Weekly Research Report #108: Thanks For Selling Cheap

The recovery last week was wiped out as the SEC once again rejected Bitcoin spot ETF. BTC dropped below the $20k level and was stabilizing with sideways price actions. ETH returned to $1k level ($BTC +9.1%; $ETH -13.3%).
Crypto total market cap declined to $842b.

Bitcoin traded sideways after returning to $20k at the end of June, marked the worst month since 2015.
Alts underperformed eliminated all the gains last week ($MATIC -18.9%; $HT -18.2%; $SOL -16.8%; $AVAX -15.5%; $GMT -15.4%)

Stablecoin dominance went higher ($USDT at 8.0%; $USDC at 6.7%) Derivatives Market

Funding rates remained negative (BTC -1.0%; ETH -4.9%)
Alts’ funding rates went deeper towards the negative side (ADA -19.0%; DOT -13.8%; SOL -10.4%).
For BTC liquidation, both long and short liquidations remained very quiet.

Chart 1: 7dma of BTC, ETH Perpetual Futures Funding Rate (Source: FTX)
Chart 2: 4hr BTC liquidation chart (Source: Coinglass)
Major Crypto KPI (Jul 04, 2022)

Altcoins Roundup

$HT dropped 18% over the last seven days as Li Lin, Huobi’s founder, was reportedly looking to sell his majority stake at the crypto exchange company, which was over 50%.

$EVMOS increased by 24.1% this week, heading to its Evmos mainnet upgrade on 4 JUL.

Axie Infinity’s Ronin Ethereum Bridge return live after $600m being hacked in March 2022. However, the governance token continued its declining price action ($AXS -14.2%).

Crypto Updates

MicroStrategy disclosed that they added another $10m worth of Bitcoin over the last 2 months. The company is now holding ~129,699 bitcoins at an average cost of $30,664 (near $4b worth in notional).

Celsius has laid off 150 employees recently, which was about 25% of its entire workforce. The exchange was at risk of insolvency and paused all withdrawals during extreme market condition last month.

CoinDCX, an India-based crypto exchange, suspended crypto deposits and withdrawals. Ramalingam.S, head of branding, marketing and communications at CoinDCX, responded that the suspension was due to compliance requirement.

Tether ($USDT), was reportedly being shorted by various crypto hedge funds after the failure of $UST. Genesis Global Trading affirmed that its hedge fund clients shorted $USDT through its service. Paolo Ardoino, CTO of Tether, hit back confidently with statistics: more than 85% tether reserves are in Cash & Cash Equivalent, 55% of those are in US Treasury Bills. In Q2, commercial papers’ holdings reduced by 58% to $8.5b.

Regulatory Updates

The SEC again rejected Grayscale Bitcoin spot exchange-traded fund (ETF). On the other hand, VanEck filed another Bitcoin spot ETF only days after SEC’s rejection on Grayscale’s.

El Salvador also bought the dip. The bitcoin country acquired another 80 bitcoins at an average price of $19k. Now, the country has a total treasury of 2,381 bitcoins.

Indira Kempis, a Mexican Senator, proposed a bill to accept bitcoin as the country’s legal tender. Before that, the Central Bank of Mexico has rejected bitcoin adoption in the country’s financial system.

Institutional Updates

Tencent, the tech and gaming leader, launched its in-house metaverse-driven division. The team will focus on both hardware and software Web3 developments.

Meta continued to express interest in the Web3 industry, renamed Facebook Pay to Meta Pay, NFT feature in progress to launch on Instagram and Meta.

Circle, the company behind $USDC stablecoin, partnered with New York Community Bancorp (NYCB) for its USDC custodian reserves.

Kaiko, the Paris-based blockchain analytics firm, raised $53m in Series B funding round, led by Eight Roads, Revaia, Alven VC, Point9 VC, Anthemis and VC Underscore.

Bulgari, collaborated with Temera, Luxochain and Polygon to enter the NFT industry.

Macro Front

Interest rate hike and inflation continued to be the major threat on the macro economy. General equities traded sideways while tech- heavy stocks suffered (DJIA +0.8%; S&P500 +0.1%; NQ -5.0%). Commodities also showed weak price actions (Gold -1.1%; Oil -5.1%; Wheat -10.6%). Focus this week will be the employment report and FOMC minutes release.

Conclusion

Crypto assets started to stabilize after weeks of suffering. Despite the upcoming macro uncertainty, bitcoin-holding company and government buy the dip, big names keep entering the industry. SR would hereby consider slowly accumulating major crypto assets.

Be patient and Good Luck!

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