Monthly Review of July 2023

In this monthly review, we'll take a look at the most significant cryptocurrency-related news from July. The major cryptocurrency news in July revolved around a decision made in the United States, stating that XRP is not a security, the European bank's $120,000 Bitcoin price prediction, the world's second-largest asset manager increasing its Bitcoin-related holdings, technical advancements of Chainlink and Polygon, and Bitcoin mining for district heating in Finland.

              
July in the Cryptocurrency Markets
July was a weaker month for cryptocurrency price movements, as most cryptocurrencies experienced a decline. However, Northcrypton featured two cryptocurrencies that saw an increase in value. Chainlink's price rose nearly 20%, while Polygon's price saw a growth of just under 5%. On the other hand, Bitcoin and Ethereum, the two largest cryptocurrencies by market capitalization, experienced a drop of less than 5% in their prices during July, whereas Aave, Litecoin, and ApeCoin saw declines of around 8%, 15%, and 17%, respectively.
XRP Ruled Not a Security in the United States
In mid-July, the Southern District Court of New York in the United States ruled that XRP, a cryptocurrency, is not a security. The court stated that the sale of XRP tokens through Ripple Labs' cryptocurrency exchanges and algorithms did not constitute an investment contract. As a result, XRP is not considered a security. However, the court viewed the sale of XRP tokens to institutional customers as a violation of securities law. The ongoing legal battle between the U.S. Securities and Exchange Commission (SEC) and Ripple Labs, which began in 2020, received a favorable decision for the cryptocurrency world on July 13, leading to a market-wide surge in cryptocurrency values.
European Bank Predicts $120,000 Bitcoin Price for Next Year
Standard Chartered, a major British bank in Europe, predicted that the price of Bitcoin could rise to $50,000 by the end of this year and reach $120,000 next year. The bank justified its view based on the increasing profitability of Bitcoin mining, which could lead to miners selling fewer mined bitcoins while maintaining cash flow, reducing net bitcoin supply, and driving the price higher. Standard Chartered raised its 2024 target price from an earlier prediction of $100,000 in April. The bank manages assets totaling around €750 billion.
World's Second-Largest Asset Manager Increases Bitcoin-Related Holdings
In July, it was revealed that Vanguard, the world's second-largest asset manager with over €7 trillion in assets, increased its Bitcoin-related holdings. Vanguard purchased more shares of the two largest Bitcoin mining companies, Marathon Digital Holdings and Riot Blockchain. Following these latest purchases, Vanguard now holds over 10% of both mining companies' shares and is their largest shareholder.
Chainlink's CCIP Launched on Four Platforms
Chainlink's Cross-Chain Interoperability Protocol (CCIP) was launched on the Ethereum, Avalanche, Polygon, and Optimism networks in mid-July. Additionally, two leading DeFi protocols, peer-to-peer lending service Aave and derivatives provider Synthetix, will start utilizing CCIP. In summary, CCIP enables functionalities such as smart contract operation, data transfer, and token transfer between different blockchains. Following the news, Chainlink's LINK token saw a price increase of around 20%.
Polygon Introduces Upgraded Token
Polygon Labs introduced an upgraded version of its existing MATIC token called POL. This token can be used on all Polygon ecosystem networks, which include the Polygon mainnet, the scalability solution Polygon zkEVM, and the customizable Polygon Supernets. POL requires approval from the Polygon community before transitioning from the MATIC token, a process expected to take place in the coming months. The upgrade is likely to be accepted, as POL offers practical improvements for MATIC token holders. POL is part of the broader Polygon 2.0 upgrade package.
Bitcoin Mining Generating District Heating in Finland
In Seinäjoki, Finland, a data center has been opened for Bitcoin mining, utilizing the waste heat generated during mining for district heating. Unlike regular data centers, the one built for Bitcoin mining allows adjusting the equipment's power consumption up or down as needed. This way, Bitcoin mining in the data center can balance the electricity grid and provide district heating for Seinäjoki residents. The project is operated by a Finnish company called MinersLoop, aiming to integrate Bitcoin mining into existing energy infrastructure. The conversion of waste heat to district heating is managed by the Finnish company Calefa, specializing in heat energy recycling. According to Antti Porkka, an energy expert at Calefa, "Utilizing waste heat from data centers is an excellent example of modern energy production that benefits both the environment and the economy."
Summary
While July may not have been a positive month for most cryptocurrency price movements, there were several positive news items for the cryptocurrency space during the month. Perhaps the most significant news for the entire cryptocurrency market was the decision in the Ripple-SEC legal battle, stating that XRP is not a security. Although the legal battle is ongoing, this decision reduced the risk of several cryptocurrencies being classified as securities in the future in the United States.
Institutional players in the cryptocurrency market focused on ETFs in June, while the most significant institutional news in July was Standard Chartered's $120,000 Bitcoin price prediction and Vanguard's decisions to buy more shares of major Bitcoin mining companies. Bank price predictions for Bitcoin are not new, as similar forecasts were made by U.S. banks during 2021 and 2022. Despite not filing a Bitcoin ETF application like many other asset managers in recent months, Vanguard continues its entry into the cryptocurrency market with a different approach. As the largest shareholder in major Bitcoin mining companies, Vanguard has confidence in Bitcoin's future due to these companies' mining operations, which accumulate thousands of bitcoins and invest millions in mining equipment to mine more bitcoins in the future.
Chainlink was one of the major gainers in July and likely represented the most significant technological advancement in the cryptocurrency market by launching the CCIP. CCIP has the potential to impact the entire market as it aims to address one of the current biggest challenges in cryptocurrencies – transferring data and tokens across different blockchains. Another significant technological advancement was Polygon's introduction of the new POL token as part of the broader Polygon 2.0 upgrade. POL token represents a positive step forward for MATIC token holders, as it offers more extensive and versatile use cases compared to the MATIC token.
In Finland, a data center was established where Bitcoin mining helps balance the electricity grid and provides district heating. Projects like this benefit multiple parties, including Bitcoin miners, district heating producers, and electricity grid users. It is highly likely that the potential of Bitcoin mining will be better understood in the near future, leading to more similar projects that benefit multiple stakeholders, both in Finland and worldwide.

Ville Viitaharju
Cryptocurrency specialist
            

Last updated: 04.08.2023 15:00