Post-LUNA world’s here. Celebrate the DeFi comeback with us!
Hello and welcome to the second edition of the theCoinStats weekly recap! This newsletter is a recap of main events, token developments, and protocol updates within the crypto ecosystem.
The recap is data-based and doesn't contain financial advice. Instead, you’ll get to dive into relevant developments and thoughts that’ll help you navigate, explore, and think about the crypto world in a more informed manner. Let’s get to it!
Market Overview
Another eventful crypto week is in the books, with majors such as BTC, ETH, SOL, ATOM, and ZEC largely remaining flat as the market continued to internalize macro trends. One of the big worries for market participants this week was the U.S. CPI number that came in at 9.1% Wednesday morning. Markets briefly panicked before reversing course and closing Wednesday trading sessions green.
One of the core developments of the week, as evidenced by AAVE and UNI in the screenshot from the CoinStats app below, was the outperformance and re-emergence of strength from DeFi protocols across the board. We’ll dig much deeper into DeFi’s return below.
This week provided more evidence to support our claim from last week that much of the forced selling and liquidations that previously cascaded the market downward are over. Further proof emerged this week, as Celsius, the embattled crypto lender, officially filed for Chapter 11 bankruptcy. Generally speaking, this closes the door on the contagion, fear, and worries that spread deep across the ecosystem stemming from LUNA and 3AC.
Weekly Biggest Gainers
LDO (+70%), GMX (+39%), SRM (+35%), SYN (+26%), AAVE (+25%), MATIC (+23%), UNI (+19%), COMP (+16%), AR (+14%)
Weekly Largest Fallers
LUNA (-19%), GALA (-14%), ENS (-12%), BAT (-14%), EVMOS (-14%), DOGE (-11%)
News & Developments
Below are some of the most impactful announcements over the week that indicate crypto’s rising demand across a broad swath of institutions, protocols, corporations, and legacy companies. Announcements, interest, and product developments continue, planting seeds for the next bull run and wider crypto adoption.
Celsius officially files for Chapter 11 bankruptcy
Snapchat is testing the display of NFTs as AR filters
GameStop launches public beta of NFT marketplace
Plaid partners with Binance, Gemini, and Kraken to expand crypto functionality
CryptoPunk 4156 bought for 2,691 ETH ($3.3M)
Disney chooses Polygon for accelerator program developing AR, NFT, and AI experiences
USDC publishes the first of ongoing monthly breakdowns of USDC reserve assets
Multicoin Capital announces third fund with $430M to deploy into crypto ventures
Animoca Brands, gaming & venture company, raises $75M @ $5.9B valuation
DeFi Revival
One of the leading market trends, as evidenced below, is the strong price appreciation across many DeFi assets. This is a welcome site for several reasons. For one, this comes on the heels of us highlighting “It’s All a DeFi Thesis” as our Read of the Week in last week’s issue. The key quote from that article worth reiterating is:
“In the medium term, emerging Web3 categories like DAOs, NFTs, gaming, and physical networks will exponentially expand on-chain economic activity. These assets will expand DeFi’s addressable market by an order of magnitude. Betting against DeFi is betting against crypto succeeding.”
While there has been a marketwide bounceback over the past two weeks, DeFi blue chip tokens such as LDO, AAVE, UNI, COMP, and CRV have consistently outperformed the broader market.
DeFi’s resurgence colorized in CoinStats favorites tab
There has been tons of speculation across Crypto Twitter surrounding who/what has been acquiring these DeFi protocols. Going by the simplest answer being the most likely one, the answer to the question of who's accumulating DeFi tokens was given by Occam's Razor.
Furthermore, as we mentioned last week, the cascading liquidations and market correction that occurred over the past few months were largely the result of insolvent, bad debt-filled CeFi lenders leading several large players to bankruptcy. Robust DeFi protocols operated smoothly, efficiently, and as designed over the course of the market drawdown.
There are certainly other small factors and narratives that have corresponded to building price appreciation this week, such as Uniswap’s addition to Robinhood’s platform that will enable greater access to the token for millions, or AAVE’s announcement of their overcollateralized stablecoin GHO. Now news events such as these may have aided their momentum, but fundamentally, strong protocol guarantees in the face of adverse market conditions as well as DeFi’s centralized competitors crumbling were the ultimate catalysts.
AAVE’s token profile
Read of the Week
“Is Forced Selling Behind Us?” by Onchain Wizard
This article is a comprehensive, data-rich explanation of the troubles and forced selling pressures the market absorbed in recent weeks because of 3AC and Celsius. Onchain Wizard echoes what we said last week in the inaugural edition of Coinstats Scoop, “As evidenced by the market’s response this week, much of the ambiguity, forced selling, and liquidations as a result of LUNA and subsequently 3AC’s collapse has been largely digested and processed.”
Don’t believe Zhu Su’s lies!
“Hopefully we’re past the bottom in the market, driven by forced selling, macro fears, and contagion fears. While there is still some 3AC contagion out there (Voyager bankruptcy, Blockchain.com’s 3AC losses, etc), it seems like we are moving towards “the worst is over” narrative.”
As we hypothesized last week and expanded upon in the intro to this edition, it’s become increasingly clear that the worst of the forced market selling is behind us. Reading and internalizing Onchain Wizard’s article was further on-chain, data driven confirmation to support the theory, and it appears markets have stabilized. Hopefully, they're preparing for the next leg upwards!
Tweets & Memes of the Week
From @JohnyCrypto on Twitter
Wrapping Up
As the week comes to a close, there are a few key takeaways that market participants should internalize. The first, touched on at length above, is the strength and return of DeFi. DeFi has been one of the most battered sectors within crypto and its return to price appreciation could be the canary of broader market strength.
Speaking of strength, the other key takeaway was the manner in which DeFi appreciated. As we mentioned regarding the UNI and AAVE announcements, their tokens and the DeFi sector at large continue gains through what would’ve previously been narrative-driven short-term pumps. It's a good sign! The length of time during which tokens and markets appreciate corresponding to news is a good barometer for overall market strength. So DeFi’s weeklong resurgence signals that the market is buying long-term narratives that would’ve evaporated in a few hours before. Generally speaking, good news and narratives carry much heavier weight in uptrending markets, something we saw with DeFi this week.
With that dose of good market sentiment, we close the second installment of the new series of weekly Coinstats recaps. Let’s hear your thoughts, comments, and feedback as we work together to improve CoinStats Scoop!