YEREVAN (CoinChapter.com) – LRC, the native token of Loopring — a layer-2 solution on the Ethereum blockchain, trades at nearly $1.20 Tuesday following a week of Bitcoin-led sideways consolidation. However, there might be enough reason to suggest a strong upside impulse for LRC in 2022.
Here are the main drivers behind the possible upward rally:
#1 GameStop integration
In detail, GameStop, the largest video game retailer worldwide, partnered with Loopring to open an NFT Marketplace on Mar. 23, noting that to “return power to the players,” the Marketplace had to be “fast, cheap, and secure for the masses.”
Meanwhile, GameStop generated net sales of $6.011 billion in 2021, a 20% rise from 2020 statistics. However, it ended the fourth quarter with a net loss of $145 million, possibly due to the simultaneous P2E gaming’s rise to prominence. Thus, GameStop joined the current instead of fighting it.
Loopring, on the other hand, expects to gain exposure to GameStop’s large client base, tapping into the vast resources of the growing Metaverse. Additionally, partnering with a veteran gaming company that has been in the business since the ’90s could help boost Loopring’s LRC token.
Plus, when Gamestop launches its NFT Marketplace, it will need LRC to pay for transactions. These fees are then distributed to liquidity providers, ring miners, and the Loopring DAO. The heightened demand will provide a bullish tailwind for the Loopring token.
#2 Demand for Layer-2 solutions
The Ethereum blockchain’s success in the past years has accompanied a range of technical drawbacks, including its notoriously high gas fees and network congestion. Around 3,000 dApps are running on the blockchain, with 1.3 million daily transactions, hence the congestion.
Loopring employs several technologies to help Decentralized Apps and particularly DEXs, process more transactions. For example, Zero-Knowledge rollups are at the core of Loopring’s scalability solutions. In short, zk-rollups bundle transactions together off-chain, and then process them on the Ethereum blockchain all at once.
Thus, Loopring and other layer-2s are doing the heavy lifting for Ethereum. Once bundled off-chain, the transactions entered into the actual blockchain more easily. When stored off-chain, Loopring can achieve up to 16,400 transactions per second.
#3 Supportive Technicals
Analytical platform The Digital Trend saw long-term bullish technicals for Loopring, based on 2021 rally patterns and the Fib Extensions indicator. In detail, the Fibonacci extensions are a tool that traders can use to establish profit targets or estimate how far a price may travel after a pullback is over.
As a result, the experts pinpointed the purple box on the chart below as a target for Loopring’s next rally. The box lies at the 1.618 and 2 Fib Extensions.
Additionally, the authors took the configuration of the 2021 rally into account. The five-point pattern on the chart signifies the move up, followed by the corrective A-B-C.
However, the short-term technicals look grim, with a possible correction ahead. For example, the MACD indicator looked primed for a bearish crossover (histogram at the bottom). Additionally, the lowering relative strength index (RSI; momentum indicator) and trading volumes confirmed the outlook.
Notably, the bearish short-term predictions don’t trump the digital asset’s overall trajectory in 2022. Loopring looks like a prime candidate for consideration, given the above reasons. That said, traders should consider the global economic instability and LRC’s susceptibility to Bitcoin’s price fluctuations before making an investment decision.