Crypto Recap: PASSIVE INVESTORS NEED BITCOIN

6 min readJan 10

Summary

The crypto market cap added another 3.7% to $887b after the release of US jobs data. Bitcoin penetrated its 50dma and had already gained 4.3% since the first day of 2023. Altcoins broadly outperformed with Ethereum-based layer 2’s tokens taking the lead (7d: $LDO +80.0%, $OP +41.9%). On crypto front, the market focus will be the Shanghai upgrade for Ethereum in March and the insolvency issues of Huobi exchange and investigation of Digital Currency Group (DCG). On the traditional finance (tradfi) front, the December inflation data will be the spotlight this week (12 Jan) with a consensus of 6.5%. SR believes a number lower than 6.8% (0.3% lower than previous number) will push the risk asset class higher in near term. Equity market have had their biggest gains on Friday since December (DJI +2.1%, S&P500 +2.3%, NQ +2.7%), DXY also hit 103 (-1.4% since the death cross on 5Jan). SR expects the crypto market will follow the traditional economy closely this week with CPI data coming out on Thursday. The upcoming data will perhaps give us clearer insight about the next interest rate decisions.Top 100 in the last 7 days:

Outperformers: · LDO (+80.0%), SOL (+60.9%), ZIL (+36.7%), ETC (+35.3%), SAND (+33.9%), NEAR (+32.5%), ADA (+31.9%), MANA (+31.1%), BIT (+29.0%), FXS (+27.9%), RPL (+25.2%)
Underperformers: HT (-6.3%), TON (-4.7%), LEO (-1.7%), OKB (-0.7%), USDD (-0.4%)

Crypto Headlines

- BlackRock added Bitcoin to its $15T ‘Global Allocation Fund’

The largest fund manager started to provide bitcoin exposure for passive investors. It is important to note that only 1.93m bitcoins ($33.2b) are available from global exchanges. Only about 0.22% of the fund will be able to buy all the available bitcoin.

- Ferrari cut ties with crypto sponsorships

The Formula One racing car manufacturer stopped its multi-year deal with Velas Blockchain and chip manufacturing giant Snapdragon with about $55m loss

- ‘FUD’ on Justin Sun’s Tron ecosystem

$TRX token declined 9% and $USDD de-pegged to $0.973 on Friday due to the drama between Justin Sun and Huobi (rumours about Huobi shutting down internal communications and insolvency issue). Approximately $60m worth of crypto and fiat assets flowed out from Huobi exchange on Friday and Huobi officials confirmed its intent of 20% layoffs of its employees.

- Hot tokens for the week

The Ethereum-based layer 2’s tokens rallied: $LDO (+80.0%) and $OP (+41.9%), due to talks about Ethereum Shanghai upgrades may add incentives for more Ethereum staking. GameFi tokens generally outperformed: $AXS (+18.9%), $SAND (+35.3%), $ENJ (+18.6%), $GALA (+121.9%), $GMT (+29.4%).

On derivatives front, general crypto perpetual contracts’ funding rates (Chart 1) remained positive, the average Bitcoin and Ethereum funding rates for the last seven days were +5.9% and +4.0% respectively. The continuation of positive funding rates implies a positive expectation from investors on crypto recovery after FTX meltdown since mid Nov. On the option market, historical volatility (HV) started to revert. The HV for Bitcoin and Ethereum are now at 16.5% (+6%) and 25.3% (+10%) respectively. The long-straddle strategy suggested last week should be slightly in profit today. It is also notable that the open interest for Bitcoin and Ethereum option contracts expired on 31 Mar keeps rising these days. On the liquidation front, Bitcoin had six consecutive days that the size for short liquidation was greater than the long liquidation, which well explained the uptrend price actions last week.

**Chart 1: The 7-day average funding rates for BTC and ETH**

**Table 1: Major Crypto KPI (as of 09 Jan 2023)**

NFT News

NFT is having a great start in 2023, marking $9.7m trading volume (Chart 2) and 39k NFT sales (Chart 3) on average daily basis, which are both higher than December’s numbers. The floor prices of most blue-chip NFTs went up over the weekend: Moonbirds (+23.4%), Azuki (+11.3%), MAYC (+11.5%).

- PROOF signed with United Talent Agency (UTA)

The company behind Kevin-Rose NFT — ‘Moonbirds’ signed a representation deal with UTA, the Hollywood talent agents. The partnership aims to broaden PROOF’s audience and transform ‘Moonbirds’ into a global brand. This move has been recognised as a bullish action, reflected by the 23% rising price actions of ‘Moonbirds’.

- SuperRare cut 30% of staff

The NFT marketplace confirmed that they were facing headwinds and over-hired while the CEO remained a positive view on the NFT and web3 future. It is worthy to note that the leading NFT marketplace, OpenSea, also laid off 20% of its staff in July 2022.

- Moutai’s Metaverse

Moutai, the well-known Chinese liquor distiller, launched a metaverse — ‘Xunfeng World’ on App Store and hit 1 million registered users. Users can experience the Moutai distilleries, interact with each other and learn the liquor making procedures.

- 9GAG Memeland NFTs

The social media platform launched a new NFT — ‘The Captainz’, also under its series of Memeland NFTs (‘YOU THE REAL MVP’, ‘The Potatoz’). ‘The Captainz’ is now trading at a floor price of 5.35eth and the market anticipates the owner of it will receive airdrops of $MEME governance tokens and entry tickets for Memeland’s Treasure Islandz (the metaverse) in the future.

**Chart 2: OpenSea Monthly Volume ($USD)**

**Chart 3: OpenSea Monthly NFTs Sold (Transaction Count)**

**Chart 4: Floor Prices of Blue-Chip NFTs ($ETH)**

Defi Updates

**Table 2: Total Value Locked (TVL) on major blockchains**

In the DeFi space, total TVL rebounded +6.9% from last-week number, with currently $62.5b* worth of tokens being locked. Solana continued its strong rally by adding another 31.2% into its ecosystem, TVL $456m ($SOL +61.1%). Layer 2s also had another week of gains (TVL: Arbitrum +1.2%, Optimism +1.6%, Polygon +6.1%). Tron TVL has been underperforming since drama of Justin Sun might ‘got rekt’ in Huobi exchange’s massive layoffs.

- ‘Mastercard Artist Accelerator’

The payment service firm partnered with Polygon to assist five emerging musicians or artists in setting up their brands in the web3 space.

Regulation Updates

- DCG under investigation by US authorities

DCG suffered from the FTX collapse and its close relationship with Genesis Trading. The market has been worrying about the ripple effects if the biggest crypto conglomerate also gets hit under strict regulatory policies.