Stable September, Uptober October

4 October 2021

Market Recap

Bullish sentiments are best reflected by latest crypto memes — ‘Uptober’ and ‘buy because it’s Q4’. Following China FUD, market saw strong month-end bid, followed by Uptober bid. BTC reclaimed above $45k and 50dma, while ETH also broke above 50dma; ETHBTC still largely range-bound as ETH continues to suffer from negative headline, such as several mining pools closing/preventing Chinese access (Sparkpool, BeePool), outsized ETH put purchase, Ethereum developer pleading guilty to violating North Korea sanctions. Funding rate (Chart 1), Kimchi premium, and futures open interest have all ticked up (Chart 2).

Chart 1: YTD 7-Days Moving Average of Hourly Funding Rate for BTC and ETH on FTX
Chart 2: YTD BTC Price (Upper Panel) vs. Aggregated Open Interest (Lower Panel)

In the alts space, $BNB (+18%, demand due to $BETA IEO), $LUNA (+15%, Columbus-5 upgrade successful) and $SOL (+20%) outperformed bitcoin/ether. But the true outperformer was $AXS (+108%, introduction of staking for cool 187% APR, resulting in decreased circulating supply, as well as plan to launch a DEX), bringing its market cap to US$ 8.3bn and FDV to $36.6bn (vs. Zynga’s US$ 8.2bn, EA Sports $40.9bn, Nintendo $52.3bn). On the anticipated bitcoin ETF approval, the SEC once again delayed its decision on 4 proposals, a stark contrast to Canadian regulators’ decision to approve Evolve Funds Group’s multi-cryptocurrency ETF. Nonetheless, overall market sentiments appears to be that futures-based ETF would be approved soon. GBTC continues to trade in firmly discounted territory (Chart 3).

Chart 3: GBTC Price (Green, LHS) vs. Premium/ Discount (Navy, RHS)

On the institutional side, the most notable news was Visa proposing a “Universal Payment Channel”, an interoperability platform for stablecoins across various L1 solutions, highlighting Visa’s conviction and preparation for influx of stablecoins/CBDCs built on various L1s. Aside from that, Fireblocks, a digital asset security firm, has posted a proposal on Aave to authorise Fireblocks as a whitelister for deployment of Aave, stating that ~50 of the company’s 500 institutional clients have expressed interest in using Aave Arc. Fireblocks is already working with Compound Treasury to offer DeFi yields to institutions, and we do not think that the proposal being passed would result in significant influx of capital, but would see Compound and Aave yields more in line with each other.

(Oct 04, 2021, Top 5 Crypto KPI)

What is Happening?

Revolut is looking to launch crypto token. The fintech company with a $33bn valuation, is looking to issue tokens, subject to FCA’s approval. Although details of tokens are unknown, token issuance would set Revolut apart from other fintech players, such as Square, Paypal, and Robinhood, dabbling in crypto. Launching tokens, as opposed to raising equities/going public, could be a viable route for companies to monetise their services / incentivise customer acquisition and activities. Centralised exchanges, such as Binance and FTX, have taken on the token raising route, with some profit-sharing to token holders in the form of buybacks, while decentralised exchanges, such as DYDX, have also segregated the equity (profit) and token holders (utilities, such as discount).


We continue to like decoupled movements of cryptocurrencies until a strong catalyst, such as ETF approval, could lift BTC and the broader market higher in a correlated fashion. At the risk of sounding like a broken record, we also like being allocated to various dApps to snowball DeFi yields and take advantage of lucrative liquidity mining incentives. We are also keeping a close eye on the latest trend of “being scammed into wealth”, in the form of airdrops.

Good Luck!