Weekly Insights May 17, 2021

Elon Musk Announces Tesla Has Suspended Accepting Bitcoin Citing Environmental Issues, Sending BTC Downwards.

Some highlights from last week:

  • Elon Musk Announces Tesla Has Suspended Accepting Bitcoin Citing Environmental Issues
  • Cboe Files to List Fidelity Bitcoin ETF Amid Regulatory Test
  • MoneyGram Will Allow To Buy And Sell Bitcoin With Cash In Partnership With Coinme Exchange
  • Asia’s DBS Bank Launches Bitcoin Custody Service
  • Coinbase Adds Chrome Extension for Wallet App to Improve DeFi Access
  • Balancer Labs Launches Balancer V2
  • Huobi Group Launches $100 Million VC Fund for DeFi, NFT Projects
  • Circle and FTX Announce Global Partnership
  • Elon Musk Says He’s Working with Dogecoin Devs to Make DOGE More Effecient

Crypto Topics Trending in the Media

Market Overview

The total cryptocurrency market cap decreased by -11.5%, dropping from $2.59T to $2.29T. Bitcoin dominance has fallen below 40%. All major assets besides ADA (+26%) and DOT (+4%) decreased, with a median 7d return of -8.5%. BTC took the biggest hit among the majors, as it decreased by -21.4%, its biggest pullback since February. Long term sentiment remains positive, despite dropping a bit. Trading volume (+4.3%) and Tweet volume (+2.1%) were up slightly. 

Weekly Performance of the Crypto Market

All sectors throughout the crypto market faced heavy selling pressure this week. DeFi held up the strongest among the group, despite returning -0.8%. NFTs decreased by -22.2%, once again being the weakest performing sector.

Bitcoin

Bitcoin took a major hit this past week, as it saw its biggest sell off since mid February. The price of BTC traded within a 26.5% range, from the high of $59,592 set early in the week, all the way down to the low of $43,825 set on the weekend. One major event set the stage for the entire week; Elon Musk once again impacting crypto markets. Musk tweeted out that Tesla has suspended accepting BTC payments for vehicle purchases due to ‘environmental issues’. The market instantly reacted, selling off by double digits. Short term sentiment dropped rapidly by -44% in a matter of hours.

Pancake Swap

Decentralized exchanges have rapidly grown in popularity throughout the year. Uniswap has been leading DEXes in daily trading volume for the first 4 months of 2021, but has changed. Pancake Swap’s 30d average daily trading volume has blown past Uniswap by over $1B, blowing the rest of the DEXes out of the water.

Solana

The Solana Season Hackathon has brought a lot of attention to the Solana ecosystem over the past few weeks as things led up to the official start date. The hackathon finally started this weekend, and Twitter activity picked up quickly. Tweet volume for Solana hit a new all time high of 18,309 Tweets in a single day.

Cardano

The price of ADA has been on a tear over the past few months. Earlier this week, we saw ADA spike to a new all time high of $2.23, as the number of Twitter users talking about Cardano surged to 11,263. This was also a new all time high, adding to the list of recording breaking moments that ADA has had recently.

Futures Curve                                                            .

Image courtesy of @laevitas1

Amidst rumours of a market-marker on Deribit getting blown out and margin called, the Deribit basis across almost all futures expiries went into severe backwardation relative to the rest of the market, offering a cheap discount for quick fingers as the discount quickly closed. 

Funding                                                                      .

Image courtesy of CryptoQuant

Funding dislocated heavily on Deribit because of the aforementioned liquidations, which at it’s peak (not pictured above) was paying longs -0.5% / 8hrs, or about +550% annualized in funding alone.. 



Coinbase and Korean Premiums

Image courtesy of CryptoQuant.com

Coinbase books emptied last week and created a -$1500 discount on May 12. The Sunday drop was not nearly as illiquid, though Coinbase did trade at a nearly -$500 discount as Bitcoin plummeted below $47,000.

The Korean BTC premium remained surprisingly flat in the face of the Bitcoin sell-off, hovering at around 10%.


Aggregated Open Interest and Liquidations              .

Image courtesy of bybt.com

Aggregated open interest took a 15% haircut since last week with the majority of liquidations coming through on Bybit and FTX.

Ethereum Reserves on All Exchanges           

Ethereum reserves continue to decrease on exchanges despite an aggressive sell-off this week, possibly indicating continued spot buy pressure and accumulation.

This thesis could be further validated by noticing the diminishing netflow surrounding Ethereum despite recording record highs. While some large outflows occurred during the run up from $1500 onwards, little volume relatively has exited after Ethereum passed $2000.