Quantify Crypto - July Market Report

July Cryptocurrency Report-Price Movement and Leading Stories

Bitcoin finally breaks critical resistance of $10,000 on July 26th and goes all the way to $11,000 less than a day later.  Bitcoin would end the month of July at a price of $11,350, this is the second highest monthly close ever, only December 2017 was higher.  What was the cause of this move?  Generally we do not try to assign a single cause to each major price move, instead look at the overall macroeconomic conditions and determine if we are in a long term bull scenarios or long term bear scenario.  The two biggest drivers of a bullish scenario for Bitcoin in 2020 are the May halvening, and the monetary stimulus response to the coronavirus pandemic.  Billions of new dollars are printed every day, devaluing all other existing dollars.  In contrast, Bitcoin experienced its third halvening event this May and where its block reward was reduced to 6.25 BTC per block.  There are only 2,550,000 Bitcoin remaining to be mined, at a rate of 6.25 per block, and 6 blocks per hour, this is 900 new Bitcoins a day.  

July Heatmap

Recap of Major July Events

Dogecoin goes viral on TikTok, this is the first ever pump and dump caused by the TikTok platform, Apple founder Steve Wozniak begins a lawsuit against YouTube for supporting Bitcoin giveaway scams using his image.  Chainlink was heavily in the spotlight this month, it reached a new all time high, integrated with Binance Smart Contract (BSC) platform and many other new partners.  Ethereum has been performing well up over 40% from last month to a price of $395, it is boosted by the increased functionality of smart contracts that are made possible by off chain data provided by Chainlink, the testnet for Ethereum 2.0 and proof of stake also increases positive sentiment.  Bitcoin breaks and holds above $10,000 for the first time since February, and is trading at $11,400 at the time of writing.  Cardano finally launched its long awaited shelly Shelly mainnet on July 29th.  

Dogecoin starts the Party

Early in the month on July 8th, Dogecoin had a breakout to 60 satoshi, this is the highest level for DOGE since April of 2019.  Many people(us included) see dogecoin as an indicator of overall market sentiment, meaning when DOGE does well it signals a shift in the entire cryptocurrency ecosystem from bearish to bullish.  The rationale for this is that if dogecoin, which was originally created as a joke, can have big returns, everything can.  In January 2016, dogecoin had a rally while Bitcoin was still $500 and just beginning to turn the corner out of a multi year bear market.  Less than a month after that historic breakout for dogecoin, Ethereum began to rally and would become the first alternative cryptocurrency to reach mainstream.  Tesla founder and CEO Elon Musk is a big fan of DOGE, and tweeted this image of what he predicts the future will hold for the fun cryptocurrency.

Chainlink and Ethereum

Chainlink has had a strong month, making a new All Time High of $8.83 on increased hype around DeFi.  Off chain data provided by chainlink oracles is a critical component to all DeFi projects, and this use case will help Chainlink cement itself as an essential part of the greater cryptocurrency ecosystem.  Ethereum used to tout that their turing-complete smart contracts were able to perform any type of computational task.  However a smart contract with no ability to import external data is limited to token creation and transfer, so Chainlink’s oracles will allow Ethereum to write the types of complex contracts they have envisioned from the start.     

The testnet for Ethereum 2.0 has finally been launched this month, and the Casper proof of stake hard fork may happen before the end of 2020.  Back in 2017, Casper was “just around the corner, only a few months away, to be completed before the end of 2018”.  I am not super enthusiastic about Ethereum until they prove the ability to make consistent progress on the protocol.  The Ethereum Foundation’s delays have allowed other Proof of Stake platforms, Tezos and Cardano, to shrink a once massive gap, and implement Proof of Stake before Ethereum.         

Cardano

On July 29th Cardano executed its planned hard fork to the Shelly mainnet.  This will allow for users to begin staking their Cardano in the Proof of Stake consensus starting on August 18th.  This hard fork has been long awaited, and it is very good that Cardano is achieving their planned protocol upgrades without delay.  I become more bullish on Cardano each time they complete a milestone on schedule.  

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None of this is meant to be financial advice and I do not have any financial expertise.

Full discloser: I do own Bitcoin and other cryptocurrencies.