The Graph is an indexing protocol on Ethereum that helps organize blockchain data and makes it easily accessible. It analyzes and stores this data in indexes called subgraphs, which allows it to execute fast responses to queries sent to its protocol.
The Graph protocol’s token, GRT, clocked a 92% gain between 31st January and 7th February. After plummeting in the second half of 2022, the GRT token has bounced back during the market recovery in the first few weeks of 2023. Its market cap even briefly touched the $2 billion mark on February 8th, 2023. While there’s still a long way to go for the token to surpass its 2021 market cap of $5 billion, it’s still a considerable recovery. But what’s behind these promising movements?
Growth in Key Metrics
A recent report by Messari showed that The Graph network saw growth in key ecosystem metrics during Q4 of 2022. According to the report, as of December 2022, 618 subgraphs moved to the Graph mainnet, a 25% increase from Q3 and a 151% year-on-year increase.
Participants in The Graph ecosystem are divided into indexers, curators, and delegates.
In Q4 of 2022 –
- Indexers increased by 33% quarter-on-quarter
- Curators grew by 2%
- Delegates saw a 9% increase
All these participants have different roles on the network. Indexers manage the processing and storage of data by graph nodes, curators find graphs worth indexing and signal this to the indexers, while delegates are the participants who might not have the resources to index and therefore delegate GRT to indexers.
The Graph network’s revenue from query fees surged 66% QoQ in the fourth quarter of 2022, which corresponds to a whopping 6200% YoY increase. And expectations are that this will continue to rise.
Growth in AI Popularity
Analysts have attributed GRT’s growth to the rising popularity of AI due to the ChatGPT effect. While GRT itself is not an AI token, The Graph supports AI-related crypto projects through its back-end infrastructure.
According to CoinMarketCap’s rankings of the most valuable AI and big data crypto projects and tokens, The Graph is currently 1st.
What Are the Indicators Saying?
The key momentum indicators on the daily chart indicated that the GRT token was continuing on its upward trajectory. Its Relative Strength Index (RSI) and Money Flow Index (MFI) were 67.6 and 77.6, respectively. Both values indicate a bullish sentiment surrounding the asset.
However, GRT’s Chaikin Money Flow (CMF) value is falling, which could indicate that the asset’s price is rising simply due to buying pressure and that the momentum might actually slow down soon.
Our Takeaway
The Graph has been seeing strong uptrends despite macroeconomic factors not being in favor of buying. This is a good sign for the crypto market as a whole; it shows investors’ faith in the asset class.
If you are considering investing in the GRT token or any other cryptocurrency, remember to do your own research first. None of this is financial advice.
