The TIE Weekly Insights (Jan 25)

Despite Bitcoin and most sectors correcting this week, Ethereum and DeFi continued pushing to new highs.

Some highlights from last week:

Market Overview

The total cryptocurrency market cap has decreased by -4.5% this week, dropping from $1.02T to $976B. Bitcoin saw a -10% return, its second down week in a row. The media return of major assets was -1.3%. ETH (+13%), LINK (+6.6%), and DOT (+5.3%) were the only 3 majors to increase. Despite another pullback, investor sentiment remains high. The median long term sentiment score among the majors is 71.1. Trading volume (-18.9%) and Tweet volume (-13.8%) were down for everything except ETH.

Weekly Performance of the Crypto Market

Despite the rest of the market taking a hit this past week, the price of ETH broke its previous all time high set back in 2017 in addition to many DeFi tokens continuing to rally to new highs. BTC, Alt Index, Mid Index, and Priv Index all performed negatively.

Bitcoin Continues Correction

The price of Bitcoin decreased by -10% this week, trading within a 31.2% range. from the high at $37,850 all the way down to the low at $28,850. The week began with slightly bullish price action, setting the high at $37,850 on Tuesday before a few announcements caused sentiment to shift. BitMEX Research reported block 666,388’s abnormalities on Twitter, causing the market to react negatively thinking that funds were double spent. This led to a ton of misinformation being spread around, but further research shows that this double spending was just a false alarm.

Later Tuesday evening, Janet Yellen stated “We need to look closely at how to encourage cryptocurrency use for legitimate activities while curtailing their use for malign and illegal activities”. Additionally, she pledged to work closely with the Fed and other regulators on “how to implement an effective regulatory framework for these and other fintech innovations”.

On Wednesday, BlackRock Inc, the world’s largest asset manager, said it could use Bitcoin derivatives for its funds BlackRock Strategic Income Opportunities and Allocation Fund. The funds will invest only in cash-settled BTC futures traded on commodity exchanges registered with the CFTC.

The market continued to sell off until setting the weekly low at $28,850 on Thursday, just below the yearly open price. This wiped out basically all 2021 gains. The price of BTC consolidated throughout the weekend.

Ethereum Social Conversations Surge

With the price of ETH reaching a new all time high, social conversations have surged. Ethereum Tweet volume has hit a new high of 32,640. This is over 10,000 more Tweets than last time ETH was at these prices.

BTC and ETH NVTweet Ratios

Bitcoin and Ethereum are trading at very similar multiples to their social activity. Both coins average about 9-10 tweets per $1M in market cap. Ethereum hasn’t traded at a high multiple of its social activity relative to Bitcoin since July 18th.

The NVTweet Ratio compares a cryptocurrency’s social conversation relative to its Market Cap. The NVTweet Ratio looks at how many tweets a particular coin has per each $1M in Market Cap. The lower a coin’s NVTweet Ratio the more tweet volume it has per $1M in market cap.

An increasing NVTweet Ratio could suggest that a particular coins’ market is becoming increasingly driven by institutional trading. As market cap is increasing faster than social volume, this may suggest less retail involvement in the market for a particular coin.

Chainlink has been on a tear since the new year started, currently up over 110% YTD. The price of LINK has reached a new all time high of $24.5. In addition to an increasing market cap, LINK’s trading volume dominance has grown to a new high of 4.7%.

DeFi Token Performance

The median DeFi token saw an +11% increase this past week, with ALPHA (+120%), AAVE (+43%), and UNI (+39%) leading the way.

Coinbase Custody Lists Second DeFi Token of 2021

Yearn Finance Launches v2 Vaults

Saddle Raises $4.3M for Slippage-Free DeFi Trading

Kyber Network Announces Kyber 3.0

Aave Hits Record Highs as Demand for Flash Loans and Staking Increases

Since launching back in 2020, Uniswap has dominated social media hype. That has changed this week, as the number of daily Twitter users talking about Aave has grown to 1,232, passing Uniswap to become the most popular DeFi token on Twitter.

Notable News

Panamanian Lawmakers to Hold Discussions on Regulating Cryptocurrencies in the Country

The Race is on Yet Again for Crypto ETFs as Valkyrie Files Registration

Contact us for a demo of our SigDev platform to view all market-moving events in real-time.

This Week’s Podcast Episodes

Ep. 34 – Inflation as a Part of Life: Why Venezuela Needs Crypto with Mauricio Di Bartolomeo (Ledn)
Mauricio Di Bartolomeo (Co-Founder & Chief Strategy Officer of Ledn) joins The TIE’s Fundamental Value Podcast to discuss crypto mining, why the USDC airdrop is so important to the people of Venezuela, building lending products for all, and the Latin American crypto market. Listen here

Ep. 35 – Systematic Crypto Arb Trading at Scale with Mitchell Dong (Pythagoras)
Mitchell Dong (CEO of Pythagoras Investments) joins The TIE’s Fundamental Value Podcast to discuss building scalable systematic arbitrage strategies for crypto, the on-going inefficiencies of crypto derivatives markets, philanthropy, and running one of the largest quantitative funds in digital assets. Listen here

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