GM, and welcome to another edition of CoinStats Scoop! 🥂 In this week’s newsletter, you'll find:
The usual market overview including updates on PEPE and why optimism remains crucial
Updates on this week’s noteworthy news and developments
Analyzing the investment case for Arbitrum (ARB) & the future of ETH scaling
Reading and thinking through crypto’s ability to create and benefit from passion
Tweets & Memes that capture last week's highlights
Weekly wrap-up: predictions & takeaways.
Market Overview
Another week has passed and crypto continues to progress forward! Of course, you wouldn’t know that from just looking at the price of BTC and ETH this week, but the adoption and building towards a better crypto future always continue despite what the prices may show (as always, you’ll see the continued adoption in News & Developments). 💪
Speaking of those prices, BTC (-7%) and ETH (-6%) trickled lower this week but the overall total crypto market cap continues to hover around $1.2 trillion which is significantly higher than where it was to start the year! Nonetheless, a week where BTC and ETH both lose 6%+ could be framed as a rough week but here at CoinStats we’re more than prepared for slight drawdowns.
First, while BTC lost ~7% this week, the structural range with which it’s operating in remains the same as it has been for two months now. On March 16th, BTC finally, convincingly broke above the 25k price level and has been bouncing between 26k and 30k since then. So, the drawback this week is relatively unsurprising because BTC remains in the same range it has been in and the price for 1 BTC is still 10k higher than it was to start the year! 😤
Additionally, we’ve talked plenty of times in recent weeks how pullbacks are to be expected throughout the long, winding road that leads upwards. Despite these anticipated pullbacks, we’ve also reiterated numerous times that crypto markets remain in an uptrending market in spite of the small pullbacks that will occur along the way! So, to put everything together, the total crypto market cap continues to make higher lowers, BTC and ETH continue to bounce around within the same ranges they have for months, and structural tailwinds in the form of ETH burns and the upcoming BTC halvening reinforce the fact that despite pullbacks along the way, crypto as an asset class remains in an uptrend! 💪
While the market decided to pullback this week, it was slightly predictable in hindsight becuase of PEPE and the memecoin insanity that followed it. As we pointed out last week, PEPE’s rise included an inception only a short ~4 weeks ago that resulted in a holder count of 100,000+ and a market cap of $1.6B+! 🤯 Unfortuantely, historically speaking, the rise of memecoins such as PEPE result in the creation of hundreds of thousands of tokens that try to emulate PEPE’s success.
Of course, none of them ever do as the leading token in a specific crypto almost always dominates flows despite the number of tokens that try to copy it’s success. What does happen though is a widespread appitite for risk that chases “the next PEPE” despite the fact that it’ll never happen. Risk and capital shifts from BTC, ETH, and strong altcoins to the furthest end of the risk spectrum as money chases the next 1000x memecoin.
Along the way, people lose money to rugs and scams while no token edures the success that the original token, PEPE in this case, had and eventually the risk that was willing to chase closes up shops and decides to protect capital. At this point, no one is left to chase new tokens along with the appetite to bid BTC and ETH disappearing as their prices have decreased since people sold them to chase risk. The cycle becomes a self-fulfilling prophecy as BTC and ETH go down while capital misses out on the gains of PEPE and everyone is stuck left watching and waiting to reenter their capital at lower prices! 🤓
This point in the memecoin/risk cycle is where we currently stand and, as mentioned, it’s usually a stalemate of price action for a bit as everyone who sold their prestine assets waits to buy them back lower. In addition, those who may not have sold hang on the sidelines to witness the chaos that is occuring and decide to sell as all the signs point towards lower levels for crypto broadly when the riskiest assets are being chased. The end result is where we currently stand as PEPE is down ~50% from it’s all-time highs and many other memecoins have trending to lower prices. As for what happens next, let’s hope that BTC and ETH continue to hold the lower range levels of ~25k and 1.7k that they’ve bounced off of several times before! 🌞
News & Developments
MakerDAO (MKR), one of the oldest and most used DeFi protocols, officially launches their long developed Spark Protocol that does xyz
Unstoppable Finance, large Germany-based fintech application, to launch Europe’s first “DeFi-Native Bank”; reserves held with the European Central Bank will also underpin its new euro-pegged stablecoin and DeFi banking services
Blockworks, the popular crypto media and podcasting network, raises $12 million dollars at a valaution of $135 million to deepen and expand their coverage of the crypto ecosystem
Tether, the issuers of the most popular stablecoin USDT, provides their Q1 assurance report that shows reserves surplus at an all-time high of $2.44 billion and a net profit of $1.4 billion in the first quarter of 2023 🤯
MetaMask, the largest crypto wallet provider, partners with fintech giant PayPal to enable users to directly buy ETH through their PayPal accounts inside MetaMask’s app
Pudgy Penguins, the popular NFT collection, raises $9 million to continue building their brand
Paradigm, one of crypto’s largest venture capital firms, doubles down on Coinbase’s future and the United States embracing crypto as the firm buys $50 million worth of Coinbase stock
Kanpai Pandas NFT collection details instructions to receive token airdrop of $KARATE tokens just weeks after the Karate Combat league annonced xyz in funding (link this) as consumer crypto continues to take off despite the current market environment
Worldcoin, identity and financial blockchain network currently in beta testing, commits to using Optimism’s (OP) Superchain tech stack to build on ahead of their mainnet launch
Goldman Sachs, Microsoft, Deloitte, and other legacy finance/tech giants partner to commit to join and build a new blockchain network called the Canton Network
Arbitrum & ETH’s Bright L2 Future
It’s been a few months since Arbitrum’s ARB token release so it seems right to check in on the ecosystem, the future of ARB, and the bright future L2 adoption paints for ETH’s overall health and asset price! 💪
To do that, we’re going to highlight a recent thread from Crypto_McKenna where he explains the reasoning behind ARB being his current largest portfolio holding. As for his credentials to talk on the subject, McKenna has been an active crypto market participant through multiple crypto cycles know, actively invests and advises throughout the space, and previosuly worked at the crypto venture capital firm ROK Capital. Now, to the future of ARB and ETH L2s.
If you don’t have time to read the thread (which is exactly what the CoinStats team is here for), the key points of his argument are outlined below. Importantly, before any further information, McKenna highlights the fact that Arbitrum “is an optimistic rollup layer-2 on Ethereum that is actively capturing Ethereum protocols, users, and liquidity.” The entire reason this topic is relevant is because Arbitrum continues to grow users, capital, liquidity, and mindshare. In addition, McKenna highlights that ARB benefits from:
ORUs (optimisitc rollups) are the immediate scaling future for Ethereum
Blockchain users and capital are steadily migrating to scaling solutions with Arbitrum continuing to lead the pack in terms of adoption
In 2023, Arbitrum’s L2 flipped Ethereum’s L1 transaction count and is continues to pace with the number of transactions executed on mainnet
Since the start of 2023, ARB’s seven day transaction count has increased from 222,700 to 1,450,000
Active addresses on Arbitrum have increased from 35,500 to 307,000 since 2023
Arbitrum’s TVL (total value locked) dominance compared to ETH and OP has grown from 0.91% to 5.06% since the start of 2022
The coming EIP-4844 Catalyst: later this year, ETH will institute EIP-4844, an improvement proposal that has the potential to reduce gas fees on optimistic rollups by 10-30x
As if the above information wasn’t enough, McKenna is kind enough to summarize all of the above points into a succinct thesis that reads: “ARB is the fastest grwoing L2 now executing more transactions then the ETH base layer, ecosystem incentives will continue to grow users, activity & liquidity, there are no investors/team unlocks until 2024, EIP-4844 is biggest coming catalyst.” 🤑
While we’re certain Arbitrum’s ARB token will continue to act as a levered bet on ETH’s success, the ability to predict which L2 gains the most marketshare of useres, capital, and fees remains uncertain. McKenna makes a compelling case for Arbitrum to benefit the most, but the coming wave of zero-knowledge L2 solutions from the likes of Scroll, StarkWare, Polygon, zkSync, and many others make the eventual “winner” a crowded contest. Still, what we can all agree on is that the overall success of L2s benefits ETH and we’re once again left with ETH being the asset that benefits the most from a crowded field! 😤
Read of the Week
“Building on Passion: A framework for consumer crypto” — Gaby Goldberg/TCG Crypto team
Another week and more reading about the future of the crypto space! 🤓 This week, we’re reading about passion, consumer crypto applications, and sustainable crypto business models from Gaby Goldberg and the TCG Crypto team.
We’ve not only read from Gaby’s work before, but also from various other members of TCG Crypto as they’re routinely one of the most active, boots on the ground crypto venture firms. The ownership economy combined with passion uniquely enabled by crypto rails is a core focus and belief of TCG. Crypto enables true ownership of digital goods at a fundamental level that was previously impossible and that onwership “inherently incentivizes a customer to participate depper in these existing and newfound experiences.”
“What we’ve observed is that blockchain has the ability to turn passionate audiences into passionate owners, unlocking experiences that previously felt either personally or professionally prohibitive…when crypto works for consumers, it doesn’t need to interfere with the existing business but ratheadrds net new benefits on top…we believe the most powerful blockchain consumer platforms will use crypto as a tool…we continue to obsess over how new technologies [such as crypto] will expand, impact, and create behaviors online.”
On top of providing some valuable insight to the beliefs that one of the most active crypto venture capital firms holds, Gaby also highlighted some key themes TCG Crypto is watching develop throughout 2023 that include:
Loyalty & Membership — one of the largest benefits of crypto remains its unique ability to enable digital assets to be bought, sold, and traded; as our time and identity increasingly moves online, native infrastructure to accomodate this behavior is critical
Multichannel/Multimedia — crypto’s growing mobile wave is a core focus and apps that tap into native mobile use will be massive as mobile internet usage drives 60% of global traffic
Communications — crypto wallets and other blockchain standards integrating into a shared communication layer where the “inbox” becomes the nexus of online identity
Infrastructure for Consumer Scale — consumer crypto applications reaching global scale through improved usability of modular blockchain architecture, improved wallet management, better fiat on/offramps, etc.
Tweets & Memes
It’s always good to have a refresher on proper security practices!! 😤
Last week, daily active users of Solana passed both Ethereum and Polygon 🤯
Let us help you save on ETH gas fees with our thread on tools at your disposal!
Wrapping Up
With that tweet highlighting our thread that showcases tips and resources to save on high ETH gas fees, we’ll conclude this week’s CoinStats Scoop! 💫
As usual, we discussed the regular market updates including PEPE’s effect on markets and why you should remain optimistic in spite of the down week, covered the usual noteworthy developments of the week, analyzed Arbitrum’s ARB and the bullish case for it’s future, read about passion and ownership riving the deepest crypto connections, and walked through the tweets and memes that showcase another week of building towards the future of crypto! 💪
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 one