Crypto Market Forecast: W/C 24th August 2020

Heat in the crypto bull run cooled a little last week with some major cryptos trading in the red. The Bitcoin price fell by ~1%, while the Ethereum Price and XRP Price both slipped by 8% and ~3% respectively. The overall crypto market cap for all coins was down ~2%.

Surprising crypto news this week was a major outage on the public testnet for Ethereum 2.0, Medalla, over the weekend that took most of its testnet validators offline. The incident occurred because of a Cloudflare outage that affected node synchronization. Confusion unfolded across the testnet as Prysmatic Labs, the primary node operator team behind Medalla, struggled to fix the initial issues. The outage meant nodes were prevented from publishing blocks and validating transactions. Describing the incident in a blog post, Raul Jordan the editor of Prysmatic Labs said that Medalla “spiraled into a series of cascading failures this past weekend which exposed several vulnerabilities and process faults in how to best handle critical scenarios.” While such an incident is one of the worst-case scenarios for a mainnet, the series of events “were the best thing to happen to the testnet,” says Jordan, as it gave testers insight into what a network catastrophe looks like without the consequences of assets of real value being at stake. The testnet is now back online. Jordan also clarified that the incident would not inherently affect the launch date of ETH2. “The incident from this weekend was a good stress test for many clients and actually checks off a few requirements on the launch checklist,” he said.

Also last week, major stablecoin operator Tether (USDT) announced that it is now leveraging the OMG network to circumvent congestion issues on the Ethereum network. Ethereum, which serves as the most popular platform for USDT transactions, has faced rising transaction loads over the last year driven by the surge in popularity of DeFi solutions on its network. The increase in demand to use the network has led to long wait times and very high gas fees for users.

The OMG Network will be used by Tether’s partner exchange, Bitfinex, to facilitate more deposits and withdrawals of USDT in times of market stress. OMG’s public mainnet beta was launched in June 2020. The network is a layer 2 scaling solution for Ethereum that utilizes Plasma, a second layer of smart contracts over the main blockchain that doesn’t require every contract transaction to be broadcast or validated by the entire network allowing for faster confirmation times. The price of the OMG token has risen by ~124% in the last week on the back of the Tether announcement.

Confusion reigned around Polkadot last week due to a redenomination of the DOT token. New DOT is now 100x smaller than old DOT which for DOT holders means that their balance is now 100x higher and the price per DOT is 100x lower. For a full explanation check this article.

Crypto news for the week ahead

28th August– QTUM version 0.19.1, hard fork and mandatory upgrade for the network

This Friday the QTUM (QTUM) proof-of-stake platform blockchain will launch a mandatory hardfork to enable offline staking for QTUM holders. The update will offer the ability to stake QTUM from an offline wallet address by delegating that address to an online Super Staker node. Prior to this update, QTUM holders that did not want to run a full node, or had security concerns, could not participate in staking. The price of QTUM has risen by ~22% in the last week.

24th August– INX Security Token sale

Gibraltar based cryptocurrency exchange platform INX will launch an Initial Public Offering this Monday hoping to sell 130 million Ethereum based Security tokens for USD 0.90 each. This equates to a raise of ~USD 117 million. The U.S. Securities and Exchange Commission (SEC) posted a notice of effectiveness, officially clearing the sale. Tokens offered in the sale can be used to pay for fees on the INX platform and entitle holders to a share of the company profits.

Top 10 Crypto Summary

It was a difficult week for some large-cap assets on the Brave New Coin market cap table. Some assets suffered double-digit losses. Chainlink (LINK) was the biggest loser amongst the top 10, however, it had been the highest gainer over the last 30 days. Data from Santiment indicates that August 23rd was a record day for daily active addresses on the network.

Bitcoin Price Chart

The price of Bitcoin (BTC) started the week strongly briefly crossing the USD12,000 before retracing and settling around USD11,600 price level. Market data provider Skew reported last week that Bitcoin futures open interest is sitting at an all-time high at USD 5 billion. The high open interest may indicate confidence from investors that Bitcoin’s recent bullish trend may be set to continue.