Could the reduced supply impact price movement?
Altcoins are once again stealing the show, with promising network activity and regulatory changes in Hong Kong driving gains for standout performers Polygon and NEO.
Meanwhile, most larger cryptoassets have pushed slightly higher, led by Ethereum which has been boosted 5% by shrinking supply on exchanges.
Read more after the jump.
This week’s focus
– Hong Kong hype drives double-digit gains for NEO
– Ethereum eyes $2K as the amount of ETH on exchanges hits lows
– TRON surges on stablecoin success
– Polygon pushes 4% higher on encouraging network data
Hong Kong hype drives double-digit gains for NEO
NEO is up 17% since last Monday
Hong Kong’s embrace of crypto has sparked excitement among buyers of altcoins associated with China.
Foremost among these is NEO, which has risen around 17% in the last seven days after Hong Kong’s securities regulator said it would allow retail trading of certain crypto assets starting June 1st.
The announcement reinforces widespread expectations that the next bull run will begin in Asia, as regulations choke developments in the West.
Yet as economist and crypto specialist Noelle Acheson told CNBC, the change in regulations is unlikely to lead to sudden boost in buying power, though it could potentially lead to a “volume uptick”.
Ethereum eyes $2K as the amount of ETH on exchanges hits lows
ETH continues to nudge $2K
Ethereum has slightly outperformed Bitcoin over the last week, rising 5% compared to Bitcoin’s 4%.
This outperformance could be driven by increased scarcity, with the amount of ETH on exchanges falling to lows not seen since July 2016, according to market intelligence firm Glassnode.
Increased levels of staking are said to be the cause of the decline, with the recent Shanghai upgrade removing withdrawal risk and triggering a surge in staking on Ethereum, leading to less ETH being left on exchanges.
The resulting decline of ETH on exchanges is typically considered to be bullish, as crypto analyst and Twitter personality Ajay Kashyap highlights: “Less supply on exchanges equals less available for sale, which is great for investors”.
TRON surges on stablecoin success
TRX briefly surged towards $0.80 before losing momentum
TRON started last week with strength, rallying towards yearly highs before eventually reversing to finish with 2% losses.
This momentary outperformance was noted by eToro Global Strategist Ben Laidler, who commented that “TRON was the performance outlier among major coins, benefiting from rising adoption stats.”
TRON’s success is particularly evident in the stablecoin sector, with data from Coinmetrics showing that the supply of USDT (Tether) on Tron has surged in 2023, leaving Ethereum behind. This is corroborated by a recent report from crypto data provider Kaiko, which points out that the majority of Tether is now issued on Tron, with $46bn compared to just $36bn of Tether issued on Ethereum.
Large investors, also known as whales, appear to be encouraged by this adoption. Data from crypto intelligence tracker Santiment shows that whales have consistently added to their TRON holdings over the past year, which is often thought to be a bullish signal.
Polygon pushes 4% higher on encouraging network data
MATIC broke higher out of an ascending triangle pattern, and is now testing support at $0.9
Leading the altcoin market higher, Polygon has pushed up 4% on encouraging network data.
According to market intelligence firm Glassnode, the number of new MATIC addresses created on the Polygon network has surged over 1.83k, representing a 10.68% increase from around 1.66k addresses as recorded at the beginning of the year.
This suggests that despite lackluster price action, interest in the Polygon ecosystem continues to increase.
The driving force behind this could be growing optimism around Web3 gaming, which according to recent comments from the co-founder, is at the center of Polygon’s future plans.
“Last year there was $2 billion+ in funding for Web3 games.” said Polygon’s Sandeep Nailwal in a recent Reddit ask-me-anything session. “Polygon combined with its ecosystem players like ImmutableX got the lion’s share in terms of those funded games. Fingers crossed for some of them to go big!”