Tezos (XTZ) Rises on Ubisoft NFT Launch
Tezos (XTZ) compensated for the deep losses from the end of last week, remaining one of the few assets in the green. XTZ added more than 34% overnight to trade at $5.54, while other coins had another setback.
XTZ has hovered around the $5 range for years, for now remaining without a significant breakout. Still, XTZ managed to recover its positions, as the bear market in 2018 pushed the asset to under $1 briefly.
Why XTZ May Break Out
One of the possible scenarios for platform-linked assets like XTZ is the inflow of NFT and game projects. For years, the Tezos network worked with little addition of new projects, serving mostly as a staking mechanism.
Tezos was also pushed aside by more active DeFi and NFT networks. Solana (SOL), trading at above $200 in 2021, did what was previously expected of the XTZ asset.
But now, Tezos may be catching up with adoption. There are more mentions of NFT projects being added to the network, and games being built to ensure those items are not sitting idle. GameFi, or token-incentivized gaming is a trend that can bring new activity to a network and ensure economic value through the trading of in-game items.
Ubisoft Chooses Tezos
Ubisoft, the gaming company behind Assassin’s Creed, has chosen the Tezos network to launch Ubisoft Quartz. The items will be featured in the Ghost Recon: Breakpoint and will display a unique serial number. The introduction of in-game NFTs will mean a game item economy happening even outside the ecosystem of Ubisoft.
Game items have already appeared on the OpenSea market, opening a path to tokenizing and realizing profits from items that would otherwise expire or be limited to in-game tokens. Informal game item markets have existed for a long time, but blockchain projects are just adding the use case to potentially become hubs of exchange.
The partnership is one of the signs of mainstream gaming companies choosing to wrap their in-game items as NFTs.
XTZ may thus become more valuable as a tool to secure rare items and potentially achieve a higher retail price.
How Risky is XTZ
XTZ still holds a relatively low per-unit price compared to SOL or Terra (LUNA). The hype around GameFi and on-chain gaming can easily lift the asset price.
However, XTZ has the potential for significant volatility, due to the lower liquidity of its Binance trading pairs. There is also no clear path for XTZ from the $5 range to higher valuations, despite long-term expectations the coin may rise to triple-digit prices.
So far, even at peak prices, XTZ has not managed to break the $10 level, despite network growth and decentralized app usage.
XTZ Lags Behind ADA Fame
The performance of XTZ has lagged behind Cardano (ADA), which receives more visibility due to its high supply and higher overall market capitalization.
XTZ has a relatively low supply of around 1B tokens, of which a significant part has been staked or held by validators. For some, XTZ has a higher potential for growth from the current levels.
At triple-digit levels, XTZ could have the potential to be a top asset. The network is widely used for even more popular NFTs, with Tezos-based collectibles recently appearing at the Art Basel Miami fair.
The Tezos network also attempts to position itself as a greener alternative to mining, as its block production has a negligible electricity usage.
ETH, Altcoin Influence Increases
Despite expectations of a year-end Bitcoin (BTC) rally, the more successful asset is Ethereum (ETH).
The ETH market cap dominance keeps expanding and is now at 21.9%. ETH peaked in market dominance back in the summer of 2017, when the ICO hype lifted dominance to above 30%. A weak BTC only helped at that time.
Now, ETH is also driving a newly emerging economy of open access finance. The NFT sector, initially viewed as mere hype, is evolving into the play to earn phenomenon. Instead of relying on a passive reward structure, more projects are adding game development and plan to capitalize on the model of startups like Axie Infinity (AXS).
Still, GameFi tokens remain risky and volatile, as the success and demand for the games fluctuates. The tokens are also highly dependent on speculative trading, and face the possibility of concerted manipulation due to relatively low trading volumes.
Assets like LUNA were highly active for a few weeks, but can also stagnate or erase a significant part of their value. At this point, the collection of larger and smaller altcoins makes up about 35% of the cryptocurrency market, while some assets show decoupling from the price of BTC.
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