We have reported about several important developments concerning the U.S. and global economy last week. In brief, the Federal Reserve (Fed) has announced a second consecutive 0.75%. interest rate increase on Wednesday. By hiking up the interest rated, the Fed aims to battle the raising consumer goods prices and crippling inflation. With higher interest rates money becomes more expensive to borrow, resulting in a lower consumption – people and companies are spending less and saving more. In theory, this slowdown of the economy should result in the return to baseline prices for goods. In addition, we have written about the Bureau of Economic Analysis reporting a decline in the U.S. GDP for the second quarter in a row. Nevertheless, despite the slowing economy both stock and crypto markets posted gains last week – Bitcoin gained 5% in the last 7 days while ETH is up by more than 7%. The total cryptocurrency market capitalization climbed from $1.08 trillion to $1.15 trillion last week.
3. Qtum (QTUM)
Qtum protocol features elements from both Bitcoin and Ethereum, including the Ethereum Virtual Machine, and tries to combine the best of both worlds. The Singapore-based cryptocurrency project is designed as the backbone of mobile decentralized apps (dApps) and optimized for blockchain interoperability. Qtum’s native cryptocurrency, QTUM, is used to pay network fees as well as to participate in the project’s on-chain governance system. distribution of newly minted QTUM is based on ownership of the asset. Qtum blockchain utilizes a mutualized proof-of-stake (MPoS) consensus, where anyone can stake their QTUM to receive a reward in the form of a share of newly minted QTUM and share of the transaction fees.
Qtum Mainnet Upgrade successfully deployed through the July 31 hardfork
The Qtum Mainnet underwent a hard fork on July 31 at block 2,080,512. The upgrade is called Qtum Core v22.0 and will introduce the support for Taproot/Schnorr signatures, implement a new Ethereum Virtual Machine evmone that will result in faster EVM processing, and deploy the several bug fixes. You can read the full release details here.
Because it was a hardfork, all users also needed to upgrade their Qtum Core Wallet to version 22.1. So, just in case you are wondering why you cannot access your QTUM coins anymore, make sure to upgrade and recover access ASAP. Even before the implementation, the upgrade was well received by the investors, who apparently accumulated QTUM in the week before the hard fork, causing its price to grow by more than 25% in just one week. Furthermore, the gains were even higher on Friday, July 29, when QTUM briefly spiked above $5.00. At the moment, QTUM is changing hands at $4.25.
2. Polygon (MATIC)
Polygon, previously known as Matic Network, is a leading Ethereum Layer 2 scaling solution. The Polygon Layer 2 network consists of several simultaneously run proof-of-stake sidechains that regularly push the data to Ethereum to create network checkpoints. Currently there two bridges that allow users to move assets between Ethereum and Polygon, the first one being the Plasma bridge and the second one the PoS Bridge. The Plasma bridge delivers supersonic speeds and throughput and allows for an easy and fast exit to Ethereum mainnet at the same time. Together with several other features and tweaks, Polygon provides a major scalability improvement to the biggest smart contract blockchain. By successfully overcoming Ethereum’s most limiting shortcomings Polygon has become attractive for DeFi projects and is establishing itself as one of the key DeFi networks.
MATIC continues to rally on the tailwind of Ethereum merge hype and Polygon’s high-profile partnerships
Although we have featured Polygon on our lists on several occasions in the past 3 months, we believe that the project that has defied even the bear market deserves to be on the list once again. In the past 30 days, MATIC has managed to more than double its price, which is now nearing in on $1.00 again. Analysts claim that Polygon has benefited from the hype surrounding the upcoming Ethereum mainnet merge. For example, the recent Goerli testnet Merge announcement has led to a spike in the price of ETH but also the price of coins belonging to projects with a heavy focus on Ethereum, such as LDO and MATIC. Considering the fact that there are still a few more weeks until the Merge takes place on Ethereum mainnet, the hype is only about to amplify, which could result in further growth of Ethereum-connected coins. But of course, the MATIC rally is not purely hype-driven as that would likely be very unsustainable. Polygon has also established several important partnerships with big and well-known companies, such as the partnerships with Disney and Coca-Cola, of which we have written in our Top 3 Coins to Watch article from two weeks ago.
1. Bitcoin (BTC)
Although we believe Bitcoin does not need much introduction and that all eyes would be on it even if it were not featured on our list, here is a short summary of the history and key characteristics of the first truly decentralized digital currency. The world’s pioneer cryptocurrency was launched by pseudonymous figure named Satoshi Nakamoto in 2009 and has a capped supply of 21 million coins. The decreasing miner block rewards make the cryptocurrency scarcer with time, ensuring a deflationary nature. Bitcoin is also often referred to as the barometer of the cryptocurrency market as other assets usually follow BTC’s price performance.
Bitcoin rallied after the news of another 0.75% interest rate increase
As already mentioned, the U.S. Federal Open Market Committee (FOMC, part of the Fed) announced another 75 bps interest rate hike on Wednesday, July 27, which pushed both the stock market as well as the crypto market into a small-scale rally. Bitcoin gained almost 10% on the day of the announcement and its appreciation continued throughout Thursday despite the Q2 2022 GDP report, that showed that the U.S. economy is technically in a recession, being published. Interestingly, we have already seen this pattern following previous interest rate hike announcements. When the FOMC announced the increase in interest rates last month, Bitcoin gained 10.5%, while Ethereum surged even higher, increasing its price by more than 15%. Nevertheless, last month the rally turned out to be very short-lived as both Bitcoin and Ethereum quickly lost back all their gains. It will be interesting to observe whether this pattern will repeat itself this time around.
