Exploring Aptos Blockchain's Microsoft Partnership: Insights and Considerations

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If one has been exploring the altcoin market recently, they are not alone in their endeavors. While Bitcoin's price has maintained a relatively stable trajectory, a selection of cryptocurrencies has undergone notable growth, exhibiting rallies ranging from 15% to 25% over the preceding month. Among these upward surges, the native token of the Aptos blockchain, APT-USD, has stood out.

Remarkably, APT experienced a swift 20% intraday surge on August 9th, followed by a partial retracement of approximately half that gain. Nonetheless, the token managed to sustain a commendable 10% increase since early August. The impetus driving this surge can be attributed to an announcement by the lead developer of Aptos Labs, unveiling a collaboration with the tech giant Microsoft (MSFT):

Aptos marks a significant milestone as it forged an alliance with Microsoft to enable Web3 functionality on the Aptos Network. Through this partnership as an MSFT collaborator, developers and users worldwide will seamlessly access Web3 utilizing our array of AI-supported tools.

The utilization of the term "partnership" in this context has sparked debates among critics. Some posit that it may be more accurate to describe Aptos as integrating a Microsoft product with their network rather than directly establishing a partnership. Nevertheless, Rashmi Misra, Microsoft's General Manager of A.I. and Emerging Technologies, alludes to a symbiotic association in his statement:

The fusion of A.I. and blockchain stands as a highly intriguing amalgamation of emerging technologies. By integrating Aptos Labs' technology with Microsoft Azure OpenAI Service capabilities, our aim is to democratize the utilization of blockchain.

Despite this, the sentiment conveyed bears resemblance to previous statements by Misra earlier in the year when collaborating with the blockchain infrastructure protocol Ankr. As of now, it remains an early stage to ascertain the concrete outcomes stemming from the Aptos/Azure integration.

**Historical Performance and Current Status of Aptos Token**

Given its relative novelty, Aptos does not possess an extensive trading history for its APT token. During the last significant price surge of APT, rationale behind the movement iwas analyzed by an article where the author concluded:

No substantial reasons underpinning this surge were identified. Exercising caution within the crypto industry, particularly with new protocol coins lacking robust tokenomics, positive sentiment, and active engagement, is prudent. Aptos embodies these criteria. In October, it was deemed a "hold," a stance that could have been lenient. Currently, APT seems like a sell from the author's perspective.

Subsequently, the value of APT experienced a decline of approximately 60%, while network activity demonstrated a modest upswing since the coverage in January:

With daily active accounts for APT rising from around 30,000 earlier this year to exceeding 100,000 in mid-July, and new accounts maintaining a consistent range of 85,000 to 95,000 daily, evident traction for Aptos is apparent. Despite these encouraging trends in usage, actual APT trading volume has remained relatively low, except for the recent surge following the Microsoft announcement:

While it is plausible that this surge in volume could be linked to on-chain demand for the token, it is more likely that speculation prompted by the news primarily propels it. Insights from derivative market data sourced from Coinglass reveal a decline in the volume-weighted funding rate after the partnership announcement:

The record-low funding rate of -0.0397% on August 9th suggests that bearish expectations regarding the token's value decline are held, leading to the establishment of short positions. However, if APT's price experiences an ascent, these bearish positions could be compelled to cover, potentially reversing the dynamic. Notably, an imminent event on August 11th will unlock 4.5 million APT tokens, constituting just over 2% of the circulating supply. While this might not trigger a significant selling event, given the substantial planned emissions for the remainder of the year, its influence on APT's trajectory remains uncertain.

**Final Observations on Aptos' Collaboration with Microsoft**

Recent indications suggest that Aptos has witnessed heightened usage, concurrent with bearish predictions regarding its price. The recent collaboration announcement with Microsoft might have precipitated a one-sided trading scenario. Nevertheless, despite the reservations expressed concerning APT's tokenomics and the prospective trajectory of the Aptos blockchain, tactical traders may find opportunities to momentarily squeeze bearish positions, considering the possibility of history repeating itself following the July unlock.

On the other hand, it is conceivable that the gains post-unlock have already materialized and subsequently retraced. In the author's perspective, a prudent course of action at this juncture would be to adopt a cautious stance and observe from a distance. It is noteworthy that other blockchain-based infrastructure projects also lay claim to a "partnership" with Microsoft, with potential disparities in the level of enthusiasm generated. As a long-term investment, APT continues to be regarded as one to avoid.

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