WAXP Surges to Defy Market Movement as Wax Network Activity Rebounds

After making an attempt at recovery on Tuesday, Bitcoin took a tumble under $27,000, and Ether went to $1,550. The second-largest cryptocurrency is currently down 5.2% in the past week compared to Bitcoin’s mere 1.4%.

At the time of writing, BTC is trading at $27,280, up 66% year-to-date (YTD), and Ether is changing hands at $1,576, having gained 32% this year. Ether’s underperformance compared to Bitcoin stems from several reasons, including the recent ETH sales by the Ethereum Foundation and limited enthusiasm for Ether futures ETF. Additionally, a “notable rise” in the cryptocurrency’s supply over the last month due to reduced transaction activity has resulted in less Ether being burned.

With this, the Bitcoin market dominance rate rose to 51.2% on Tuesday, near a 26-month high of 52% at the end of June. 

Amidst this, positive news came from crypto exchange Bitstamp, which said it’s in talks to help three large European banks begin offering crypto services around the first quarter of next year. 

Meanwhile, a new report from Fidelity Digital Assets (FDA) is arguing for Bitcoin to be evaluated separately when constructing crypto investment portfolios as it is fundamentally different from other digital assets. FDA is the crypto-centric investment division of Fidelity, the third-largest asset manager, with $4.24 trillion in assets under management (AUM).

In its most recent research report, authors Chris Kuiper and Jack Neureuter said that investors should have two separate frameworks for considering investment in the crypto ecosystem — one to examine bitcoin as an emerging monetary good and the other for other digital assets that exhibit venture capital-like properties.

“Bitcoin is currently the most secure and decentralized monetary network,” noted the report, adding the return profile of BTC is “driven by two strong tailwinds: the global growth of the broader digital asset ecosystem and the potential instability of traditional macroeconomic conditions.” 

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Crypto Against the Uncertain Macro Backdrop

Amidst all this, top-ranking Federal Reserve officials indicated this week that rising yields on long-term US Treasury bonds, which directly influence financing costs for businesses and households, could keep the US central bank from further increases in its short-term policy rate.

“We are in a sensitive period of risk management, where we have to balance the risk of not having tightened enough against the risk of policy being too restrictive,” said Fed Vice Chair Philip Jefferson. He also talked about the central bank to “proceed carefully” with any further rate, saying, “I will remain cognizant of the tightening in financial conditions through higher bond yields and will keep that in mind as I assess the future path of policy.”

While the projections issued last month showed that policymakers have been calling for one more increase in the benchmark federal funds rate this year, the CME Group’s FedWatch showed the estimated chance of a rate hike at the upcoming FOMC meeting on Oct. 31–Nov. 1 has plunged from 30% at the beginning of the week to now 11.8%. 

The Fed raises rates to move market-based borrowing costs higher, slow down the demand for goods and services, and lower inflation. But of course, the central bank does not want to raise the rate too much and damage the economy. However, the fight against high inflation is not over, and the report on consumer prices this Thursday could still influence the outcome. Not to mention, the ongoing Israel-Palestine conflict could also shift sentiments.

The war in the Middle East is currently affecting risky assets negatively as investors seek safe havens like the US dollar and gold. In fact, since Hamas’ surprise weekend attack on Israel, BTC price has declined by about 4%.

If we look at Russia’s invasion of Ukraine in early 2022, BTC lost as much as 7% in a single day. But then, in March, we saw a sharp rebound in Bitcoin and the broader crypto market. This shows that during such geopolitical struggles, typically, investors tend to flee to the safety of gold, while assets deemed riskier tend to see declines.

However, according to hedge fund giant Paul Tudor Jones, the combination of extensive geopolitical risk, which he called the “most threatening” he has “ever seen,” and rising US government debt levels makes both Bitcoin and gold attractive options.

Talking about the US fiscal position, Jones called it the weakest since at least World War II. 

“As interest costs go up in the United States,” said Jones, “you get in this vicious circle, where higher interest rates cause higher funding costs, cause higher debt issuance, which cause further bond liquidation, which cause higher rates, which put us in an untenable fiscal position.”

“I can’t love stocks,” said Jones, “but I love bitcoin and gold.”

Jones first made his foray into Bitcoin in May 2020, when he said that he had put 1%-2% of his assets in the largest cryptocurrency. Then, in 2021, he said he wanted Bitcoin’s allocation to be higher at 5%. Earlier this year, Jones said an unfriendly regulatory picture and the Fed’s determination to tackle inflation were likely headwinds for Bitcoin.

WAXP Token Attracts South Korean Interest 

As digital asset prices turned red, the crypto market capitalization dropped by 1.8% to $1.09 trillion, a decrease from its high of about $3 trillion during the 2021 bull market peak. The market cap had previously hit a low of around $820 million in Nov. 2022. However, it rebounded in the initial four months of 2023, reaching above $1.3 trillion. Since then, it has mostly plateaued, hovering near the $1 trillion mark for the last two months.

According to the Korea Financial Intelligence Unit (KOFIU), a government agency that oversees the nation’s anti-money laundering (AML) regime, South Korea’s crypto market also bounced back during the first half of 2023. The country’s crypto market cap rose from January to June this year, increasing 46% to reach a valuation of 28.4 trillion won (US$21.08 billion), according to a KOFIU study released this week. However, the South Korean crypto market is still down 48.5% from its peak of 55.4 trillion won (US$40.9 billion). 

The authorities surveyed 26 crypto trading platforms and reported an average daily trading volume of 2.9 trillion won (US$2.19 billion) in the first six months of this year, a drop of 1.3% from the latter half of 2022. Ten of these surveyed exchanges reported difficulties in maintaining operations due to a lack of transaction fees because of the estimated number of crypto traders also falling 3% to 6.06 million from the previous period’s 6.27 million traders.

South Korean traders are known for their irrational exuberance, which led to the rise of kimchi premium, the difference in crypto asset prices between South Korean exchanges and foreign exchanges. Additionally, when a new crypto asset is added to the country’s one of the biggest crypto exchanges, Upbit, it tends to send the prices of that crypto skywards for a brief period. 

This time, it’s WAXP that is enjoying this phenomenon, with the price of the token seeing increased momentum this week while the broad crypto market is experiencing a decline.

On Sunday, WAXP price was trading around $0.0423, and on Monday, it went to surpass $0.0491, rising 16% only to drop back down even lower to $0.0417. But since then, the price of WAXP has rallied yet again by 15.6% as it hit $0.0482.

At the time of writing, the crypto asset with a market cap of $163.4 million is trading at $0.0480 while managing about $15.4 million in 24-hour trading volume.

During the initial two months of 2023, WAXP surged more than 116% in value as it hit $0.090 in late Feb. However, from there onwards, the price continued on a broad downward trend and lost 60% of its value as it fell to $0.0365 on Sept. 12. 

Now, over the past month, the crypto asset has been gradually recovering and is up 32% during this period. The token is still down 42% over the past year and a staggering 98.25% from its Jan. 2018 peak of $2.77. Compared to that, the price of WAXP only managed to hit almost $1 during the latest bull market. 

This latest price action of WAXP comes as WAXP/KRW becomes the 6th largest trading pair on Upbit, accounting for 7.16% of the platform’s volume, nearly as much as BTC/KRW’s 7.58%, which is the 5th largest trading pair on Upbit, as per CoinGecko. Meanwhile, WAXP/KRW accounts for 79.3% of all WAXP token’s trading volume, with WAXP/USDT on Binance coming in second at 11.63% share. 

Moreover, the price of WAXP on Upbit is $0.0480, while on Binance, the altcoin is trading at $0.04749.

Click here to learn all about investing in Wax (WAXP). 

The State of WAX Network 

WAXP is the native coin of a smart contract-enabled blockchain network by the same name, which focuses primarily on NFTs. The platform was founded in 2017 by William E. Quigley (CEO) and Jonathan Yantis (COO). 

WAX, or Worldwide Asset Exchange, is a blockchain that facilitates the trading of NFTs, collectibles, and video games on the network. The blockchain operates via a delegated proof-of-stake (DPoS) method and doesn’t charge customers fees. WAXP token, meanwhile, is used for staking, rewarding, and voting.

With WAX, the idea is to provide everything from games, dApps, and exchanges to the marketplace for a brand to launch a successful NFT collection. WAX further wants to popularize vIRL NFTs that “let you earn physical stuff without dealing with delivery.” 

When it comes to WAX’s resource model, WAX (WAX on the WAX network, WAXP on the Ethereum network) can often be recouped by the user if they no longer require bandwidth or state storage resources. So, WAX doesn’t collect revenue through gas fees but levies a 2% tax on NFT secondary sales backed by a “gentlemen’s agreement” with NFT marketplaces. 

WAX burns 20% of its revenue and bridges the remaining 80% to Ethereum to distribute to liquidity providers. The protocol mints WAX at a 5% annual inflation rate, which it distributes to validators, delegators, and its treasury. 

At the beginning of this year, the Wax Blockchain unveiled its game plan for conquering Web3, which included funding and working with the Antelope Coalition, improving token utility, and implementing Inter Blockchain Communication (IBC) to boost horizontal scalability. The Antelope protocol powering WAX is currently set for a milestone upgrade in Q4.

In Q3 of this year, the network also introduced a new feature for its Cloud Wallet that enabled users to easily claim control over their admin keys and revamped its developer portal.

The likes of Sony Pictures, the Saw movie franchise, Atari, and Mattel are already on board with WAX. Moreover, in the previous quarter, the Stranger Things collection of Funko, a toy company that sells licensed pop culture collectibles, reached almost $1.2 million in combined primary and secondary sales on the day of its drop, marking the second-highest daily trading volume for a WAX collection in the past year. Besides Stranger Things, Funko also held other drops featuring licensed collectibles from Power Rangers, Steven Universe, and Jurassic Park.

Average daily NFT buyers on WAX, however, declined by 68% QoQ to 1,400, and similarly, average daily NFT sellers decreased by 51% QoQ to 3,000.

According to Messari’s State of WAX Q3 2023 report, average daily transactions fell 5% to 17 million, and average daily active addresses fell 11% to 302,000 on the network. Both the metrics reached their lowest figures in a year near the end of August, hitting 14.5 million and 237,000, respectively, only to rebound quickly. During this period, there were a total of 877,000 unique active addresses, a 20% QoQ decrease, while average daily new addresses grew 81% QoQ to 2,900. Active address activity was dominated by P2E games Alien Worlds and Farmers World.

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Concluding Thoughts

Crypto prices have continued to drop ever since the Israel-Palestine conflict started as investors shun risky assets and turn to safe havens like the US dollar and gold. When it comes to WAXP, the price is struggling in tandem with the crypto market. 

Moreover, the WAX network’s key metrics, such as average daily transactions, average daily active addresses, and NFT sales volume, took a dip in the past quarter, but again, they are largely aligned with the overall market.