VYSYN Ventures Weekly Insights #65 — A significant altcoin performance may be underway for Q4 as altcoins record significant upside movements
Several high-cap altcoins have been recording extremely bullish movements recently as we move towards the final quarter of the year. After a period of consolidation, several top altcoins broke through major resistance levels and appreciated to all-time highs (ATH). This breakout may be setting the tone for what could be an extremely bullish Q4.
Ethereum’s breakout above $3300 for the first time since May was a key movement for the overall altcoin market and significantly increased the odds that the biggest altcoin can return to all-time highs. So-called “Ethereum killers” also entered a market frenzy with several printing record high prices.
In the latest VYSYN release, we highlight the market movements in some of the most relevant large-cap altcoins. We analyze some of the potential drivers behind the movements and consider where the market could be headed from here.
Ethereum breaks key resistance to continue bullish trend
During the week, Ethereum surpassed key resistance lying around $3,300. This level represented the 0.618 Fibonacci retracement between the May highs and June low of the recent trend. Surpassing this level significantly increases the odds that Ethereum can reclaim and surpass it’s previous record highs which were formed in May, setting the tone for an outperformance across the entire altcoin market.
The resurgence in Ethereum price has seen a spike in discussions about the leading altcoin across social media platforms like Twitter, Telegram, and Reddit. Data from Santiment reveals that the Ethereum mentions across these platforms rose to the highest levels observed in several months ahead of the surge above $3,300.
The latest movement is largely seen as a continuation of the trend that was ignited when the most recent upgrade of the Ethereum protocol was implemented. The London Hard Fork, which introduced EIP-1559 into the Ethereum network, led to a burning mechanism which fostered more bullish demand-supply conditions for ETH.
Since this upgrade, over $432 million worth of Ethereum has been burned, meaning that over 136K ETH has been removed permanently from the Ethereum network. Assuming constant demand levels, such supply reducations naturally push prices to the upside.
Polkadot follows in the footsteps of Ethereum
Some so-called Ethereum killers also entered a market frenzy during the week. Polkadot recorded similar price movements to Ethereum. However, Polkadot has yet to pass it’s 0.618 Fibonacci retracement level, which remains a key level of potential seller liquidity.
Although the broader trend has been to the upside, there are several factors that may have fueled further bullish sentiment surrounding Polkadot. One of these factors is the upcoming parachain auctions on the Polkadot network. Slots to launch on the Polkadot blockchain are limited. Therefore, for projects to get on the platform, they vie for votes from the community. This process characterizes the parachain auction, and winning projects will find the opportunity to launch on any of the limited slots on the blockchain.
In anticipation of this auction, and the associated tokens rewards, members of the community are likely to accumulate DOT tokens in advance. Such demand-side pressure may apply further upside momentum to the price of Polkadot.
Another factor under consideration in the bullishness of Polkadot is the large number of projects that are competing for the available parachain slots. In an attempt to outvote themselves, demand for DOT tokens could skyrocket. However, in the long run, new projects are expected to be welcomed to the Polkadot ecosystem, implying a significant increase in adoption as well as demand for the network’s token.
Cosmos and Solana also rise to new heights
Another altcoin that has followed in the tracks of Ethereum is ATOM, the native token of the interoperability blockchain Cosmos. For the first time since May 2021, Cosmos reached $26, leading many to anticipate that it could soon reclaim it’s ATHs around $32.
Cosmos is one of the several third-generation blockchain projects aiming to solve the popular blockchain trilemma of decentralization, scalability, and security without giving up any of them in the process. Another Layer 1 protocol whose native token posted impressive returns is Solana.
Solana’s SOL has been among the leading performers in recent months and the movements of the past week made the project the seventh largest among all cryptocurrencies. Solana recorded a record high of over $150 in recent trading and those invested in the project have experienced tremendous returns. At the start of the year, SOL was trading at less than $1. And just two months ago, the project was trading at roughly $35.
Cardano, Tron, Fantom, and several other altcoins have also responded to the positive market conditions by also recording significant movements to the upside. With Bitcoin also moving to the upside, the tone is set for a bullish Q4. However, in the final quarter of 2021, altcoins may dramatically outperform if recent conditions are indicative of future performance.
About VYSYN Ventures
VYSYN Ventures is a longstanding venture capital company that specializes in funding and supporting disruptive startups in the blockchain and cryptocurrency industry. We have provided early-stage support to several projects that have grown to USD market capitalizations of hundreds of millions and even billions. Our incubation program focuses on providing capital allocations, versatile marketing support, and tech assistance.