6 September 2021

Market Recap

Both bitcoin and ether broke out of their consolidation zone — bitcoin broke through $50k resistance on 9/5 amidst thin weekend liquidity, while ether has been consolidating since bulldozing through $3,400 on 9/1/2021. ETHBTC is now at upper range of 0.055–0.082 zone. Pretty much everything went up last week, so as long as one has some crypto exposure, s/he would’ve done pretty well, but alternative Layer-1 tokens ($SOL +41%, $DOT +33%, FTM +102%) and Web3-related tokens ($LINK +30%, $FIL +56%) especially did well. Ethereum DeFi protocols continued to lag behind its counterparts (DPI +15%), and the mood was further dampened on Friday when WSJ reported that the SEC is conducting a civil investigation into Uniswap Labs, signalling that the recent talk of regulating DeFi is being translated into action. Although investigation is not an allegation of wrongdoing and just how SEC gathers information, this could dampen institutional appetite for DeFi-related services. We don’t necessarily deem it as a bad thing, as this could lengthen the window of opportunity for heightened yields for leaner/non-US players and foster developments in non-DeFi space (e.g. NFTs). Bubble indicators, such as Kimchi premium (Chart 1) and Grayscale premium (Chart 2), remain stable, but funding rate (Chart 3) and leverage (Chart 4) are ticking higher.

Chart 1 : Kimchi Premium (Upbit vs. Binance), from Source: scolkg.com
Chart 2: BTC Price (Green Line) and GBTC Premium (Dark Blue Line)
Chart 3: YTD 7-Days Moving Average of Hourly Funding Rate for BTC and ETH on FTX
Chart 4: BTC/USD Price (Top) vs. Aggregated Open Interest (Bottom), from Source: Coinalyze

On the industry front, FTX continued its acquisition spree — FTX.US acquired crypto derivatives exchange, paving way for it to offer crypto derivatives (futures, options, and swaps) for retail clients in the US. Given how underserved US crypto derivatives is, the acquisition, together with extensive marketing, could be the magic sauce. $FTT responded positively to the news, rallying fom ~$50 to high of $70. Binance, on the other hand, continued to struggle with regulators as South African regulator warned that Binance is not authorized to provide financial advice and intermediary services, and MAS placed Binance.com on the investor alert list vs. supposed rumour that Binance was considering obtaining investment and protection from government funds, with Singapore being one of the most likely options.

On the macro side, ADP jobs number and NFP came in well below expectations; this was taken largely as good news as the report likely pushed out commencement of asset purchase tapering to later this year. Friday’s jobs report also showed continued wage-inflation, as Average Hourly Earnings beat estimates (0.6% vs. Est. 0.4%) and ISM Non-Manufacturing Index (61.7 vs. Est. 61.5) both came in at solid territories; the number spurred inflation fears as benchmark 10-year Treasury yield jumped ~5bps. Overall, equities were mixed, USD and oil lower, and gold higher. Market is expected to be largely quiet this week, which is also shortened with Labour Day holiday.

(Sep 06, 2021, Top 5 Crypto KPI)

What is Happening?

Twitter is reportedly testing crypto-related features according to leaks from a community developer. Features include ability to display Bitcoin and Ethereum addresses on profile, tipping in bitcoin/ether, and Lightning Network-related capabilities.

Australia, Malaysia, Singapore and South Africa will test cross-border CBDCs, as part of Bank of International Settlements’ new Project Dunbar. BIS hopes this project will allow financial institutions to transact directly with each other, eliminating the need for intermediaries and cutting time/cost of transactions. The project appears to be for wholesale/institutional applications rather than retail use, and results are expected to be published in early 2022. As expected, pace of government development for CBDCs are far slower vs. private stablecoins.


Nothing much has changed from last week in terms of macro backdrop, institutional involvement into crypto, and breakneck developments in DeFi/NFT space. Last week has rewarded all corners of crypto (except the stablecoins), as everyone’s looking out for pockets of the ecosystem that have not rallied yet. In the coming week, we are especially interested in: dydx token launch on 9/8, Cardano’s Alonzo upgrade on 9/12 (buy the rumour, sell the fact event?), and developments in the Web3 space as catch-up play to NFT.

Good Luck!