GM and welcome to another edition of CoinStats Scoop! 🥂 Here’s an overview of this week’s newsletter:
The usual broad market update with insights into another strong week 💪
Reading, thinking through, and analyzing the prospects of an “echo bubble”
Updates on the impactful news and developments of the week
Exploring how a plugged in venture capitalist is thinking about the current markets
Wrapping things up with the usual predictions & takeaways
Welcome to Everything Rally, Part 2 💪
Market Overview
It’s another beautiful week in the crypto markets as the strong rally that we covered last week continued its momentum! Weekends have been good to us lately: last week’s and this week’s explosive moves upward both began on Friday nights. 🤑
The total crypto market cap is back up, sitting comfortably above the $1 trillion dollar mark. BTC gained a strong 9% this week while ETH followed with a respectable gain of 6%. BTC and ETH, the majors we all know and love, propelled tokens across the entire crypto ecosystem higher.
This weekend’s rally was once again fueled by short liquidations as more than $300 million worth of market shorts were liquidated on the continued move upward. The rally resulted in some insane gains for altcoins that act as higher beta to both BTC and ETH. Beta refers to the expected appreciation of altcoins in respect to ETH/BTC: Historically, they’ve both rallied harder and declined more than the majors in previous cycles. This trend continues today and was more than evident this week.
Below, we have highlighted those notable sectors:
DeFi — FXS +47%, AAVE +11%, CRV +23%, SNX +23%, CVX +25%, & DYDX +10%
LSDs (liquid staking derivatives) — LDO +3%, RPL +12%, & SD +61%
Scaling Solutions — OP +29%, IMX +11%, LRC + 7%, & SYN +14%,
Alternative L1s — APTOS +60%, CANTO +32%, FTM +18%, NEAR +13%, & SOL +4%
Gaming & Metaverse — MANA +22%, SAND +22%, APE +5%, & AXS +46%
NFT tokens — XMON +13%, LOOKS +17%, MAGIC +48%
Miscellaneous — BONE +14%, ENJ +23%, FIL +18%, SHIB +13%, & AR +10%
As you can see, crypto has enjoyed another profitable week. Yay! 🤑
Obviously, it’s anyone’s best guess how long this rally will last, but regardless of future price action, it has become clear that crypto was severely oversold as a result of FTX’s collapse. While people search for reasons for this rally after preemptive eulogies, we’ll just enjoy the rally we anticipated and continue to vibe to the undeniable future impact of crypto. 😎
News & Developments
HashKey Capital, Singapore-based global asset manager specializing in digital assets, raises $500 million for its third crypto fund
The National Australian Bank creates an ETH-based stablecoin called AUDN that allows business customers to settle transactions in Australian dollars; the stablecoin will be backed one-to-one with Australian fiat held in banks
Nil Foundation, a ETH-based zero-knowledge scaling tech developer, raises $22 million at a $220 million valuation
Alchemy Pay, a popular fiat-to-crypto bridge provider, becomes an Official Service Provider of Visa’s Third Party Agent Program enabling easier on/off ramps for Alchemy’s NFT Checkout service
SUSHI’s new Head Chef outlines SUSHI’s roadmap and goals for 2023
OpenSea, the largest NFT exchange, adds support for Abritrum’s Nova scaling solution
ConsenSys, one of the oldest and largest builders within the ETH ecosystem, announces that their L2 scaling zkEVM is now available in private beta testnet
Binance’s BNB token completes its 22nd quarterly burn, burning 2.064M tokens worth ~$618 million
ETH-based infrastructure service provider Flashbots is looking to raise $50 million at a valuation of $1 billion
FTX’s new leadership finds $5 billion worth of cash, liquid crypto, and liquid investment securities
Polygon’s MATIC completes upgrade that will address transaction fee spikes and chain reorganization issues that previously affected the chain
Shibarium Network (SHIB) introduces its Shiba Inu Layer 2 scaling network
Examining the Potential “Echo Bubble”
Since the market has impressively rallied to start off 2023, talk of an “echo bubble” has become persistent across Crypto Twitter. An echo bubble essentially means that speculation has returned and crypto is in a good environment for a sustained rally! 🤑
Our examination of the 2023 Echo Bubble this week comes from Andrew Kang. Andrew is heavily involved with advising Mechanism Capital, one of the best crypto funds in this space. In addition to working for Mechanism, Andrew is known for his multi-million dollar public bets on the theses he forms. He is arguably one of the best long-term, thesis driven investors.
As Andrew states in the thread, the prospects for a “mid-term bottom and oncoming echo bubble” are supported with on-chain data, technical analysis, and exchange data!
The first point that Andrew makes centers around technical analysis and how great the charts of BTC, ETH, and other cryptos look on high timeframes. As you can see in the BTC chart below, the selling has been relentless for over a year and there’s a ton of room for BTC to explore above 💪
Next, he highlights the incoming/ongoing supply squeeze of both BTC and ETH through various onchain metrics including the number of each asset left on exchanges (which has reached new lows)
A large driver of bearish momentum in 2022 came from overlevered BTC miners that became forced sellers of BTC due to decreasing prices and increasing energy prices. Since then, energy prices have declined and miners have stabilized, decreasing the sell pressure and downward price pressure
One of the key points Andrew and others have made is the number of stablecoins and dry powder on the sidelines. In the 9th tweet of the thread, he wrote, “aggregate holders are no longer underwater, they still hold a very large amount of stables relative to total crypto market cap which can serve as rocket fuel for a trending up move”
Andrew also highlights the fundamental changes to ETH that we’ve talked about ad nauseam since The Merge. The factors affecting ETH’s supply, demand, and changed fundamentals are only just beginning to take shape!
Finally, he closes the thread posing the core question: “Double bubble was meme’d into reality — why can’t echo bubble?” To provide closing evidence for that thought, Andrew writes: “Mt. Gox release delayed until September, FTX having sold most customer assets, major players liquidated and many other assets tied up in bankruptcy proceedings, supply is significantly reduced.”
Many indicators we’ve discussed in recent editions of the CoinStats Scoop are included in Andrew’s thesis of this year’s echo bubble. Specifically, since the Merge, we’ve highlighted and detailed ETH’s fundamental changes that will massively benefit the asset moving forward. It’s always reassuring when one of the best investors/traders in the space agrees with us after examining the data! 😎
Whether we fully enter an “echo bubble” or not is a much-debated topic, but the energetic start of the year supports the thesis. Echo bubble or not, CoinStats and CoinStats Scoop will be here to educate you & cover everything that happens in the rapidly expanding crypto ecosystem. 🤑
Read of the Week
Our read this week comes from an interview with the great Haseeb of Dragonfly Capital. The interview that we’ll outline below is 73 minutes long and covers the future of L1s/L2s, top narratives for 2023, BTC vs ETH, and plenty more. Below, we’ll provide an overview of the key takeaways! 😤
As we learned with LUNA, “if you’re creating something that doesn’t create net value, it’s not gonna work, it doesn’t matter how big you scale it”
ETH is superior to BTC in the eyes of massive financial institutions as it’s more ESG (environmental, social, governance)-friendly
There will be a massive non-EVM winner — “in the long run, it’s almost certain that there’s going to be a non-EVM player”; SOL, NEAR, APT are the leading candidates
Focus on asset’s investment potential, not its categorization — “It doesn’t matter whether it’s a DEX or NFT, there’s no such thing as a bad buy, there’s only a bad buy at a given price”
ZK (zero-knowledge) rollups are a narrative to monitor in 2023 — “you’re going to see ZK rollups come to market…that’s going to be a interesting space to watch”
Identify problem solvers — “The thing that you can be certain of is that, the big problems that were unearthed in the last cycle – if you solve them, there's going to be a big prize waiting for you at the end.”
On the current market — the worst is likely behind us — “A lot of blood has already been drained. We can always go lower, but.. I don't know how many doomed projects are left to blow up…the market is in a much healthier place, which gives me more confidence to be actively investing”
Don’t time the market — “timing the market is never a good idea…don't be pro-cyclical..as long as you do that you're going to do reasonably well..buy assets and then stop looking at them”
Alright, so once again we have a brilliant investor within the space echoing everything we’ve previously highlighted! 😎 What sticks out to us is Haseeb’s proclamation that the worst is likely behind us. That, combined with the echo bubble thesis laid out by Andrew, creates an extremely friendly environment for token rallies, speculation, & green charts to continue throughout 2023! 🤑
Tweets & Memes
SOL-based xNFT Backpack integrates both MetaMask & Phantom wallets
A breakdown of ongoing and upcoming events and narratives to monitor
The adoption of crypto is truly just beginning
It’s been an amazing start to 2023 for BTC & crypto
Wrapping Up
The sings that 2023 will be incredibly beneficial to crypto market participants continue as we conclude this edition of CoinStats Scoop. 💫
This week, we covered the ongoing rally across crypto markets, examined crypto's continued green start to 2023, read and thought through the way an extremely successful crypto venture capitalist is looking at the year ahead, discussed the “echo bubble” leading to the ongoing momentum of BTC, ETH, and the crypto market at large, and summed up the news & developments of the week.
As usual, CoinStats will continue to guide you through the world of crypto and DeFi. We'll see you next week for another edition of CoinStats Scoop! 😎
good news for market and anyone ))