Weekly Research Report #104

Market Recap

Cryptocurrencies trended sideways again, with $1.3T (+1.6%) total crypto market cap.

Bitcoin showed boring price action, still ranging around $30k. Its weekly bar finally turned green (+1.4%) after nine consecutive weeks of red.

Bitcoin market dominance increased to 44.3% (+0.5%) as traders and investors showed risk-off activity on cryptocurrency during bear market.

Derivatives Market

BTC and ETH funding rates continued to trade at premium, +4.0% and +4.4% respectively (Chart 1). Alts funding rates slightly recovered but still pointing towards south (ADA -9.1%; DOT — 9.7%; SOL -7.9%).

For liquidation, calm activity tied closely with the boring price actions. The only notable event was the $200m long liquidation on the first day of June, which was caused by FOMO price actions when Bitcoin went up to $32k. The highly leveraged long traders suffered immediately.

Chart 1: 7dma of BTC, ETH Perpetual Futures Funding Rate (Source: FTX)
Chart 2: 4hr BTC liquidation chart (Source: Coinglass)
Major Crypto KPI (Jun 6, 2022)

Alt Roundup

Solana blockchain network halted again earlier this week. Transactions could not be processed for about eight hours. Solana total value locked (TVL) dropped from $11.2b at the start of 2022 to $3.7b. $SOL also declined to $40 (-18.6%)

Cardano rallied up after the anticipation of Vasil Hard Fork Upgrade. The upgrade expected to lower Cardano transaction fees and expand the scalability of the smart contract platform. ($ADA +5.5%)

On Web3/Metaverse front, the move-to-earn giant, STEPN, has entered its death spiral after its couple months of flourishing. Both the governance token and utility token could not sustain an attractive price for users as crypto market declined. Model was not sustainable once users were exiting the app. ($GMT -8.9%; $GST -55.9%)

Crypto Updates

FTX, one of the leading crypto exchanges, overtook Coinbase to become the second-largest centralized crypto exchange with a market share of 10.8% (Binance 64.1%; Coinbase 9.6%). FTX was also in talks with Goldman Sachs about support for derivatives trading weeks ago.

Boba Network, the Ethereum L2 scaling solution, decided to go multichains by expanding its network to Fantom and Moonbeam.

Optimism, another Ethereum L2 scaling solution, sent airdropped token ($OP) to previous users. $OP could be used for liquidity mining and voting.

A proposal about whitelist Stake DAO to lock $BAL token has been passed. The new feature will allow users to enjoy yields and still be associated with voting rights whilst keeping a liquid position.

Regulatory Updates

The Bank of England proposed a treasury plan about stablecoin safeguard after $UST crash, which will recognize stablecoins as a legal form of payment and consumers will be protected by the bank if the stablecoin collapses.

The New York Senate will be establishing a two-year moratorium on new ‘proof-to-work’ mining operations powered by fossil fuels.

The Indian Government planned to release a set of guidelines for certain crypto-related taxation before July. The 30% capital gain tax from crypto transactions and NFT sales introduced are unlikely to be reduced.

The Union Bank of the Philippines has raised $209m to issue the country’s first blockchain-based peso bond.

Institutional Updates

Despite recent bearish market sentiment, there was no deterrent for VC funding to back crypto startups.

Andreessen Horowitz (a16z) made record high by raising a $4.5b crypto fund, which $3.5b to venture investments and $1.5b for seed. a crypto trading platform founded by Alan Howard, announced a $70m new funding round, led by Goldman Sachs and Dawn Capital. This funding round brought Elwood’s valuation to $500m.

Binance Labs raised a $500m fund, focusing on early-stage web3 and blockchain companies. The fund was led by DST Global Partners, Breyer Capital, Whampoa Group and other private equity funds.

Macro Font

Beijing and Shanghai eased Covid restrictions; US was considering lifting tariffs on China; Russia-Ukraine war intensified.

US equities traded mixed (DJIA +0.3%; NQ -2.5%; S&P500 -1.6%).

Commodities were slightly up (GOLD +0.4%; Oil +0.7%; Natural Gas +1.7%). Saudis raised Oil prices more than expected for Asia.

This week focus will be the May CPI data released on 10 Jun, expecting 8.3%, same as Apr.

Conclusion

Crypto market was still trading at a risk-off stage with high correlation to the global market. Macro uncertainty reduced investors’ confidence in the volatile market. Be patient and Good Luck!

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