Cryptoassets of the Month: July 2023

Every month, our research team will present the cryptoassets of the month that increased or dropped in value by more than 15%. With a data-driven approach, we highlight the most important developments and events causing price movements.

Figure 1 –  30-Day Performance: Cryptoassets of the Month vs. Traditional Asset Classes

Source: 21Shares, CoinGecko, and Yahoo Finance, from 30-June-2023 to 31-July-2023 (Close Price)

XRP Ledger (XRP)

XRP traded up 47.58% in the past month. On July 13, U.S. District Court Judge Analisa Torres issued a summary judgment arguing that the XRP token, by itself, was not a security under U.S. law. Specifically, Judge Torres distinguished between the target of an investment contract (e.g., XRP as a token) versus the sale and marketing of that asset (e.g., the investment contract around the sale or offer of XRP). The former was not deemed a security, but the latter was in certain circumstances, such as institutional sales. Crucially, "programmatic sales" (e.g., XRP sold on exchanges) did not constitute a securities offering, which prompted centralized exchanges like Coinbase, Kraken, Bitstamp, and Crypto.com to relist the token in the U.S.

Stellar (XLM)

Stellar's native token XLM traded up 35.79% over the past month as the network continues facilitating cash-to-crypto on and off-ramps. Bitso, a leading Latin American crypto exchange, integrated Stellar's Anchor Network to enable businesses worldwide to transact in USDC to Argentina, Colombia, and Mexico, where Bitso has a direct connection to local banking systems. In addition, Lemon – a mobile wallet with more than 1.7 million users in Argentina, Brazil, Mexico, Colombia, and Peru – integrated USDC on Stellar, allowing users to perform seamless peer-to-peer payments or hold the asset as a digital store of value.

Solana (SOL)

Solana (SOL) rallied 25.52% in July. On July 19, Solana Labs introduced Solang, a new compiler that allows developers to build on Solana with Solidity. Solang will help bridge the gap between EVM developers and the Solana ecosystem, as Solidity is the primary programming language used for Ethereum smart contracts. Solana's effort toward supporting multiple programming languages for smart contracts (Rust, C, Python, and now Solidity) is incredibly positive, as it invites a broader skill set of developers entering the ecosystem – a leading indicator of value creation. In addition, Solana Labs also unveiled GameShift, a unified game development API designed to simplify and accelerate Web 3 game production.

Uniswap (UNI)

Uniswap (UNI) rose 23.86% over the past month amidst exciting developments. At the Ethereum Community Conference (EthCC) in Paris, Uniswap Labs introduced UniswapX. This open-source, auction-based protocol aggregates on-chain and off-chain liquidity by outsourcing liquidity routing to an open network of third-party fillers who compete to execute trades. Today's most pressing issue affecting DEXs is Maximal Extractable Value (MEV), the profits validators extract by re-ordering, inserting, or censoring transactions within a block. UniswapX offers gas-free swaps and internalizes MEV as a price improvement for end-users. In addition, UniswapX will enable cross-chain swapping later this year, allowing traders to specify if they want to receive native assets on the destination chain rather than "wrapped" or synthetic tokens.

Chainlink (LINK)

Chainlink (LINK) rose 19.65% over the past month. On July 17, Chainlink launched the "early access" phase of its Cross-Chain Interoperability Protocol (CCIP) in the Avalanche, Ethereum, Optimism, and Polygon blockchains. As an increasing number of blockchains gain prominence, adopting an industry standard for cross-chain communication is essential to avoid siloed networks, liquidity, and poor user experience. CCIP aims to fill this gap, fitting into the broader off-chain middleware infrastructure that Chainlink has built since 2017. As such, it takes advantage of pre-existing innovations, including off-chain reporting (OCR) and Decentralised Oracle Networks (DONS). CCIP also features additional layers of protection via the Active Risk Management (ARM) Network and transfer rate limits.

Ethereum (ETH)

Ethereum traded down 3.97% over the past month. The sixth edition of the Ethereum Community Conference (EthCC) took place in Paris from July 17-20. EthCC was filled with exciting announcements, including Lens Protocol V2, Gnosis Pay, and the already mentioned Solang, UniswapX, and Chainlink's CCIP. Regarding infrastructure developments, July was a remarkable month for scaling solutions building on top of Ethereum – both Base and Mantle Network mainnets opened for builders ahead of general availability later this year, while Celo announced it would migrate from an EVM-compatible L1 to an Ethereum L2, leveraging the OP Stack. On a final note, ETH's staking ratio surpassed 20% in July, with ~25 million ETH ($46 billion) now securing the network.

Bitcoin (BTC)

Bitcoin traded down 4.09% over the past month. On July 12, the U.S. government sent 9.8k BTC ($295 million) from the March 2022 seizure of James Zhong's assets to a potential Coinbase address. For context, a court filing revealed that the U.S. government sold ~9.9k BTC via Coinbase in March and that they would liquidate the remaining seized ~41k BTC over four more batches this year. Assuming the amount sent on July 12 was sold (no court filing confirmation yet), that still leaves ~31.6k BTC to be liquidated over three more batches. On another note, BTC CME futures volume surpassed $55 billion in July, the highest monthly figure since January 2022. The uptick indicates increasing institutional interest, especially as regulatory tides in the U.S. appear to be shifting.

Stacks (STX)

Stack's native token STX traded down 15.26% over the past month. On July 21, ALEX – the most prominent decentralized exchange (DEX) on the Stacks network – introduced its "Decentralized Launchpad." Applications are open to everyone, but holders of the ALEX governance token must approve candidate projects. Upon approval, a launch date is set alongside a fundraising target. On another note, the Stacks Foundation approved some critical bounties related to sBTC. The "Nakamoto release," expected in Q4 this year, will introduce a trustless two-way system peg for sBTC and BTC.

Bitcoin Cash (BCH)

Bitcoin Cash (BCH) traded down 19.12% over the past month, underperforming the broader crypto market. BCH's relative strength index (RSI) was in the "overbought" zone (>70) for the latter half of June as the cryptoasset rose ~171% on the back of its listing on EDX Markets. After this correction, BCH's RSI is hovering around 50. If we look at the futures market, BCH's open interest across centralized exchanges reached $574 million on July 2, a more than 500% increase from the previous month, suggesting that its rally toward the end of June was primarily driven by leverage and speculation.

Fantom (FTM)

Fantom's native token FTM traded down 22.71% over the past month. On July 6, more than $125 million worth of cryptoassets was illicitly withdrawn from Multichain, with nearly $120 million coming from Multichain's Fantom bridge. A week later, the Multichain team announced they would cease operations due to their lack of access to the platform and the suspicious activities surrounding the company's CEO, Zhaojun. Cross-chain bridges remain a honeypot for hackers, with over $2 billion stolen since 2022. On July 25, the Fantom Foundation announced that LayerZero and Axelar, two interoperability protocols, introduced bridged versions of USDC, USDT, WETH, and WBTC to Fantom.

Strategies of the Month: July 2023

Every month, our research team will also present the ten best-performing strategies of the month in our product suite. With a data-driven approach, we highlight the most important developments and events causing price movements.

Figure 2: 30-Day Performance: Strategies of the Month vs. Traditional Asset Classes

Data Source: 21Shares Index Management Console and Yahoo Finance, from 30-June-2023 to 31-July-2023 (Close Price)

ALTS

The 21Shares Crypto Mid-Market Index ETP (ALTS) rallied 16.90% over the past month. ALTS seeks to track the investment results of an index capturing the mid-cap portion of the cryptoasset market. ALTS benefited from XRP being the largest constituent of the index, with a weight of ~31%. XRP was the best-performing cryptoasset of the month due to U.S. District Court Judge Analisa Torres' ruling in a summary judgment that the XRP token, by itself, is not a security under U.S. law.

HODLV

The 21Shares Crypto Basket Equal Weight ETP (HODLV) appreciated 13.30% over the past month. HODLV tracks the investment results of an equally-weighted index composed of the top 5 largest cryptoassets based on market capitalization. The index’s best-performing asset was XRP, which appreciated 47.58% over the past month, followed by Cardano (ADA), which registered a 7.15% month-over-month price increase.

STAKE

The 21Shares Staking Basket Index ETP (STAKE) traded up 10.97% over the past month. STAKE seeks to track an index comprising the largest cryptoassets with institutional-grade support for staking. Staking is a process whereby investors, commonly referred to as validators, commit a portion of their cryptoassets (the "stake") to secure a blockchain by confirming transactions – and gain access to a recurring value stream of native tokens to compensate them for their work. Staking is a core energy-friendly feature of Proof-of-Stake (PoS) blockchains, and each blockchain network has its own set of staking requirements. The index's best-performing asset was SOL, the third-largest constituent weighing ~19%.