Round Tripping
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tl;dr: Arbi stimulus week & ecosystem benefits, BTC dominance reasserts strength, the (hopefully) coming alt season, USDT continues growth & token news galore
BTC dominance 47% | ETH dominance 17% | DeFi TVL $49B |
Total Crypto Market Cap $1.2T | Stablecoin Supply $133B |
Another week has passed and the quintessential cocktail of increasing bank chaos and rising crypto prices was once again in strong demand. BTC responded perfectly to the global banking turmoil as it painted its largest weekly candle since January of ‘21 and has gained an impressive ~40%+ since March 6th’s 19.6k lows.
As you can see from Glassnode’s image below, 7-day price rallies greater than 35% have historically been strong indicators for bull market conditions. With that being said, the sample size is obviously small and the corresponding macro conditions were far more accommodating in previous instances. Despite that, BTC was created in response to the exact chaos we’re seeing in the global banking sector and benefits from being the most useful bearer asset in existence, provides a deeply liquid, global, 24/7 market and is uniquely positioned to be one of the purest expressions of change in the Fed/global banking liquidity.
As BTC continued to steal the show this week, ETH lagged behind gaining a meager ~27% as BTC dominance is in full swing. BTC’s increasing dominance, while hammering non-Arbitrum alts against BTC, has increased the likelihood of a coming frenzied alt season. When BTC displays its blackhole like liquidity drain in strong rallies like the past week, the broad market spillover effects usually ignite alt season as BTC and ETH stabilize at higher levels and give way for alts to appreciate.
Strong BTC led rallies are usually healthy indicators for the beginning of continued up trending markets as eventually ETH gains from high BTC beta while alts in-turn rally from ETH beta and capital dispersing farther down the risk curve. BTC inflows increase > BTC dominance leads rally > flows trickle down to ETH > capital eventually permeates to the entire alt ecosystem. Right now, we’re still squarely in stage two of this cycle as BTC dominance climbs and ETH/BTC lost another ~12% this week. Here’s to hoping the cycle continues the progression soon.
One of the only sectors that was immune to BTC’s liquidity blackhole was Arbitrum as Offchain Labs, the developers of the most used/highest TVL ETH L2, finally announced the launch of Arbitrum’s native token, ARB. While a token was always the plan, Coinbase building on OP’s stack and recent regulatory pressure may have advanced the timeline as Arbitrum’s token is necessary for sufficient decentralization where the chain ownership role will be handed over to the Arbitrum DAO which is governed by tens of thousands of ARB token holders. In addition to the token, Offchain Labs announced Arbitrum Orbit, a development framework for permissionless L3 Arbitrum chains.
Arbitrum’s token will officially be tradeable on Thursday and you can monitor real-time data on the airdrop through Westie’s great dashboard. As mentioned, the entire Arbitrum ecosystem has been one of the best performing sectors since Arbitrum’s token confirmation last Thursday. TVL on Arbi has continually increased over the past few months and will receive a massive capital injection on Thursday.
Previous users of Arbitrum and protocols built on ARB will receive a combined 12.75%, or 1.275B tokens, of ARB’s total supply. The eventual market price of ARB and how it effects the ecosystem has been a large focus of discussion since the announcement. In my view, it’s unquestionable that ARB’s airdrop will be lighter fluid added to the already lit fire that is Arbi’s DeFi and altcoin ecosystem. While the ecosystem value has drastically appreciated throughout the weekend, it’s difficult to imagine the launch of ARB not propelling prices another level higher.
The reasoning behind this includes the sticky nature of capital that enters the Arbitrum ecosystem as users have to actively bridge back out along with the increasing number of Arbi maxis, the lack of other compelling narratives/ecosystems to rotate to, the number of protocols migrating to Arbi and the massive amount of capital that is appearing out of thin air that will be initially contained within Arbi’s ecosystem.
ARB’s OTC price, as of Monday morning, is comfortably trading above $1 and is quickly approaching near $1.5. If we take the 1.275B tokens and multiply them by a token price of $1.25, we get a result of the Arbitrum ecosystem is essentially receiving a ~$1.59B liquidity injection. Of course, a large portion of that liquidity will be bridged out of Arbi or swapped for ETH, USDC, or USDT, but I think a substantial amount will remain and flow to the active DeFi and altcoin ecosystem.
Outside of BTC’s increasing dominance and Arbitrum’s long awaited announcement, the two other notable developments of the past week to me include Tether’s continued growing stable market share which now sits above 57% up from 55% last week and the hopefully continued calm in the crypto banking sector. Additionally, while last weekend’s chaos and the closing of SVB, Signature, and Silvergate caused panic, the past week+ of calm from crypto founders, protocols and funds (presumably) indicates that their ability to find banking services is solved for the time being.
Looking ahead, we have another fun week in store as Arbitrum officially launches their token, FOMC and the FED’s decision on a rate hike or pause comes Wednesday, the BoE hike decision follows on Thursday, the Game Developers Conference kicks off with anticipated announcements from various gamefi projects, and MATIC’s zkEVM launches March 27th.
As a reminder, the P1 team consisting of myself, MoonOverlord, terv & boffin are always reachable at contact@pageone.gg. If you want to contact us in regards to sponsoring the newsletter, pitch a guest post, tell us about your protocol or to collaborate on anything in general, you can always reach us there or @PageOneGG.
funding:
DeFiance Capital completes first close of new $100M liquid token fund
Ark Invest raises $16.3M for new crypto fund
DressX, digital fashion firm building NFT marketplace, raises $15M Series A
CNHC, stablecoin pegged to offshore Chinese yuan, raises $10M Series A+
Orbs, crypto infrastructure developer, raises $10M in token sale
Jungle, developers of crypto mobile shooter games, raises $6M seed
Smooth Labs, building parallel transaction infrastructure, raises $2M seed
news:
Arbitrum finally announces token (ARB), to be airdropped March 23rd
ETH Shapella completes final Goerli testnet; Shapella upgrade enabling staked ETH withdrawals now officially planned for April 12th
Epic Games has “close to 20” crypto games in store pipeline to add by next year
Fidelity Crypto launches crypto retail product, provides access to BTC & ETH for millions of users; Fidelity Digital Assets to collect spread of no more than 1%
Meta to end support for NFTs on Instagram & Facebook
Coinbase exploring the launch of offshore product that would include perps
National Australia Bank (NAB) completes intra-bank, cross-border transaction using its stablecoin via Ethereum
TLDR on the chaos and takeover ongoing at DefiLlama
Microsoft appears to be working on native crypto wallet for its web browser Edge, Bleeping Computer says Microsoft partnered with ETH giant Consensys to offer crypto swap feature
DOJ investigating Terraform Labs and the collapse of LUNA
tokens & protocols:
ATOM — successfully completes Lambda Upgrade enabling Replicated Security
FIL — successfully launches the FVM enabling smart contracts & programmability
UNI — officially expands and deploys on BNB; UNI to also expand V3 to AVAX
DYDX — passes proposal to limit emissions, reduce trading rewards by 45%
LDO — stETH withdrawals expected to be live mid-May, a ~month after Shapella
SEI — announces Atlantic-2, the final version of the upcoming L1s testnet
MKR — approves extension from $500M to $1.25B invested in U.S. Treasuries
MATIC — launches EUROe stablecoin on GEN-X network
BLUR — launches mobile support
INJ — Babylon (BTC security to Cosmos) testnet integrates with Injective
OSMO — launches v15 Sodium Upgrade
PENDLE — launches ankrETH pool
IMX — teases news of “biggest token utility upgrade in history coming soon”
SI — Siren to migrate to Arbi, revamp protocol & announce Siren Flow upgrade
RDNT — launches long-awaited v2
GEAR — outlines upgrades coming in Gearbox V3
Succinct — zksnark interoperability solution for ETH now live on mainnet
Espresso — announces Espresso Sequencer: the way rollups decentralize
Chronos — liquidity layer & AMM launching on Arbi introduces chrNFT Collection
around the ecosystem:
Arthur’s “Kaiseki” detailing all things macro, the banking crisis, & crypto markets
Luca Prosperi’s “Banking Is Broken, Hallelujah”
Joel John & Saurabh on everything Ordinals with “Make Bitcoin Fun Again”
tweets:
Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions.
This was my favourite newsletter yet - much appreciated Page One fam
Always a good read, thanks Tolks