Diving into SOL's recent surge ð£ July 16, 2023 Milk Road Sneak Peek: Market Musings â®ï¸ Diving into SOL's recent surge ð£ The Milk Man usually doesnât deliver on Sundays. But today, weâre serving up a surprise for you. We wanted all of our loyal Roaders to be able to read a piece sent out in the first week of [Milk Road Pro](. Market Musings is a weekly write up consisting of market commentary and insights into a top story or token. Some data may have changed as this weekâs Market Musings was sent to our Pro members on Friday, July 14. This week we touched on the price action following the XRP news and dove into the recent resurgence of Solana. If you like what you see, you can sign up for Pro below. And Roaders, letâs keep it real. We know weâve been talking about Pro a lot but itâs been an exciting week over here. Weâre gonna tone down the shilling now that launch week is over. Enjoy your Sunday! - The Milk Man Thereâs only a few days left to lock in $10/month for your first three months. Thatâs 50% off the regular price. [Join Milk Road Pro]( Key Points - The (somewhat) favorable ruling for Ripple in its case vs the SEC was the ârising tide that lifted all boatsâ this week. XRP pumped ~65% on the news. - After a slow start to the week for BTC and ETH, the spillover of the Ripple news was enough to push them into the green this week. - Coins on the SECâs ânaughty listâ were the biggest winners this week. SOL is up ~182% on a YTD basis, so the Milk Man did some âSOL searchingâ this week. âA rising BTC Ripple tide lifts all boatsâ. Well, that was oddly the case this week. Following the mixed judgment surrounding [Ripple Labsâ case]( against the SEC, XRP rallied as much as ~65% yesterday. Congrats, XRP army. But the rally was not just confined to XRP. There were a lot of âwinnersâ crowned this week. And one category stood out from the rest: alternative Layer-1s. In that category, one coin stood out most: SOL. More on that below ð But first, letâs talk about âthe majorsâ. Bitcoin (BTC) was flat to down most of the week, but finished the 7D period >$31K and up ~3% after the Ripple news. âWen BTC ETF?â remains the next major question on the regulatory front. The SEC still has until mid August to approve/deny/extend the recent wave of TradFi BTC ETF applications. The filing from Ark Invest/21Shares is first in line, and approaching quickly. ð¿Â Ether (ETH) was flat to start the week, but finished up ~7% the past 7D on the Ripple news. Aside from price, there were also some notable developments in ETH land. On Monday a new milestone was reached: ~20% of all ETH are now staked. That equates to ~24M ETH worth ~$45B. Oh how far the ETH staking ecosystem has come in the past ~2.5 years. Shoutout to the ETH devs ð On the L2 front, Consensys (Ethereum development studio), launched the alpha mainnet of its new [zkEVM]( L2 network this week, Linea. The projectâs testnet phase saw an estimated ~5.2M unique wallets test out the network over 3 months. Good on ya, airdrop farmers ð«¡ It joins about a dozen other zkEVMs that were recently launched. But Lineaâs worth watching. Hereâs why: 1/ Consensysâs crypto wallet, [MetaMask](, has ~30M active users. Even if Consensys manages to get a tiny fraction of them to try out Linea, that could be a whole lotta new users for L2s. 2/ Linea could give an early look at what to expect for Coinbaseâs much anticipated Base L2 network. Coinbase is in the beginning stages of a âlegal battle royaleâ with the SEC. But itâs still working to bring Base to mainnet âsoonâ. Woot woot, Coinbase. Coinbase has ~9M active users and ~100M registered users. A successful Base launch would introduce even more users to the [L2 world](. Alternative Layer-1s: XRP may have stolen the show this week. But alternative layer-1s put on a big sideshow. Those on the SECâs ânaughty listâ of unregistered securities were some of the biggest gainers over the past 7D: - Solana (SOL) rallied 31% - Cardano (ADA) rallied 23% - Polygon (MATIC) rallied 25% The good news? Some of these coins (e.g., SOL, MATIC) remain at relatively low market caps, especially when compared to BTC and ETH. Small market caps -> more (potential) upside -> altcoins worth keeping an eye on. So Wen Alt Season? With BTC and ETH rallying this year, âWen altseasonâ has been the top of mind for investors and degens, alike. Altcoins come in different shapes and sizes (e.g., layer-1s, DeFi tokens, memecoins, etc.). But many have been looking for alternative layer-1s, in particular, to show signs of a recovery. Why alternative layer-1s? Following BTCâs run up from ~$7K to ~$30K in 2020 they had, letâs just say, âa good 2021â. Four standouts of last altseason were Polygon (MATIC), Solana (SOL), Avalanche (AVAX), and Cardano (ADA). - The worst performer in the cohort (ADA), had an ~600% return in 2021. Thatâs what we call a 7X in crypto land. - The best performer (MATIC) had a ~14,000% return over that period. Thatâs what we call a 141X in crypto land. Does another alt L1 season of that magnitude seem likely? Probably not. But even a âmini alt L1â season could result in some pretty eye popping returns. Collectively, alternative layer-1âs are ~70% off their April-22 highs. Even if they inch back some of the way towards their prior highs, that would translate to some pretty high returns. Well, one of them has âinched backâ a decent amount this year: Solana. And many are comparing itâs outlook to when ETH sank below $100 in late 2018. This week alone, SOL was up 31%, bringing its yearly return to 182% so far. [Join Milk Road Pro]( Whatâs Driving The SOL Rally? Fundamentals and expectations of future profits. More people are (probably) starting to think along these lines: âSome altcoin projects are going to survive and thrive when âcrypto winterâ comes to an end. Solana is probably one of them.â Thereâs a lot to unpack when it comes to Solana. Hereâs whatâs top of mind for the Milk Man: The Good And Bad Of Solana Letâs start with the bad. 1/ There is still a tail risk that SOL gets delisted from more exchanges. The SEC placed SOL on its ânaughty listâ when it alleged SOL was an unregistered security in June. That caused Robinhood and a few others to delist SOL. But Coinbase has said that âit does not intendâ to delist it. And seeing as Coinbase recently stated that it [will re-list XRP]( (which was delisted for ~2.5 years given its âalleged unregistered security statusâ), it looks like they will do everything they can to not delist it. That helps. 2/ Ownership of SOL is still relatively concentrated. Alameda Research liquidators [hold claims to ~13%]( of all SOL in circulation. They wonât be able to dump SOL en-masse anytime soon thanks to lock ups extending through 2028. But one entity holding upwards of 10% of a decentralized networkâs token is not good. 3/ Its ecosystem is still in recovery mode. Total value locked in Solana dApps peaked at ~$10B in November 2021 and currently stands at $300M. To add to the DeFi pain, NFT trading volumes on Solana are way down. They peaked at ~$200M per week in 2021, but have been stuck in double and single digit millions all year. And itâs still shaking off the major reputational blow of having cryptoâs biggest villain, SBF, be its âposter childâ. Yikes. The good news? 1/ The âdays of downtimeâ for Solana appear to be ending. Its blockchain has only had 1 instance of downtime this year! This compares to 14 outages last year⦠Oof. Less downtime means less risk associated with transacting on Solana. Thatâs the first positive. 2/ Itâs taking a different approach to blockchain scaling. Ethereum and other layer-1s have embraced the multi-chain and layer-2 scaling approach. But Solana has remained (primarily) focused on building one high speed chain. It has worked out pretty well so far. Despite its downtime, Solana has outperformed all major chains on a scalability (i.e. transactions per second) basis. The fee for a user to submit a transaction is a fraction of a penny. Even if few people are using Solana today, it could (in its current form) support a lot more use cases and users than most other chains out there. 3/ Its culture is centered around trying new things. Last year Solana Labs launched the first [Web3 mobile phone](. Jump Crypto is working on âleveling upâ Solana infrastructure with a new software client, Firedancer. And they are experimenting with the biggest buzzword of 2023: AI: - Solana launched a ChatGPT plugin that can be used to buy/list NFTs, transfer tokens, and interpret data. - It also launched a $10M grant program to accelerate development at the AI <> crypto crossroads on Solana this year. Will all of their endeavors be a success? Probably not. But Solana actually trying new things is confidence inspiring for its long-term survival. The Big Picture SOL has already rallied 182% this year. So, the entry point for SOL today (~$28) is worse than it was at the start of the year (~$10). And the days of $3 SOL donât seem to be coming back anytime soon. :( Yes, SBF actually tweeted that. And yes, itâs still up on the bird app. But in times like these, the Milk Man likes to kick back with a nice cold glass of milk and zoom out. Even after rallying 182% so far this year, SOL is still ~90% below its all-time-high. Funny how algebra works, innit? If youâre in the market for an altcoin bet, SOL is worth keeping an eye on, frens. [Join Milk Road Pro]( Lastly, our team is always looking to improve and wants to hear from you on how we can make Pro even better. Please reply to this email with your feedback and suggestions! What'd you think of today's email? - [ð¥ð¥ð¥ð¥ð¥ F**king great](
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- [ð¥ You didn't bring the heat]( Disclaimer This report is for informational purposes only and should not be relied upon as a basis for investment decisions, nor is it offered or intended to be used as legal, tax, investment, financial or other advice. You should conduct your own research and consult independent counsel on the matters discussed within this report. Past performance of any asset is not indicative of future results. It should also be noted that the writer(s) of this report may hold assets mentioned in the article at the time of writing. © 2023 MilkRoad.com. All rights reserved. [tw]( [ig]( [yt]( [tk]( [in]( Update your email preferences or unsubscribe [here]( © Milk Road 603 Munger Avenue Suite 100 #1006
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