Round Tripping
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tl;dr: we’re so back, UNI’s 0.15% fee switch, CME volume continues to rise, BTC dominance to alts rotation soon, FTX claims worth ~$0.50+ & crypto’s still contrarian
BTC dominance 54% | ETH dominance 16% | DeFi TVL $41B |
Total Crypto Market Cap $1.31T | Stablecoin Supply $124B |
In the October 1st edition of Round Tripping, I started to detail the case for what, if anything, could fuel the market upwards by saying, “while the endless range and time-based capitulation continue, there are several reasons to believe that BTC, along with the entire market, *should* finally push up and through 30k+.”
What fueled that thought were the crypto specific catalysts, led by Grayscale’s court win, that were quickly compounding leading me to conclude, “we’re now likely ~3 months away from the first ever spot BTC ETF approval, ~7 months away from the BTC halving and potentially ~12-14 months away from spot ETH ETF approval. Does anyone really want to be selling coins at these prices? The time to be structurally bearish has come and gone.”
Those upcoming catalysts were then ignited with rocket fuel as an *insane* tweet from cointelegraph mistakenly “reported” that the SEC had approved iShares BTC spot ETF. The market quickly realized this was categorically false but of course the damage was already done as fomo is one of the most powerful forces in life and markets. At this point, the market increasingly began to front-run what would happen on the eventual BTC spot ETF approval which has almost entirely shifted from “if” to “when”.
With BTC sitting right at 30k, the ETF fomo was pushed into hyperdrive as the iShares Bitcoin Trust ETF and its ticker $IBTC had been listed on the Nasdaq clearinghouse website. Bloomberg’s Eric Balchunas then noted that, “def notable BlackRock is leading charge on these logistics (seeding, ticker, dtcc) that tend to happen prior to launch, hard not to view this as them getting signal that approval is certain/imminent.”
As you can see, what quickly followed were a cascade of ~$325M worth of short liquidations that rapidly elevated BTC’s price from 30k to 35k in a few brief hours. Of course, the $IBTC ticker was removed from the site the next day causing a quick panic, then once again relisted before eventually resulting in a DTCC spokesperson having to clear the air by publicly saying that the Blackrock ETF has actually been on their site since August. Never change crypto twitter.
In the same manner as the cointelegraph tweet, the damage was already done as the market’s almost instant leap upwards once again reinforced the current ETF frenzy and the bid that is ready to push BTC higher. As of this writing, BTC has twice more touched 35k and is clinging to the impulse move to 34k+ despite equities continuing to puke in the face of macro and geopolitical uncertainty.
BTC is now 22% higher over the past ~week and the questions on everyone’s mind are undoubtedly how much higher can we go from here and at what BTC price is the ETF approval effectively priced in? These questions are unanswerable and their answers vary depending on the continuation the market shows and how much relative strength compared to equities crypto continues to show.
What’s clear to me though is that we’ve finally, convincingly escaped the brutal downtrend of 2022 and the endless range of 2023. The higher BTC goes above ~32k, the stronger the uptrend, momentum and hopes of a traditional bull market in 2024 & 2025 become. While it’s easy to be stuck inside the thoughts of our collective crypto circle, looking to the outside provides me with the view that will continue pushing higher ironically led by the lack of attention crypto garners and the following catalysts:
there’s still zero retail bid and/or attention
any account with a TradFi following that mentions crypto’s performance this year is still inundated with “it’s a scam”, “it’s never coming back”, “lol sure”, etc.
BTC is the best performing major asset in 2023, eventually that catches attention — the CEO of the world’s largest asset manager is calling crypto a “flight to quality” while crypto continues to outperform major indices & bonds
FTX creditor claims reach $0.50+ in OTC market — theoretically, the higher FTX claims go, the more “found” capital is returned to creditors which they can then potentially inject back into the market
upon eventual approval every spot ETF issuer for the first time ever is incentivized to push allocations to BTC as they want to maximize inflows, AUM, and most importantly collect fees on their newly launched BTC ETF products
CoinShares reports that digital asset investment products saw net inflows for the 4th consecutive week (~$179M total), what forces this to slow down in the short term with the above mentioned points & the ETF hype continuing?
Obviously led by the ETF narrative, BTC dominance has slowly climbed since the summer before exploding in recent weeks. As of now, it sits at its highest level in over 2 years after ranging for 763 (!!) days.
Historically, BTC dominance rapidly increasing is an incredibly healthy sign for the signal of the end to a bear market. With the ETF approval likely coming sometime before year’s end, now is the time to evaluate ETH and strong alts to deploy into. The ideal scenario regarding the ETF approval looks something like BTC wicking to 40k+, consolidates around that level, BTC dominance retreats, ETHBTC gains ground, and the wealth/risk spills over to the broad ecosystem leading to a proper altcoin season.
The healthiest sign of a final confirmation of an actual bull market would be something like this scenario playing out and the entire ecosystem rallying throughout Q1 in a similar but continued to fashion to Q1 2023. As I’ve been writing for a month+ now, I’m personally full bull ahead.
Regarding specific alts to monitor, those that have been outperforming of note recently include tokens such as: SOL, LINK, LDO, RLB, INJ, STX, AAVE. In addition to that, there’s been some increasing signs of onchain life and I’m personally anticipating an onchain memecoin season reminiscent (likely stronger) to that which PEPE started in April this year. Generally speaking I’m watching DEX trades, volume traded, and ETH gas fees for further confirmation but some recently emerging strong onchain coins to watch include: PEPE, BITCOIN, JOE, SMURFCAT, & SPX.
Finally, as for the rest of the ecosystem, the key events and developments that’ve occurred over the past ~week include:
FTX Claims — some large OTC FTX claims have traded at $0.50+ in recent days led by a ballooning valuation for the AI company Anthropic that FTX purchased a large stake in & rallying crypto prices; theoretically the more “lost” money found returned to creditors, the more fresh capital there is to bid crypto assets
UNI Fee Switch — Uniswap institutes 0.15% swap fee (frontend only) on two way trades involving ETH, WBTC & stablecoins, fees go to Uniswap Labs not UNI holders; a week after launch, Labs has made $421k (~$22M annualized)
GBTC discount continues to decline, CME Futures OI reaching all time highs
Scroll — officially launches mainnet of zkEVM L2, ~$14M has been bridged so far
Rome Protocol — introduces the shared sequencer using Solana, poses “rather than starting from scratch, what if we leverage existing validators from a PoS blockchain to act as a shared sequencer network?”
Circle’s CCTP for native USDC mint and burn is live on Solana’s Devnet
Flooring Protocol — launches protocol enabling the split of higher value NFTs into uTokens that fractionally represent the underlying asset, gains ~$13M of TVL & 32k of ETH volume in first week
Celestia — highly anticipated modular blockchain network launches mainnet beta and introduces “Blobstream: streaming modular DA to Ethereum”
Taproot Assets — Lightning Labs releases the first version of Taproot Assets, a protocol for assets (stablecoins + more) on BTC & Lightning
Friend Tech Selloff — TVL peaked at $52M on October 2nd before declining in recent weeks to where it currently stands at ~$40M. Part of the original FT thesis was the timing of it’s launch, there was *no other* activity in crypto which has clearly changed in recent weeks. It’s up to the FT team to clawback attention through added features, app improvement, and (hopefully) increased points distribution over the next few weeks.
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funding:
Blockaid, crypto security startup, emerges from stealth w/ $33M seed & Series A
SynFutures, perpetual futures DEX, raises $22M Series B
Elixir, algo market-making protocol, raises $7.5M Series A w/ $100M valuation
Squad Labs, asset management protocol on SOL, raises $5.7M strategic round
MyShell, opBNB-based AI platform, raises $5.6M seed @ $57M valuation
Beluga, a platform for onboarding new crypto users, raises $4M seed
Virgo Group, Canadian crypto exchange, raises $3.65M exstension round
Darewise Entertainment raises $3.5M in token sale for sci-fi game “Life Beyond”
Fileverse, decentralized file management service, raises $1.5M pre-seed
news:
FTX debtors announce plan that could result in ~90% recovery, involves a clawback of 15% of customer funds that were withdrawn in the 9 days prior to the exchange filing for bankruptcy
Genesis, DCG, & Gemini sued by NYAG for allegedly defrauding investors of $1B
Coinbase launches perpetual futures product non-US countries
Rabby Wallet releases full desktop app, a dedicated client for dapp security
The DTCC, a major US Clearinghouse, makes first acquisition in a decade as it buys security tokenization company Securrency for ~$50M
Bitgo acquires crypto wealth management platform HeightZero
Mythical Games’ NFL Rivals approaching 3 million players, early versions of the in-game marketplace that allows players to trade NFTs like official player cards has gained approval from both Apple and Google
Tether says they’re working towards “publishing real-time data on the reserves backing USDT in the coming years”
Invesco & Galaxy become the 4th & 5th companies to file for spot ETH ETF
Chainalysis responds to Senator Warren’s letter that urged the Treasury Department to investigate crypto inflows to Hamas (based on downright false & shitty reporting from the WSJ), read “Correcting the Record: Inaccurate Methodologies for Estimating Cryptocurrency’s Role in Terrorism Financing”
tokens & protocols:
UNI — launches 0.15% frontend swap fee on 11 tokens
YFI — launches veYFI tokenomics revamp
WLD — Worldcoin to transition rewards from USDC to WLD next month
USDT — aims to publish real-time reserve data in 2024 & beyond
Celestia — launches Mainnet Beta of modular blockchain network
Scroll — launches mainnet for zkEVM L2
Lightning Labs — launches Taproot Assets, protocol for assets on BTC
Manta — modular L2 to transition to zkEVM using Polygon’s zkEVM CDK
around the ecosystem:
Zee Prime Capital’s great essay “Wedge is the Founder’s Edge”
Placeholder’s Joel Monegro’s short blog “Ethereum And Solana”
Electric Capital releases their October Developer Report
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.