Round Tripping
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tl;dr: Gary’s big week, s/o Brian & Coinbase, native USDC to ARB & ATOM, takeaways from the past two days, DEXs growth, ETH’s strength & the headwinds are dwindling
BTC dominance 48% | ETH dominance 21% | DeFi TVL $46.5B |
Total Crypto Market Cap $1.17T | Stablecoin Supply $129B |
One of the slowest weeks in recent memory was upended Monday morning when the SEC announced that they were suing Binance and CZ for operating an illegal securities exchange and alleging that BNB, BUSD and various other tokens are securities. While eventual enforcement against Binance was far from unpredictable, it caught the crypto market offsides resulting in the largest day of long liquidations since FTX’s collapse in November of 2022.
What was unpredictable though, was the SEC outdoing themselves the following morning as they announced that they’re also suing Coinbase for operating an illegal securities exchange. In addition to suing both Coinbase and Binance, the SEC alleges that SOL, ADA, MATIC, FIL, SAND, MANA, ALGO, & AXS are illegal security tokens on both exchanges while BNB, BUSD, ATOM & COTI are illegal security offerings specific to Binance and CHZ, NEAR, FLOW, ICP, VGX, DASH, & NEXO are somehow specific security offerings only on Coinbase.
In response to the SEC’s suit, Brian Armstrong commendably tweeted, “regarding the SEC complaint against us today, we’re proud to represent the industry in court to finally get some clarity around crypto rules…we’ll get the job done. In the meantime, let’s all keep moving forward and building as an industry. America will get this right in the end.” Salute to Brian and the entire Coinbase team for always standing up and fighting for the entire crypto ecosystem.
While the Binance news sent the market lower, the SEC’s enforcement against Coinbase resulted in what appeared to be a poetic stand with Coinbase against Gary and the continued nonsensical approach of regulation through enforcement from the SEC. After a brief initial selloff, BTC and ETH led the entire crypto market higher in the hours following the suit against Coinbase resulting in higher prices than before the Binance news.
The market’s response to the Coinbase news brings up several thoughts including:
The reaction to every subsequent US regulatory action has slowly become more muted since the onslaught began back in February — if this regulatory action was as little as months ago, BTC and ETH’s percent loss would’ve likely been multiples higher than the ~5% decline
ETH has continued display impressive recent strength with ETH/BTC ratio slowly climbing higher. Additionally, ETH was not mentioned in either SEC filing
It’s become incredibly clear that anyone who is left to sell based on potential regulatory actions from the US has already sold. The tourists are gone and long-term convicted holders, builders & investors are the only ones currently left.
Markets tend to bottom when the demand for lower prices overwhelms the impact of bad news and the speed with which selloffs are reversed accelerates
Centralized exchange volumes which recently reached their lowest monthly levels since 2020 will continue to sputter while DEXs increase their relative market share of volume
As for that last point, both Coinbase and Binance (excluding Binance US which no one used to begin with) have said that they will continue business as usual and the eventual conclusion of the SEC’s lawsuits will likely take years to come to a conclusion (see current Ripple case). Still, the regulatory overhang and headlines created will certainly effect the volumes of Coinbase and Binance moving forward as small net outflows have already begun.
Binance over the past two days has seen net outflows of ~$1.65B, but it’s important to note that Binance has weathered plenty of “bank-run” type events in the past. The most recent example was when FUD emerged in December surrounding concerns over their solvency resulting in users withdrawing over $2B of assets in a two-day span. As Nansen further highlights, insolvency is incredibly unlikely as Binance has withstood larger net outflows and their publicly known wallets alone show $54B of assets.
As for where we go next, continuation of the strong reversal would be the obvious best case scenario but the reality is we’re currently well within the same range we have been since mid-March until proven otherwise. On the bright side, from today’s impressive recovery and overall market structure, the chances of that range breaking to the upside are heavily skewed in our favor.
The unfortunate scenario would be that the same time-based capitulation range we’ve been enduring continues through the summer and into ~late Q3 before that upward expansion takes place as potential new retail market participants and large institutions alike await further clarity and reassess their commitment to “Web3” before deploying capital.
With the uncertainty of possible actions against two of the largest players in the crypto space largely behind us, combined with a year and a half of blow ups resulting in down only, the potential headwinds are quickly diminishing. What remains is possible FUD and legal action against Tether and/or a large DeFi protocol like Lido, the US government planning to sell ~$1.2B+ of BTC (at current price & likely on Coinbase kek) in four tranches throughout the rest of the year, and potential downside legacy market scenarios.
With that being said, all of these events have been known possibilities for some time now and as we saw with the events of the past two days, the market quickly reprices clarity versus the unknown. On the other side of the summer, I expect crypto specific tailwinds to begin taking shape and pushing the market higher mainly in the form of growing catalysts from it’s two largest tokens (BTC’s halvening in 2024 & ETH’s deflationary/yield narrative going mainstream). Onwards and upwards.
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:
Tribe Capital targeting $100M raise for second crypto fund, currently $1.6B AUM
StepStone VC raises $97M for two blockchain funds, currently has $138B AUM
Magic Labs, crypto wallet-as-a-service provider, raises $52M strategic round
Anoma Foundation raises $25M in 3rd funding round for in-development L1
Transak, “end-to-end Web3 onboarding, raises $20M Series A
Illuvium, ETH-based game in development, raises additional $10M in token sale
Tabi, a BNB-based NFT marketplace, raises $10M in angel funding
Fusionist, crypto gaming infrastructure, raises $6.6M seed
Demox Labs, zk dapp & infrastructure built for Aleo, raises $4.5M pre-seed
Prisma Finance, DeFi primitive for unlocking LSTs, raises an undisclosed amount
Kakarot, zkEVM built on Starknet, raises undisclosed pre-seed
news:
Circle to launch native USDC on Cosmos and on Arbitrum in the near future
Tether to begin mining BTC in Uruguay, comes shortly after Tether announced it’d routinely purchase BTC with a portion of operating profits
Crypto analytics firm Chainalysis acquires real-time data company Transpose
Nike partners with EA Sports to enable Polygon-based .Swoosh NFTs to enter EA’s Madden NFL and other future EA games
Nike announces their Polygon-based (MATIC) .Swoosh NFTs are coming to future EA Sports Games
Evertas, crypto insurer, authorized to increase coverage limit for custodians or exchanges from $5M to $420M
BTC miner revenue grows 13.7% MoM to $917M on the back of transaction fee revenue from Ordinals & Inscriptions
Chainlink aims to advance DeFi innovation with new ETH staking APR feeds
Celsius deposits $745M of ETH to staking queue pushing Ethereum validator queue wait to 44 days for new validators wanting to stake on their own
tokens & protocols:
Skale — ETH sidechain network introduces zk-rollup Levitation Protocol
CRV — to deploy wstETH market for minting of crvUSD
JOE — TraderJoe launches auto-pools, automated liquidity built on Liquidity Book
USDC — to launch native USDC on ARB June 8th
EtherFi — LST protocol details boosted ETH rewards & their Loyalty Program
SOMM — launches 5 vaults to enable the capture of governance token yield
Altitude — Layer Zero enabled asset bridge launches public testnet
FRX — Sam details everything FRX and frxETH v2
LINK — partners with Tencent Cloud “to support development of We3 startups”
ILV — raises an additional $10M in token sales to accelerate development
AVAX — monthly active users reach new all-time highs
Elusiv — launches programmable ZK-privacy SDK on Solana
around the ecosystem:
Gabriel Shapiro breaks down the promising proposed crypto market structure bill
Arthur’s “Patience is Beautiful” on the prospects of crypto poised to rally
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.
Round Tripping
Banger as usual - cheers lads