Newsletter Volume 15
Article 1 — The Market This Week
The cryptocurrency market has been a hot topic lately as investors continue to speculate on the future of Bitcoin. Despite a sudden retreat late on Thursday, the past week has seen Bitcoin experience a surge of almost 13%. This has been interpreted as a sign of optimism from investors, although the market still faces a number of macroeconomic concerns.
The week has been anything but dull for Bitcoin. The largest cryptocurrency by market capitalization hit multiple six-month highs before suddenly retreating late on Thursday, only to rally again soon after. As a result, Bitcoin is trading at over $24,557, up almost 3.1% over the past 24 hours. This marks a significant increase from its weekly low and an even more enormous surge from its August low of $22,000. In fact, BTC surpassed $25,000 for the first time since August, before the Thursday drop.
The market conditions that led to Bitcoin’s rebound, subsequent decline, and subsequent rally have been diverse. Nevertheless, they show how sensitive cryptocurrencies are to macroeconomic conditions and industry-specific events, even if Bitcoin’s behaviour is sometimes counterintuitive. For example, late Tuesday saw investor optimism trump concerns about a stablecoin crackdown and a tepid Consumer Price Index (CPI). In an interview with CoinDesk, Riyad Carey, a research analyst at crypto data firm Kaiko, said that the upturn in Bitcoin’s value was due to “a bit of a euphoric rally that regulatory issues have cooled off temporarily.”
Despite this optimism, it’s important to remember that the cryptocurrency market is inherently volatile. While Bitcoin’s rebound is encouraging, it’s impossible to predict what will happen next. The market could just as easily take a downward turn, and investors should be prepared for such eventualities. At the same time, it’s essential to recognize that cryptocurrencies have become an increasingly important part of the global financial landscape and are likely to continue to be so in the future.
Total Crypto Market Cap: $1.16 T
Bitcoin Market Cap: $474.23 B
Ethereum Market Cap: $204.2 B
ETH/BTC Ratio: 0.07
Ethereum Gas Price: 27 gwei
DeFi TVL: $75.97 B
Fear and Greed Index: 60 (Greed)
Federal Reserve Balance Sheet: $8.38 T
Article 2 — Weekly Review of IC15
The cryptocurrency market has recently experienced a significant increase, but it has since shown signs of decline. The IC15 Index used to measure the performance of the cryptocurrency market, dropped by 1042 points to reach 33,878. While a few cryptocurrencies, such as Polygon and Polkadot, moved positively, increasing by 1–4%, others like Solana, Shiba Inu, Tron, and Avalanche experienced losses of 4–6%. The total market capitalization of cryptocurrencies is estimated to be $1.087 trillion.
Amidst the ups and downs of the cryptocurrency market, the Oman Capital Market Authority (CMA) plans to establish a new regulatory framework to govern and develop the virtual assets industry. This move aims to ensure that the virtual assets industry operates transparent, secure and reliable manner. In addition, the government of Hong Kong recently made headlines by successfully selling 800 million HKD (equivalent to roughly $100 million) in tokenized green bonds in collaboration with four banks. The yield for the bond was 4.05%, which is an impressive figure.
Furthermore, Sony Network Communications and Astar Network have joined forces to launch a Web3 incubation program focusing on non-fungible tokens (NFTs) utility and decentralized autonomous organizations (DAOs). This partnership aims to identify, nurture and support projects that leverage the potential of NFTs and DAOs to create innovative and impactful solutions. In addition, the program will help developers and entrepreneurs to learn more about the technology, receive funding and mentoring, and access a broader network of industry experts.
These developments in the cryptocurrency industry highlight the ever-evolving nature of the market. While risks are involved in investing in cryptocurrencies, there are also opportunities for growth and innovation. As more countries and institutions recognize the potential of cryptocurrencies, we expect to see further developments that will shape the future of finance.
Article 3 — Battle of Bull and Bear
The cryptocurrency market witnessed some uncertainty recently, with fluctuating prices and mixed opinions among experts. Darius Tabatabai, the co-founder of Vertex Protocol, expressed optimism earlier in the week, stating that the market could be experiencing the beginnings of another bull market. However, just a day later, bitcoin plummeted by over $1,000 in a few hours due to several factors, including hawkish comments from Federal Reserve officials, an SEC lawsuit against Do Kwon, a co-founder of Terraform Labs who has faced controversy, and a disappointing wholesale prices report.
Technical analysis-based research firm Fairlead Strategies founder Katie Stockton noted that BTC’s “intermediate-term overbought conditions provide a headwind with important resistance around $25,200 nearby, which increases the likelihood of a short-term pullback. Support is near the 200-day MA $20,000.” Despite these challenges, some investors have remained confident that the market will continue to perform well as long as regulatory crackdowns do not take down a significant stablecoin or crypto company.
In light of this uncertainty, the market may experience short-term pullbacks or consolidation, as traders are more likely to lock in profits in the face of higher prices. However, investors appeared to have regained confidence by Friday afternoon, with bitcoin approaching the $25,000 mark again. Ether, the second-largest cryptocurrency in market value, has also performed well in the past week, rising by over 12%.
Looking ahead, ongoing macroeconomic concerns will likely affect the cryptocurrency market’s performance. As a result, investors will need to remain vigilant and monitor the latest news and trends in order to make informed decisions about their crypto investments. However, despite the market’s recent volatility, some experts remain optimistic that cryptocurrencies will continue to outperform traditional equity markets, which they have been correlated with for much of 2022.
Article 4 — Weekly Spotlight
This week’s spotlight is on Camelot, a decentralized exchange (DEX) built on the Arbitrum network, which has experienced significant growth since its launch in late 2022. The daily trading volume on the exchange has increased by 369% since the first day of February, reaching $18 million at the time of writing. The price of GRAIL, Camelot’s native token, has also risen by 520% this month, currently trading at $2,833.47, according to CoinGecko. In the past day, the number of users and transactions on Camelot has grown more than 120%, as reported by blockchain analytics firm Nansen.
Arbitrum, the most extensive Ethereum layer 2 scaling system, has also seen similar progress. With more transaction volume than Ethereum’s main network, Arbitrum is the fourth-largest blockchain in terms of total value locked (TVL). Recently, there has been a surge in users and transaction volume on Camelot, which coincides with the launch of TROVE, the governance token for the yield-bearing index protocol Arbitrove. TROVE’s public sale occurred on Camelot on February 17 and will end on February 20.
Camelot’s tokenomics model includes GRAIL and a nontransferable governance token called xGRAIL. The model aims to balance incentivizing users to grow liquidity on the protocol and enhancing the long-term health of Camelot’s ecosystem. Similar to GMX, Arbitrum’s top decentralized finance (DeFi) exchange, Camelot redistributes its swap fee earnings to xGRAIL token holders. Then, it uses the earnings to buy and burn GRAIL from the open market to maintain constant buying pressure for the DEX’s native token.
Furthermore, Camelot’s TVL skyrocketed in February, jumping by 276% to $62.71 million, according to DeFiLlama. This figure reflects the overall value of crypto assets deposited into the protocol. During a community call on February 16, Camelot’s core contributors reported that the TVL is on a tear.
According to Walter Teng, Vice President of Digital Asset Strategy at Fundstrat Global Advisors, Arbitrum has yet to have a dominant DEX. He added that “no de facto DEX on Arbitrum (yet) means the market will look to find a Velodrome equivalent,” referring to the most popular automated market maker on rival layer 2 network Optimism. Velodrome currently boasts a TVL of $216.32 million, per DeFiLlama. GMX, the largest project on Arbitrum focused on financial derivatives, has a TVL of $505 million, which is 794% bigger than Camelot’s, according to DeFiLlama. It also has 356% more transactions than Camelot in the past 30 days, per Nansen. However, Camelot is catching up, as the number of users and transactions on the exchange have soared by 242% and 384%, respectively, in the same time period.
Although there haven’t been any announcements of a token or airdrop from Arbitrum developers, the increased activity on Camelot, and subsequently on Arbitrum, could be attributed to users hoping to boost their on-chain activity as a means to receive an Arbitrum airdrop, according to Teng.