21Shares Monthly Review - August 2021

August was a breezy month for altcoins; namely, Cardano (ADA), Solana (SOL), and Terra (LUNA) are breaking new highs, picking up where they left off since the market crash in May. As of writing, over the past 30 days, ADA spiked by 119.2%, while SOL and LUNA returned 239.6% and 165.5%, respectively. While they’re doing better than the previous month, BTC and ETH are still lingering below their peak levels. As of the writing of this report, BTC and ETH still dip below their all-time highs by 26.28% and 21.48% respectively. In other news, the non-fungibles are once again turning heads after electronic payments giant Visa made its first swipe on the cryptoasset when they bought one of Cryptopunks’ digital portraits for $150,000. Further in this report we’ll also brief you on the developments of the asset of the hour, NFTs.

The Smart Contract Race

Dubbed “Ethereum Killers,” Cardano, Solana, and Terra are out to get Ethereum. These altcoins, which are essentially open-source blockchain protocols, are on a mission to take away from ETH’s market share. They plan to do so by capitalizing on improving at least one of Ethereum’s main shortcomings, that Ethereum itself is aiming to fix through a series of upgrades. While these upgrades are by nature expected to take a long time, they’re taking longer than planned. Ethereum’s Founder Vitalik Buterin said that while they thought the ETH 2.0 would take one year, they found out it would actually take six.These upgrades are expected to fix the volatility issue of gas fees, network speed and energy consumption via the Proof of Stake migration.

What does that delay mean for the killers in the smart contract race? It only buys more time for the altcoins towards the finish line. On this front, these are a few highlights of how things developed this month:

1. Cardano, now the third largest token in the world with a market cap of over $90 billion, announced it will launch its smart contract functionality on September 12.
2. The currency that has only been around for 18 months, Solana, comes in eighth in the crypto market game with regards to market capitalization. It just reached it’s all-time high of $124 on August 31st, which makes it quadruple in price in just one month.
3. Terra on the other hand also reached its all-time high of $36.61 on August 29th, thanks to Solana’s Wormhole project opening a cross-chain pipeline between both SOL and LUNA which boosted confidence in the latter.
4. Also capitalizing on NFTs and Dapps, the smart contracts platform Avalanche saw its native cryptocurrency AVAX double in price by mid August. Moreover, the Avalanche Foundation is offering $180 million in liquidity mining incentives to bring more apps into its DeFi ecosystem. Avalanche has committed $20 million of its native token for Aave users and $7 million for Curve users over a three month period.

As mentioned in our latest newsletter, we at 21Shares believe this rise of Layer 1s outside Ethereum is predominantly driven and hyped by retail investors since institutional-grade investment products on these underlying assets are only available in our product suite, except for Luna, which no issuers offer at the moment. Our research team believes the narrative will shift as Ethereum competitors continue to grow and the need for blockchain interoperability starts to surface.

The Rise of NFTs

Following a burst of interest in the booming NFT (“Non-fungible-tokens”) market, trading volumes on the biggest NFT marketplace OpenSea have reached stratospheric heights for the month of August - according to an official announcement on their Twitter, OpenSea recorded a monthly sales volume of over $3 billion. This record-breaking volume outnumbers July's $325 million by more than 900 percent, indicating an exponential growth in NFT demand throughout the month.

These are the most important events that took place in the NFT market in August:

• Visa, the financial services giant, joined the NFT mania after announcing that it has bought a CryptoPunk 7610, one of 3,840 female punks, for around $150,000. Following in the footsteps of early paper credit cards and zip zap machines, the decision to purchase the CryptoPunk artifact can be seen as a sign of approval for the role that NFTs could play in the future of commerce.
• Budweiser, the American beer company, bought an NFT of a rocket designed by NFT platform Rocket Factory, which they instantly turned into their new Twitter profile picture. In addition to that, they purchased a crypto domain name, Beer.eth, which indicates they might be incorporating NFTs in future marketing initiatives.
• Stephen Curry, the American professional basketball player, entered the NFT game by acquiring a Bored Ape Yacht Club (BAYC) NFT for 55 ETH (~$180,000).
• Sotheby’s, the famous auction house, announced that they will auction 101 Bored Ape Yacht Club NFTs for an estimated $12 million to $18 million. The digital collectibles will be available for online purchase from September 2-9.

Monthly Returns

The returns of top 15 assets by market cap - excluding stablecoins - over the last month were as follows —> BTC (13.37%), ETH (35.37%), ADA (109.78%), BNB (39.21%), XRP (58.67%), DOGE (30.95%), SOL (199.89%), DOT (87.46%), UNI(35%), LUNA(192.17%), LINK(17.03%), BCH(15.88%), LTC(18.23%), ICP(51.32%), MATIC(23.85%) .