the right direction.” The crypto industry also welcomed the ruling. Gemini co-founder, Cameron Winklevoss, stated that the court decision “destroys” the SEC cases against Coinbase and Binance. Bernstein, a powerful brokerage, called the ruling “a major relief for all tokens sold on secondary platforms,” which can potentially “weaken SEC’s stance against crypto.”

However, several legal experts were quick to pour cold water on the excitement, arguing that the summary judgment may rest on shaky ground. They argued that the SEC could appeal the ruling, with the potential of overturning it. Others believe a reversal is unlikely, or they position themselves in between, stating that an appeal might be possible but not immediate. The conflicting indicators leave uncertainty.

Following the ruling, the SEC initially stated that they are monitoring the situation, but later SEC Chair Gary Gensler expressed disappointment with part of Ripple’s XRP judgment.

Now, Brad Garlinghouse and another Ripple chief executive, Chris Larsen, await a trial to determine whether top managers are responsible for the alleged illegal sale of tokens to institutions.

Arkham Intelligence rolled out crypto data marketplace, launched a native token 

It was difficult to compete with the Ripple ruling in terms of popular discussions, but the Arkham Intelligence drama was a top contender.

On July 10, data provider Arkham Intelligence announced the launch of the Arkham Intel Exchange, a marketplace that will let people buy and sell on-chain data. The new platform utilizes a bounty mechanism that allows users to post “bounties” for desired data. Blockchain researchers and enthusiasts can then provide information in exchange for the pledged bounty. Additionally, Arkham informed its community about an airdrop of new ARKM tokens to support the initiative. To be eligible, users would need to post a referral link.

However, it appeared that the referral link also doxxed the users’ email addresses. Personal addresses were appended to the referral link and encoded in base64, which is a trivial decode. The pseudonymous “m4gicpotato” posted about the issue on Twitter, where it quickly went viral. Arkham’s initiative has been dubbed “DOX-to-Earn.” The platform’s CEO Miguel Morel defended the initiative, arguing that complete anonymity is not a primary feature of blockchain.

ARKM went live on July 17, with a $113 million market cap, after being distributed to beta testers and Binance launchpad participants.

Celsius founder arrested, sued by U.S. regulators

July 13 has proven to be a fateful day for Celsius. Last year, the company filed for bankruptcy protection on that very date. This year, Bloomberg reported that former Celsius CEO Alex Mashinsky was arrested following an investigation into the company’s collapse, once again on July 13.

Mashinsky was charged by the U.S. Department of Justice (DOJ) on seven counts, including conspiracy to commit securities fraud, commodities fraud, wire fraud, and price manipulation for Celsius’ CEL token. 

Separate cases were also brought by the SEC, CFTC, and FTC against Mashinsky and Celsius. The latter has issued a $4.7 billion fine along with the lawsuit. Authorities allege that from 2018 through June 2022, Mashinsky “orchestrated a scheme to defraud customers of Celsius Network LLC and its related entities.”

According to a court document, Mashinsky entered a not-guilty plea to the seven counts presented by the DOJ. Following his arrest, a U.S. District Judge set bail for Celsius’ founder at $40 million.

Apart from Mashinsky, former Chief Revenue Officer of Celsius, Roni Cohen-Pavon, faced four charges, including fraud. Damian Williams, the U.S. Attorney for the Southern District of New York, stated that Cohen-Pavon is presently “abroad.” There are currently no details about his potential extradition to the U.S.

Polygon proposed a new token dedicated to upgrading MATIC

Did you think we were finished with the July 13 date? Nope. The day was quite busy with crypto events.

On July 13, Polygon shared a whitepaper proposing POL that could serve as a single token for all Polygon chains, including Polygon proof of stake (PoS), zero-knowledge Ethereum Virtual Machine (zkEVM), and Supernets. Validators will be able to validate multiple chains, and each chain will offer various roles due to the POL upgrade. If the proposal is approved by the community, MATIC tokens will be upgraded to POL at a 1:1 ratio, and the transition could commence within a few months.

According to developers, the primary objective of this update is to ensure the ecosystem’s scalability without compromising security. POL validators will benefit from three revenue streams, including transaction fees, protocol rewards, and potential additional subnet bonuses. More technical information regarding POL smart contracts and migration will be disclosed in coming updates.

The conversion is expected to be straightforward – MATIC holders will be prompted to send tokens to a specific smart contract, which will then return an equivalent amount of POL. Developers said that the process will take at least four years to “adapt to the new token.”

Some community members criticized the initiative, highlighting the annual POL emission rate of 1%, and price targets in the whitepaper. It is assumed that the latter could create unnecessary FOMO for the token.

One sentence news

  • The Financial Stability Board (FSB) of the Group of 20 (G20) drafted new global regulations for crypto exchanges.
  • According to Financial Times, the first spot Bitcoin exchange-traded fund (ETF) in Europe will be publicly listed later this month.
  • Multichain announced the closure of its operations due to a lack of funds after the arrest of its founder, Zhaojun.
  • Aave activated its decentralized stablecoin GHO on the Ethereum mainnet.
  • An Ethereum analog of Bitcoin Ordinals — Ethscriptions — was hacked, resulting in the extraction of 202 different assets.
  • The SEC officially acknowledged receiving spot Bitcoin ETF applications from BlackRock, Fidelity, and other institutions. (This does not indicate the regulator’s approval or denial of the pending applications).

The XRP ruling had a ripple effect on crypto markets

The pre-trial ruling about XRP status was quite unexpected for market participants, so following it, XRP embarked on a new Apollo mission. It showed a more than 75% weekly price surge. According to Kaiko, as of July 17, XRP accounted for 21% of global crypto trade volume, surpassing BTC and ETH. In addition, XRP dethroned BNB from the fourth place of top digital assets by market cap. Part of this momentum is associated with token relistings on various crypto exchanges, following the U.S. judge’s decision.

Despite the bullish implications of the ruling, altcoin volumes (excluding XRP) did not see a significant bump. Several altcoins previously labeled as securities by the SEC, including SOL, MATIC, and ADA, also showed double-digit price rallies, but then some of them lost a sufficient part of their gains in the following days. This indicates that the “ripple effect” alone wasn’t enough to maintain bullish momentum.

It is assumed that the XRP ruling may give altcoins the regulatory clarity to launch in a manner compliant with the law. However, Christian Schultz, a former official at the SEC division of enforcement, said that no other U.S. district court judges are obligated to follow the reasoning of the XRP ruling. Furthermore, he said the fact that institutional sales of XRP were deemed investment contracts could support SEC Chair Gary Gensler’s views that virtually all initial coin offerings (ICO) are securities, especially if they involved private sales.

In total, while the XRP situation sparked general optimism in crypto markets, it’s unlikely to become a long-term factor supporting upward movement of altcoins, without other fundamental catalysts.

Following this “split victory,” the XRP price reached its 15-month high, breaking the $0.90 level. After that, a slight correction followed, with another bullish round. Notably, a new wave of buying pressure might not be fully inspired by the XRP ruling. 

On July 20, FedNow, the U.S. Federal Reserve’s instant payments system, was launched. Ripple partners, including ACI Worldwide, Volante Technologies, and Finastra, actively worked on its development. Some even claim that Ripple’s Innovative Interledger Protocol (ILP) provides the foundation for FedNow. As a result, it is considered that the FedNow launch may boost Ripple adoption, and indirectly affect the XRP price.

The asset has already reached the overbought zone, and broke the upper border of the Bollinger channel on a daily chart. This suggests that correction signs are still in place, with the $0.68 level as potential support.

Bitcoin dominance moved below 50%

Following the Ripple rally, Bitcoin price updated its 2023 high, reaching $31,700. But then, it moved back to its narrow range, and even managed to break it down, dropping below the 20-day EMA. The XRP ruling also resulted in the biggest one-day decline in Bitcoin dominance in a year, as altcoin prices outperformed Bitcoin’s. The largest cryptocurrency now accounts for less than 50% of the total crypto market cap, according to TradingView.

As we mentioned in our previous analysis, RSI formed a bearish divergence, while the Awesome Oscillator hints at fading upward momentum. In addition, long candle wicks on a weekly chart indicate that there is significant bearish pressure on higher levels. This suggests that price correction potential still exists. The $28,500 may act as a potential target for the bears.

According to Glassnode, it’s the quietest BTC market since the lull in early January 2023. A price range of just 4.2% separates the upper and lower Bollinger bands, hinting at a potential squeeze, which could soon bring increased volatility.

The new Uniswap protocol ignited an increase in user activity

Uniswap Labs, a team behind the largest decentralized exchange (DEX), revealed UniswapX, a permissionless, open-source protocol that offers trading across automated market makers (AMMs) and other liquidity sources. The objective is to expand on-chain trading and improve self-custody swapping.

One of the main UniswapX features is “gas-free” trade execution – swappers can authorize off-chain orders, while “fillers” pay fees on their behalf. It also assumes that there are no fees for failed transactions. According to Uniswap, “fillers” include the gas fee in the total swap prices. They also have the opportunity to reduce transaction costs by combining several orders. The protocol also provides protection against maximum extract value (MEV) bots.

While UniswapX is currently in “opt-in beta” on the Uniswap Labs interface, and there are no details on when a final version will be available, the new protocol helped the UNI price maintain its upward momentum. According to Santiment, daily active addresses trading UNI surged by 30% in a few days, after the UniswapX announcement on July 17.  

The asset has a quite steep ascending support line (white line). The general rule says, the steeper the trendline, the higher chance it can become broken. Bearish divergence on lower timeframes indicates that the asset may potentially retest the $5.68 support area. But daily RSI is in positive territory, and hasn’t reached the overbought zone, hinting that there still could be room for an upward movement.

LINK price took advantage of the CCIP launch

On July 17, Chainlink’s Cross-Chain Interoperability Protocol (CCIP) went live for early access users on the Avalanche, Ethereum, Optimism, and Polygon blockchains. CCIP support has already been integrated by Synthetix. BGD Labs started implementing the protocol in Aave. On July 20, CCIP became available to all developers across five testnets: Arbitrum Goerli, Avalanche Fuji, Ethereum Sepolia, Optimism Goerli, and Polygon Mumbai.

Unlike typical cross-chain bridges that use “wrapped” assets, Chainlink’s CCIP uses mechanisms that support smart contracts between “verified token pools” on different blockchains. According to the developers, this approach ensures seamless interaction between different chains.

This interoperability protocol is also viewed as a potential bridge between blockchain networks and banks. In June, Chainlink and SWIFT announced that they would be testing connecting dozens of financial institutions to blockchain networks via CCIP.

Following the CCIP launch, the LINK price increased by over 20% in a few days. The asset reached the overbought zone, and made a significant move above the upper border of the Bollinger channel. This suggests a price correction may happen, with the middle of the Bollinger channel as a potential target.

Tune in next week, and every week, for the latest CEX.IO crypto highlights. For more information, head over to the Exchange to check current prices, or stop by CEX.IO University to continue expanding your crypto knowledge.

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Disclaimer: For information purposes only. Not investment or financial advice. Seek professional advice. Digital assets involve risk. Do your own research.


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