The TIE Weekly Insights (Apr 26, 2021)

Bitcoin trends downwards as tax news scares the market. Despite a market wide correction, the Solana ecosystem experiences double digit gains.

Some highlights from last week:

  • Bitcoin Broker NYDIG Acquires Firm That Finances Mining Farms
  • Coinbase adds Tether $USDT and Ampleforth Governance Token $FORTH
  • Louisiana Lawmakers Back Bill That Says Bitcoin Could Potentially Become New Monetary Reserve
  • NYSE Files to List Shares of Valkyrie’s Bitcoin ETF
  • Binance.US Hires Former Top Bank Regulator Brian Brooks
  • 21Shares is Launching Stellar and Cardano ETPs on SIX Exchange
  • Coinbase Faces Delisting on 2 European Exchanges Over Reference Code Error
  • Uniswap Deploys V3 Contracts to Four Ethereum Testnets
  • Techemy Capital Launches Managed DeFi Portfolio

Crypto Topics Trending in the Media

Macro Updates

Global markets responded as reports emerged of President Biden planning to outline his new tax bill that includes a hike in capital gains tax to 43.4% for top earners . Global markets responded, with the Dow Jones falling 400 points on Thursday before recovering on Friday.

On Friday, the S&P 500 rose just over 1%, led by tech and financials and the Dow Jones gained 0.67% while the tech-heavy Nasdaq climbed 1.44%. For the week of April 18, the S&P 500 edged 0.13% lower, the Dow slipped 0.46% and Nasdaq edged down 0.25%.

First-time claims for unemployment insurance totaled 547,000 last week , well below the Dow Jones estimate of 603,000 and a new low for the Covid-19 pandemic era. Still, about 8 million fewer Americans are at work than before Covid, with the national unemployment rate remaining at 6%, well off the pandemic high of 14.7%

In the bond markets, the yield on the 10-year Treasury rose to 1.56% from 1.55% late Thursday as 30 year yields got as high as 2.23%. Finally, the Commerce Department announced Friday that new homes surged almost 21% in March to the highest level in 15 years, an encouraging sign for the recovery of the economy.

Market Overview

The total cryptocurrency market cap took a -11% hit this past week, falling from $2.12T to $1.89T. The median 7d return for major assets was -13.7%, as 6 out of the top 10 majors decreased by double digit percentages. UNI (+5.9%), BNB (+5.6%), and ETH (3%) were the only majors to experience positive weekly returns. Long term investor sentiment has continued to be positive despite a short term market correction. Trading volume (-12.6%) and Tweet volume (-6.2%) were both down.

Performance of the market

Despite a market wide correction, the DeFi sector continued to push strongly as it saw a +8.6% return over the course of the week. Privacy coins and Currencies, two highly correlated sectors, experienced the biggest drawdowns.

Bitcoin

The price of BTC traded within a 22.5% range throughout the week, setting the high of $57,600 on Monday and then trending downwards all week to set the low at $47,044 on Sunday. The natural course of volatility has taken over, and Bitcoin has continued its pullback from its all time high. Tax news definitely had some impact on prices, as conversations regarding Bitcoin had become more and more negative post tax headlines. As shown on the chart below, The TIE’s Hourly Sentiment Score remained negative for the entire week.

Solana Ecosystem

One of the hottest projects over the past few months has been Solana. Solana is a fast, secure, and censorship resistant blockchain providing the open infrastructure required for global adoption. These key features have sparked many new projects to be built on top of their blockchain. The Solana Ecosystem has even outperformed BTC and ETH, with the main projects seeing double digit gains this week.

MakerDAO Issues the World’s first DeFi-based Real Asset Loan

The price of MKR surges +22% to pass $4,000 for the first time in history, as MakerDAO brings real estate to DeFi. Members of the MakerDAO community passed an executive vote to allow the Tinlake blockchain protocol to serve as a bridge between New Silver, a real estate loan company, and MakerDAO. Initially, the project will finance loans to renovate houses in the U.S. Since the announcement, Maker Tweet volume has increased from 86 to 349, an increase of +305%.

Uniswap Deploys V3 Contracts to Ethereum Testnet

The price of UNI surged to $38 after several significant developments. On Monday, UMA Protocol added Uniswap call options. These options expire on May 31st, 2021 and the strike price is $50. Later that day, eToro added support for UNI and LINK. On Tuesday evening, Uniswap deployed V3 contracts to the main Ethereum testnets. The smart contract code is composed of two github projects, one is core and the other is periphery. We’ve seen UNI Tweet volume steady grow all week, climbing from 2,514 to a peak of 4,030.

Futures Curve

The futures curve has regained its bullish structure, with the back-end contracts on CME showing an aggressive premium to the front-month contracts as players possibly position themselves for a bullish Q3.

Funding

Image courtesy of CryptoQuant

After the April 18th sell-off, funding rates reset and continued to decline as crypto sold off throughout the week. As price closed near $47,000 on April 23rd, funding rates started paying long positions as Bybit, Huobi and OKex posted nearly -0.05% funding and Binance and Bitmex reset at 0.01%. As crypto opens bullish for the week, aggregated funding rests at a very neutral 0.002%.

Premiums

Coinbase premiums behaved erratically after Bitcoin dropped below $50k, with several large sells on Binance creating both negative and positive premiums of $300 on April 22nd. For the rest of the week, Coinbase took the lead with a $50 to $100 premium and continues to grow as crypto opens bullish to start the week.

The Grayscale premium continues to plummet, posting a peak negative premium of -15% before finishing the week at -12.2%.

Image courtesy of cryptoquant.com

The Korean BTC premium took a major hit over the week along with the rest of the market possibly as a result of news that Korean regulators were seizing cryptocurrencies from tax-delinquent citizens to pay their debt to the government. 

Open Interest and Liquidations

Aggregated open interest cratered 30% since its April 13th peak, dropping from $27.68B to $18.99B, with Bybit and Binance taking a collective 40% haircut from their overall open interest alone.

With the majority of liquidations occurring on the April 17th drop, the second largest liquidation cluster occurred on April 22nd with $1.72B liquidated across exchanges. As bitcoin continued to drop below $50,000, there were surprisingly little longs left to liquidate, creating a solid base for price to climb out of the $47,000-$50,000 price range.

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Notable News

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

This Week’s Podcast Episodes

The Grayscale Investment Thesis with Phil Bonello (Director of Research)
Phil Bonello (Head of Research at Grayscale Investments) joins The TIE’s Fundamental Value Podcast to discuss valuing Bitcoin and Ethereum, why EIP 1559 is scary for institutions, and why FDV does not matter. Listen here 

Into the Metaverse with Marc Weinstein (Mechanism Capital)
Marc Weinstein (Head of Platform at Mechanism Capital) joins The TIE’s Fundamental Value Podcast to discuss why he thinks the metaverse is such a vast investment opportunity, identifying the next big early stage crypto project, maintaining conviction through volatility, and sizing positions. Listen here