Market Outlook - Week 32

Introduction

In this weekly market outlook, we examine the most recent advancements in technology and money. Base, incubated by Coinbase, has announced Onchain Summer. Onchain Summer event aims to highlight the potential of NFTs beyond mere speculative assets. He emphasized the event's goal to encourage people to set up their first wallet and immerse themselves in this futuristic experience.

We now focus on PayPal launching their own stablecoin and competing against USDC and USDT in the stable wars. Then we examine the recent Consumer Price Index (CPI) and how it seems that inflation is down.

We also examine Liquid Staking of Ethereum, which is becoming more popular, and the appearance of liquid staking derivatives in the cryptocurrency market.With an emphasis on Bitcoin and Ethereum, we present an update on the state of the cryptocurrency market at the moment. We also go through the DeFi sector's results, emphasizing the large increase in Base. Finally, we rank the crypto market's top and bottom performers and offer a prediction for the coming week. Whether you're an experienced investor or an interested spectator, this article gives insightful perspectives into the changing worlds of finance and technology.

Base and Onchain Summer

Base is a Layer 2 blockchain network on Ethereum, incubated by Coinbase. It's designed to be a safe, affordable, and user-friendly platform for building on-chain applications, with full decentralization as its goal, thanks to collaboration with Optimism.

Coinbase has kicked off "Onchain Summer" to celebrate the launch of its new layer 2 network, Base. This multi-week event features a series of Web3 activations spanning art, gaming, and music. Notably, big names like Coca-Cola and renowned DAOs such as Friends With Benefits are actively participating. The event, which began with the mainnet launch of Base, will see over 50 brands, including the likes of NFT creator platform Zora, hosting NFT mints on the Base network.

Coinbase is not just stopping at branded NFTs. They've teamed up with Prop House, associated with the NFT project Nouns DAO, to distribute over 100 ETH (equivalent to $186,000) as grants for developers who are building on Base. There's also an upcoming hackathon named ETH Global Superhack, which promises rewards totaling $175,000. To further engage the community, Coinbase is offering a free NFT to those who bridge their ether to Base, marking the launch of the Base mainnet. So far, this initiative has seen over 125,000 individuals minting more than 30 million free NFTs.

If you want to learn more about Base, checkout our articles about projects and how to get started with Base.

PayPal Stablecoin

PayPal has ventured into the cryptocurrency realm by launching its own stablecoin, PayPal USD (PYUSD). This move comes at a time when the U.S. government is heightening its oversight of the crypto sector. PYUSD, created in collaboration with the New York-based Paxos Trust, is pegged to the U.S. dollar and built on the Ethereum platform. It's slated for release in the coming weeks and will be available in U.S. states that permit digital asset transactions. Touted as a multifunctional tool, PYUSD can facilitate person-to-person payments, transfers to external wallets, and purchases. However, when used for buying, PayPal will automatically convert PYUSD to fiat currency.

Users also have the flexibility to swap PYUSD with other digital currencies supported by PayPal, like BTC, BCH, ETH, and LTC. Moreover, the stablecoin will soon be integrated into Venmo, PayPal's mobile payment service. To widen its reach, PYUSD will be introduced to various digital asset exchanges. Yet, its initial acceptance by the beleaguered Huobi exchange has raised eyebrows. Emphasizing the importance of a stable digital counterpart to traditional currencies,

Earlier in the year, Paxos faced regulatory obstacles when the NYDFS instructed it to cease minting the BUSD stablecoin. Additionally, the SEC expressed concerns about the same coin. Despite the positive reception of PYUSD in some regulatory circles, its implementation has sparked debates. The elevated 'gas' fees on Ethereum could deter users, leading some to suggest that PayPal might have been better off with a different blockchain. Post its announcement, there were instances of counterfeit PYUSD tokens on various blockchains, raising security concerns. Another contentious feature is PayPal's ability to freeze or erase the value in PYUSD wallets.

CPI

The consumer price inflation (CPI) has showed signs of moderation in July. This trend has ignited hopes that the Federal Reserve might be nearing the conclusion of its rate-hiking phase. In July, the consumer price index (CPI) saw a modest increase of 0.2%, according to the Labor Department. This brought the annualized rate to 3.2%, a slight rise from June's 3%. Interestingly, this was below the anticipated rise to 3.3% as predicted by economists. When focusing on the core CPI, which excludes the often fluctuating food and energy prices, the growth rate decelerated to 4.7% in July, a small drop from 4.8% in the previous month.

The CPI's trajectory has been on a downward slope since its peak of 9.1% in June 2022. This has led traders to reconsider the likelihood of further rate hikes by the Fed, especially as inflation inches closer to its 2% annual target. Yet, caution prevails in the market.

The Narrative

Ethereum staking has surged as a result of this. The use of liquid staking derivatives has increased. The Liquid Staking Derivatives financing space is a recent development in the market.

LSDfi expands on LSDs to open up new market potential involving validator monopolies, staking yields, risk reduction, and even validator censorship. By encouraging healthy competition among validators and preventing one party from controlling the consensus layer, these approaches offer special potential for users.

LSDs, tokens that users obtain when they stake their assets, are the foundation of LSDfi. These tokens improve network security while also enabling users to increase their income beyond their staking payouts. The flexibility and liquidity that LSDs offer consumers is a crucial component. This means that even without locked assets, users can still benefit from staking cryptocurrency. Staked assets are represented by LSDfi, which can be exchanged, lent out, restated, or used in arbitrage transactions on secondary markets. Read more here to learn more about LSDfi

Crypto Market data

Bitcoin appears to have finally broken out of its month-long range. The unfortunate news is that it collapsed downward. Right now the place to keep in mind is 26,000 and 27,000. If these levels can hold then market structure will hold. The biggest issue for crypto right now is the US stock market and the dollar. The US stop market looks like it will be having a pullback while the dollar looks like it wants higher. Till we have seen the downside of the US stock market, it might be best to wait to bid Bitcoin.

If you decide to trade Ethereum this week, I hope your mental health is in peace. Trading Ethereum has been awful, it's been a consistent chop for the past weeks. Ethereum looks like it's heading to $1720, which is where I will be placing some buy orders. If you're not interested in trading Ethereum, there is a magnitude of Alts being launched on-chain, but be careful—you can be roughed up.

The DeFi Sector

With Ethereum chopping around this week, the best performing chain is Base

Base’s Onchain Summer has recently started and with that over $75 Million TVL has been locked up in the chain. With new projects launching everywhere, check out our article about 7 projects on Base.

Best and worst performers

The top gainer of this week is Rollbit, this is because Rollbit launched a new buy-and-burn feature that will take portions of revenue and use it to purchase and then destroy RLB tokens every day, theoretically helping to strengthen the token’s price.

There isn't any narrative when it comes to the losers. These are all random coins that had previously had their time in the sun.

The week ahead

For now Bitcoin is trading sub $30,000,We broke below the month-long range. I think we will start trading back at $27,000 and that is when you want to potentially position yourself. If you want to position yourself, waiting for strength or a leverage flush is best. Till then no point in trying to force a trade.Ethereum appears to be in dire straits and may be headed lower. For Ethereum, a claim of $1700 or $1918 is the best long. There is no purpose in interacting with Ethereum until that. It is preferable to go on chain and start trading the alts there if you are eager for gains. There are thousands of alternative launches every day, but be careful—you can be roughed up.

If you are not in any positions yet, it might be best for the market to show some strength. It's also great to start researching new narratives and projects. You can read those here.