Back to Basics

ByteFolio 60;

ByteFolio is stripped back to the bare essentials this week as the Binance Coin (BNB) breaks trend relative to BTC and will be removed. Binance has been under pressure on multiple fronts of late, some of which are discussed below. That leaves us with holdings in just Bitcoin and Ethereum, which is an appropriate reflection of the state of the market at the moment.

BNB Scores a 0-star Trend on ByteTrend in BTC

The good news is that despite the lack of breadth in the market, ByteFolio has risen this week as ETH outperforms BTC. There is likely to be some resistance at around the 0.07 level on the ETH/BTC cross, a level which was rejected in April, but the strength of ETH’s fundamentals gives us confidence that ETH will continue to outperform BTC. Proceeds from BNB will therefore be allocated to ETH.

One of the features of crypto markets of late has been the drop in exchange volumes, which is hardly surprising in an environment of regulatory uncertainty and rising interest rates. While this affects the optics of digital asset markets, it doesn’t necessarily affect the substance. In the same way that the short-term share price behaviour of an equity doesn’t tell you about a company’s monthly sales, volumes of bitcoin traded on exchanges don’t tell you anything about activity on the network.

Therefore, it is worth continuing to remind readers that bitcoin’s on-chain activity remains strong. In fact, over the last fortnight, the total value transacted has moved sharply higher again, probably as a result of lower congestion on the network. This has released demand for lower-cost transactions after the recent period of extremely high fees. The following charts show, in order, a falling number of transactions (Ordinals are fun but largely useless and expensive), a rising median transaction value and finally, the rising value transacted.

As long as we continue to see the final dynamic in the ascendant, we can be positive about the future of the network.

Action:

Sell BNB to zero, reinvest proceeds in ETH.

Movers

NFTs

Amidst the hype of Bitcoin NFTs and BRC-20 tokens, a novel token standard called BRC-721E has been launched on the Bitcoin blockchain. This new standard serves as a bridge between the Ethereum and Bitcoin networks, enabling users to convert their ERC-721 NFTs into BRC-721E tokens on the Bitcoin platform. This integration allows for increased interoperability and expanded possibilities for NFT holders.

In addition, based on the Ethereum Improvement Proposal 6551 (EIP-6551) update that went live on the Ethereum Mainnet on 7 May 2023, a new token standard was introduced named ERC-6551. This particular token standard establishes a smart contract wallet for each ERC-721 token (Ethereum NFTs), allowing them to engage in transactions and hold tokens or other NFTs. This development brings additional functionality to ERC-721 tokens.

These advancements demonstrate the ongoing improvements to ease of use and utility in the blockchain space, paving the way for further growth and adoption of NFTs.

Binance (BNB)

In terms of trading volumes, the leading cryptocurrency exchange has seen a 3-month consecutive decrease in its market share, reaching its lowest point since October 2022.

After reaching a peak of 57% in February 2023, Binance's market share dropped to 43% in May, with its spot trading volume falling to $212 billion, the lowest monthly volume recorded since November 2020.

Reasons for this decline will include Binance's withdrawal from the Canadian market, as well as the withdrawal of liquidity providers in the US, such as Jump Trading and Jane Street. Binance has typically been more dominant in the more exotic parts of the market, i.e. altcoins, where the bear market rumbles on.

Furthermore, Binance is also planning to soon remove 11 privacy tokens from its platform in France, Italy, Poland, and Spain, which will further contribute to the decline in trading volumes. Notably, these 11 tokens include Monero (XMR), Zcash (ZEC), and DASH. Although the value of BNB is not directly linked to Binance's trading performance (the BNB blockchain is a big component of its worth), it helps explain the continued price weakness.

Shakers

Render (RNDR)

Training large Artificial Intelligence (AI) models requires significant amounts of power. For example, the training of the GPT-3 language model required over a thousand GPUs and CPUs running for several months. This can be a major bottleneck for AI development, as training large models on traditional hardware can be prohibitively expensive and time-consuming.

Decentralised GPU rendering services such as Render (which Token Takeaway covered back in April) can help to solve this issue by providing a more cost-effective and scalable way to train large AI models. These services aggregate idle GPUs from users worldwide, and they can be used to train AI models on a much larger scale than would be possible with traditional hardware. This means that the large models can be trained more quickly and affordably, which can accelerate the pace of AI development.

For example, Render can be used to train a GPT-3-sized language model in just a few weeks, compared to several months on traditional hardware. This can save researchers and developers a significant amount of time and money, and it can help them to bring new AI applications to market more quickly.

Decentralised GPU rendering services are still in their early stages, but they have the potential to revolutionise the way that AI models are trained. By providing a more cost-effective and scalable way to train large models, these services can help to accelerate the pace of AI development and make AI technology more accessible to a wider range of users.

Chainlink (LINK)

Tencent Cloud, a Chinese cloud company, has partnered with Chainlink Labs, the developer of Chainlink Network, to support the development of the global Web3 ecosystem. Tencent Cloud offers stable and secure cloud services and tools to Web3 developers, while Chainlink Labs provides industry-leading Web3 services for accessing off-chain data and computation. By combining their solutions, developers can create more secure and feature-rich applications. Through this collaboration, Chainlink BUILD projects gain access to benefits such as Tencent Cloud service vouchers and prioritised product listings.

ByteFolio Performance

ByteFolio Asset Allocation