Newsletter Volume 10
As of Friday, 13th January 2023
Bull & Bear
Article 1 - The Market This Week
Crypto markets received a boost this week as the U.S. government's Consumer Price Index (CPI) reading for December showed a slowing pace of price rises to 6.5% on an annual basis. Many traders and economists took this as a sign that the Federal Reserve may soon declare victory in its campaign to bring down inflation, which could mean less pressure on risky assets in the near future. As a result, Bitcoin saw its biggest one-day return in two months, rising 5% to surpass the $19,000 level briefly.
In fixed-income markets, traders are pricing in expectations of a 0.25 percentage point hike at the Fed's next meeting, which is a slowdown from the recent pace. However, Fed officials have stated that the campaign is not on the verge of ending anytime soon, with many more hikes to come. The crypto-industry meltdown from last year continues to loom, as the U.S. Securities and Exchange Commission (SEC) alleged in a lawsuit that the crypto exchange Gemini and crypto lender Genesis Global Capital sold unregistered securities.
Tyler Winklevoss, the co-founder of Gemini, spoke out against the SEC's charges, calling them "super lame" and a manufactured parking ticket. He also expressed disappointment that the regulator was "optimizing for political points." Gemini plans to defend itself against the charges and ensure they don't distract from its important recovery work.
In Asia, most currencies crept higher on Friday and were headed for steep weekly gains on the prospect of an eventual shift in the Federal Reserve's hawkish stance, pushing the dollar to a seven-month low. Technology-heavy bourses in Taiwan, South Korea, and Hong Kong were among the biggest gainers for the week as Treasury yields retreated. However, analysts have warned of a potential delay to a bigger economic recovery in China due to the country's worst yet COVID-19 outbreak.
The IC15 index jumped sharply to 27,806 from 24,584 a week ago. While interest rates are expected to peak this year, markets are also wary of a potential recession, especially as the effects of tight monetary policy become more pronounced. Slowing growth in major economies could bode poorly for sentiment toward risk-driven markets.
Key Indicators
Crypto Market Cap: $942 Billion
Bitcoin Market Cap: $363 Billion
Ethereum Market Cap: $170 Billion
Ethereum Gas Price: 16 Gwei
DeFi TVL: $64 Billion
Article 2 - Weekly Review of IC15
The IC15 Index, also referred to as the "Index of Cryptos," is a rule-based, market capitalization-weighted index that tracks the performance of widely traded and liquid cryptocurrencies worldwide. This is a review of the top constituents of the IC15 index.
The crypto markets have seen a bullish bias in recent weeks, with a number of top cryptocurrencies experiencing significant gains. However, the lingering effects of the FTX collapse continue to weigh on the market, and how much further pain investors may have to endure remains to be seen. Investors are watching the movements of the Digital Currency Group with trepidation, with one report warning that if the firm slides into further financial distress, it could severely impact crypto markets.
Bitcoin and Ethereum both made double-digit surges each. Solana, one of the standout performers in the last week, saw an impressive 29% uptick. This surge in Solana users is particularly noteworthy given the recent struggles of SBF and FTX, both of which had been vocal advocates of the Solana blockchain.
Another top performer was Cardano, which jumped over 20% as the Voltaire Upgrade drew near. According to Cardano Founder Charles Hoskinson, this upgrade has the potential to bring millions of people together to collaborate for the growth and utility of ADA, the blockchain's native cryptocurrency.
Despite the recent market downturn, it's important to remember that the long-term prospects for crypto remain strong. Bitcoin and Ethereum, for example, have risen more than 1000% since their inception, and the key for investors is to stay in the game for the long term without getting knocked out by short-term market fluctuations.
Article 3 - Battle of Bull and Bear
The crypto market has seen a bullish trend in recent weeks, with a number of positive developments driving top cryptocurrencies higher by more than 10%. The lower-than-expected CPI inflation, Solana's user growth, Cardano's Voltaire Upgrade, Ethereum's Shanghai Upgrade, and more have all contributed to this positive momentum.
While there have been setbacks in the form of the financial struggles and collapses of companies like FTX, Voyager, Celsius, Terra, Hodlnaut, and Nexo, the crypto market has demonstrated its resilience in the face of such challenges. In fact, crypto's risk-adjusted return has performed in line with the United States and global stock indexes during 2022 and has even outperformed U.S. bonds. Additionally, the blockchain market is poised for continued growth, with accounting firm PwC estimating that metaverse-related projects will represent $1.5 trillion by 2030.
The crypto and blockchain space has weathered four crypto winters, proving its staying power and showing that it is here to stay. In 2023, we can expect a renewed focus on transparency and regulations to build greater trust among crypto and blockchain projects. Bad actors will continue to be pushed out by legitimate projects and entrepreneurs working together to improve the crypto space. The power will shift from large crypto companies to innovative builders creating next-generation applications that will drive the next wave of mass adoption.
Market Sentiments
Article 4 - Weekly Spotlight
The crypto market continues to show signs of growth and progress towards decentralization, as evidenced by the strong performance of Aptos. The token has seen a 72% increase in value over the past 7 days, reaching a high of $6.64, the highest point since November 8, 2022. This surge, along with a 105% increase from its lowest point on record, has propelled Aptos to become one of the top-performing tokens in the industry. The total market cap for Aptos has also grown to over $824 million.
This growth can largely be attributed to the addition of PancakeSwap, a giant DeFi platform, to the Aptos ecosystem. In a short period of time, Aptos has seen its total value locked (TVL) skyrocket to over $50 million. PancakeSwap itself has also seen a significant increase in TVL, now standing at over $30 million, which is a 97% increase from the past 30 days.
Other dApps within the Aptos ecosystem have also seen significant growth, although on a smaller scale. For example, Tortuga, a liquid staking platform, has seen its TVL rise by 39% in the same period, reaching $5.1 million. Ditto, another liquid staking product has seen its TVL increase by 56%.
The strong performance of Aptos can also be attributed to its staking rewards, as data from its explorer shows a significant increase in the number of actively staked APT tokens, now standing at over 838 million. However, a closer examination of in-chain data reveals that the number of user accounts, deployed contracts, and daily active accounts have remained relatively low in the past 30 months.
While the crypto market has experienced a bearish year, it's important to remember that it is part of the normal market cycle. The market cap of the crypto market has grown from $250 billion in 2020 to $942 billion currently, indicating a strong long-term trajectory. Additionally, innovation continues to occur in the market even during the bear market. While it's difficult to predict when the market will return to an uptrend, it's important to remember that it's not likely to happen next week.
