🔎The State of The Market👀
weekly valuable insights
In today’s newsletter:
📈📉 The State of the Market
📊This week’s On-chain Alpha
🗞️The Latest DeFi news
Today’s email is brought to you by Kelp DAO - one of the largest liquid restaking protocols built on top of EigenLayer
📈📉The State of The Market
The past few days have been rough for the crypto market.
Now the main question is, where is it heading next?
To answer this, today I’ll share a few news headlines and charts that illustrate the current levels of institutional & retail interest in crypto, stablecoin netflows, and more.
Let’s dive in👇
Bitcoin became the 2nd Largest ETF Commodity in the US
Even though the approval of the spot BTC ETFs ended up being a sell-the-news event, their launch was certainly a big success by any metrics.
Bitcoin has surpassed silver to become the second-largest ETF commodity in the US in less than a week after the BTC ETFs launch.
On top of that, in just 7 days, the new spot Bitcoin ETFs have amassed over 100k BTC.
Stablecoin market cap is holding steady despite the recent market crash
Since October, the total stablecoin market cap increased by $10 billion.
Over the past few days, the stablecoin market cap growth has been stagnant which is not great, but at least liquidity is not exiting crypto at this moment.
The People's Bank of China announced an injection of ~$140b USD of liquidity into the market
The money printer goes brrr.
The liquidity injection will happen from Feb. 5, and the announcement already led to a pump in the price of China stocks.
However, this will likely ultimately have a positive impact not only on the stock market, but on most financial markets including crypto.
On top of that, the first spot BTC ETFs in Hong Kong are rumored to launch in the first half of 2024.
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Recently, the protocol has onboarded Frax Finance’s liquid staking token, sfrxETH, to the platform.
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FTX has recently dumped $1B+ worth of GBTC
The bad news? This seems to be one of the main reasons behind the recent market dip.
The good news? FTX has already sold all its GBTC holdings.
So while this affected the crypto market in the short term, this shouldn’t have a long-term negative impact on prices.
Google Search Traffic for “crypto” remains far below its ‘21 ATH
This is both a good and a bad thing.
On one hand, it shows that even though the prices of many coins skyrocketed over the past few months, this wasn’t enough to draw retail investors’ attention to crypto.
On the other hand, if retail interest revives later this year, we’re likely going to have an incredible bull run given how much BTC has already increased in price lately despite how little attention crypto is currently getting from retail.
But for now, I personally remain optimistic and believe that the latter scenario is more likely.
In the short term, my market bias is neutral, and I plan to simply keep holding my spot bags without using leverage.
But I continue to be extremely bullish on crypto for the mid-long term given the major catalysts that crypto has later in 2024.
ETH is seeing large smart money inflows
Following the approval of the spot BTC ETFs, it looks like smart money is starting to pay more attention to ETH.
ETH is the asset with the largest recent smart money inflows, while BTC is the asset with the 3rd largest smart money outflows according to SpotOnChain. (at the time of the writing)
The latest developments in DeFi
Frax Finance launched Frax Bonds that enable buying future FRAX tokens at a discount. This completes the FRAX v3 design
Kamino Finance released Kamino Points. They also announced that the first Kamino airdrop will go live in Q1-Q2 2024
Arbitrum introduced the Orbit Expansion Program, allowing anyone to launch custom Orbit (L2 or L3) chains. The program requires Orbit Chains to share a % of their profits with Arbitrum Developer Guild
Synapse launched request-for-quote bridging, its biggest upgrade yet. RFQ bridging turns bridge transactions into auctions, making them 10x cheaper
Avalanche Foundation provided Struct Finance with $1M in $AVAX in Avalanche Rush incentives
Conflux Network announced the launch of its EVM-compatible Bitcoin L2. BTC will serve as the native currency for gas fees
Picasso announced that it will launch SOL restaking on Jan. 28
Jupiter Exchange released the Jupiter LFG Launchpad. 2 tokens will launch on the launchpad in January
Magpie introduced Eigenpie, the first Isolated Liquid Restaking Platform. Each LST restaked by Eigenpie will be backed only by 1 specific liquid staked token for security reasons
Drift Protocol announced Drift Points, designed to reward the platform traders. The points program will run for a maximum of 3 months
GammaSwap introduced DeltaSwap, the first commission-free DEX for spot trading
Perpetual Protocol introduced Perp V3 - a Smart Liquidity Framework for on-chain derivatives. Perp V3 was designed focusing on 3 key areas: security, onboarding, and an all-in-one stop
Rabby Wallet Introduced Rabby Points, rewarding EVM wallet address holders
Aevo L2 has migrated to use Celestia
That’s all for this week!
Until next time,
The DeFi Investor
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