1. Summary of Industry Dynamics
Last week, the crypto market showed a clear upward trend. Both Bitcoin and Ethereum broke through the shock range of the previous two weeks and reached the highest point in nearly 11 months. The overall trend outperformed the US stock market. Among them, Ethereum successfully passed the Shanghai upgrade. This upgrade will unlock 18.1496 million ETH, a total of about 15% of ETH, with a total value of about US$35 billion. Unlike what we understand as unlocking and withdrawing coins, unlocking and withdrawing ETH pledged in the beacon chain is actually a process of node unstaking and exiting the node, so it will involve the consensus of node exit and will queue up. Therefore, in actual calculation, at most nearly US$200 million of ETH will enter the liquidity every day, so the selling pressure on the market is limited. The current average deposit price of all pledged ETH is US$2,136, which corresponds to the current price in a loss state. It can be foreseen that ETH will have strong pressure above and below the loss line.
As of the time of writing on April 16, Bitcoin was at 30319.88, up 7.04% on the week; Ethereum performed strongly, closing at 2092.84, up 12.58% on the week. This week, many Altcoins also performed well under the leadership of Ethereum. The popular Layer 2 coin Arbitrum rose 37.34% this week, and the Layer 1 project injective also rose 50% this week. BTC's market share fell 0.64%, the ETH/BTC exchange rate rose 3.48%, and the total market value of cryptocurrencies fell 0.31%. It is still in the Bitcoin Season.
In contrast, the U.S. stock market released several important data last week. The CPI data released on Wednesday showed that the core CPI rose by 0.4% month-on-month, in line with expectations, and the overall CPI rose by 0.1% month-on-month, lower than expected. The CPI data was slightly positive; the PPI index was released on Thursday. As a leading indicator of CPI, the PPI also gave a figure of 2.7%, lower than the expected 3%, and a sharp drop compared to February. The market's expectations for a slowdown in inflation have increased, and expectations for the last 25 basis point rate hike in May have been increased.
Last week, major banks also released their first quarter financial reports. Among them, JPMorgan Chase and Citigroup achieved encouraging results, both of which increased to varying degrees, and the deposit amounts also increased to varying degrees, indicating that the market's willingness to deposit money has not been significantly reduced due to the collapse of Silicon Valley and Signature Bank, and the major banks have basically escaped from this crisis.
Next week, several financial reports that are receiving much attention will be released, such as Bank of America on Tuesday, Tesla on Wednesday, and TSMC on Thursday, but the reports are more concentrated at the individual stock level, and you need to pay attention to individual stock risks.
Industry data
1) Stablecoins
According to glassnode data, as of April 15, 2023, the combined supply of the top five stablecoins (USDT, USDC, BUSD, DAI, TUSD) was approximately 126.7 billion, a decrease of approximately 490 million (-0.39%) from last week, and there was a slight outflow of funds from the currency market.
Among the fiat stablecoins, USDT supply increased, but continued to slow down. USDT increased by about 660 million (0.83%) this week. After reaching 60% market share, USDT growth slowed down, and most of the USDC funds may have been replaced.
The supply of USDC fell again this week, decreasing by about 769 million (-2.36%). Since the Silicon Valley Bank incident, the supply of USDC has fallen again after a brief stabilization last week, and North American funds have continued to leave the market.
The supply of BUSD continued to fall this week, decreasing by about 385 million (-5.4%). As Paxos has been banned from minting BUSD, it is expected that the supply of BUSD will continue to fall, and BUSD will gradually withdraw from the stage of history. Binance has begun to gradually remove BUSD perpetual contracts of some currencies, including mainstream ones such as AVAX. As an alternative, the supply of TUSD continued to rise, increasing by 63 million (3%) this week, and TUSD continued to grow.
According to data service provider Kaiko, BTC-TUSD’s share of BTC trading volume on Binance is almost 50%, which is comparable to BTC-USDT.
However, the increase in this proportion is mainly due to the decline in BTC-USDT transaction volume. Even with the fee-free policy, TUSD has not yet been adopted on a large scale.
Overall, the cryptocurrency market is still experiencing a net outflow, and there is no sign of a large influx of external funds. With limited incremental funds, the market needs to accumulate more liquidity to pull up, and under the game of existing funds, the structural market will be the main trend. At present, the market has continued to rise, and the money-making effect is good, but it is already at a relatively high level. If stablecoins continue to flow out, it is not an optimistic signal.
2) BTC Miner Balance
The BTC miner address balance shows the total BTC holding balance marked as miner addresses on the chain, including Foundry USA, F2Pool, AntPool, Poolin, Binance and other addresses.
This data is usually used to judge miners' interest in the current BTC price. When the miner's balance increases, it usually means that the chips are in a state of accumulation; when the miner's balance decreases, it indicates that miners are selling or pledging their BTC.
According to OKLink data, as of April 16, miners' balance continued to increase slightly compared with last week. The market broke through the high after three weeks of sideways trading, but miners continued to not leave the market. Miners' balance has not changed significantly since they stockpiled during the correction in early March. It is expected that the BTC price will most likely continue to rise.
The market continued to rise last week, which was in line with our previous expectation of accumulating liquidity in the market.
3) ETH deflation & staking withdrawal data
As of April 16, according to data from ultrasound.money, the supply of ETH this week has decreased by about 6,203 compared to last week. Since the completion of The Merge, the supply of ETH has decreased by 88,000 in total. Based on the data of the past week, the annualized inflation rate is -0.27%, and the activities on the Ethereum chain remain active.
Last week, the market surged, BTC's market share peaked and fell, ETH led the rise, and the ETH/BTC exchange rate rose sharply. It is expected that this situation may continue. In the past two years, the ETH/BTC exchange rate has always maintained a wide range of fluctuations of about 0.05~0.08. During the period when BTC is sideways at a high level, ETH may usher in a rebound.
Last week, the Ethereum Shanghai upgrade was completed, and users can now queue up to withdraw the ETH they previously staked, but there was no significant selling pressure as many people expected. According to Token Unlocks data, there are about 995,000 ETH waiting to be withdrawn, with a daily selling pressure of about 100,000, and the overall selling pressure is not large. Overall, the current ETH pledge rate is only about 15%, and there is still a lot of room for improvement.
Judging from the price performance of ETH, the withdrawn ETH has not been dumped into the market in large quantities. We speculate that there are several reasons for this:
Staking Cost
Nansen data shows that the staking cost of ETH is largely distributed in the range of US$1,500 to US$3,000. Currently, most stakers are in the stage of just making back their investment or are about to make back their investment. The current market sentiment is good and there is no reason to sell.
Risk Appetite
Early users who participated in staking generally have a higher risk appetite and agree with the narrative and long-term development of the Ethereum ecosystem. This is because the date of the Shanghai upgrade was uncertain, and whether the staked ETH could be successfully withdrawn was completely unknown. Although withdrawal can be made through the liquidity pool, the risk of staking is still high.
It is speculated that these users who are willing to accept high-risk lock-up in exchange for a fixed income of about 5% annualized return on the currency standard have sufficient "faith" in Ethereum, and the current market and ecological development lack reasons for them to sell.
Some wait-and-see users with low risk appetite who were unwilling to accept high-risk lock-up positions joined in the staking after the Shanghai upgrade was completed, and staking activities became more active than before.
Supervision
Judging from the distribution of validators currently waiting in line for withdrawal, the three centralized exchanges Kraken, Binance and Coinbase together account for more than 80%. Since Kraken was previously regulated by the SEC, paid a fine to reach a settlement, and promised to stop providing staking services, in order to avoid risks, users are likely to choose to withdraw funds from centralized exchanges and turn to decentralized staking service providers, such as Lido.
Therefore, some withdrawals may be in transit and will be pledged again.
2. Macro and Technical Analysis
The market broke upward, but basically reached the previous high.
Two-year US Treasury bonds are trading sideways, and there is a high probability that the interest rate will be raised by 25bp in May
Nasdaq index briefly moves sideways as market begins to anticipate recession
arh999：0.88
The number of addresses holding more than 100 coins has dropped significantly
The number of currency holding addresses is relatively stable
III. Summary of Investment and Financing
Investment and Financing Review
From April 10 to April 16, 2023, the crypto VC market disclosed 21 investment and financing events, with a cumulative financing amount of more than US$175 million; (https://www.rootdata.com/Fundraising)
During the reporting period, there were 7 events with financing amounts exceeding USD 10 million:
Organization News
4. Dynamic tracking of non-performing assets
The latest developments in the digital distressed asset claims market:
1.FTX dynamic tracking:
The story of the bankrupt exchange FTX has taken a dramatic turn. Last Wednesday, Andy Dietderich, a lawyer from Sullivan Cromwell, the law firm representing FTX, said at a court hearing in Delaware that FTX had recovered $7.3 billion in assets, including $2 billion in cash, $4.3 billion in Class A cryptocurrencies, $300 million in securities, $600 million in investment receivables, etc. In addition, FTX is considering reopening its exchange business at some point in the future. One possible option is that FTX's creditors convert their claims into shares in the reopened exchange. Stimulated by this news, FTT rose strongly, breaking through 3 USDT at one point. Although it has now fallen back to around 1.84 USDT, the increase is still more than 90%.
2. About restarting FTX
Although this week's news came out of the blue, this is not the first time that FTX has considered restarting the exchange, but it is the first time that this potential option has been raised in court. According to the Wall Street Journal, as early as January this year, FTX's new CEO John J. Ray III expressed his openness to restarting the exchange business in his first public interview. John J. Ray III mentioned at the time that he had set up a special task force to explore how to restart FTX. Although the exchange's previous management team was accused of criminal misconduct, some customers still admired FTX's technology very much, so they tended to and believed that restarting the exchange was valuable.
Since then, the law firm representing FTX’s Official Committee of Unsecured Creditors has held several discussion meetings on the theme of “restarting the exchange,” and some creditors have shown a very positive attitude towards restarting the exchange’s business.
Sunil Kavuri, a creditor with seven figures trapped in FTX, once said: "If run properly, the underlying business can make money. So for me, it makes no economic sense to dissolve a profitable business. Restarting it will generate revenue and compensate users."
Another anonymous creditor, @AFTXcreditor, agreed: “FTX is a highly profitable exchange that just had its assets taken away by a completely unprofitable entity, Alameda. It makes perfect sense for most to refinance this profitable business to resume activity and generate profits and equity value that can better compensate creditors.”
Most importantly, some creditors who actively tracked FTX's bankruptcy and liquidation trends found that after analyzing the financial details submitted by FTX to the court, the exchange had also discussed some topics about restarting with the legal team. The specific topics discussed included:
Create mockups to test user experience;
Restart the security analysis of the exchange;
Restart tax analysis of exchanges.
Here is a small anecdote: the reason why these discussions can be seen in the financial details is that FTX needs to pay consulting fees based on the length of time for these discussions with its legal team, and Sullivan Cromwell received fee income of up to $13.5 million from FTX in February.
3. The possibility of relaunching FTX is just one of many options
Although many relevant people believe that restarting FTX may indeed have the opportunity to help creditors recover higher compensation, based on the current situation, this is only an option for the time being.
Another point that needs to be emphasized is that the reason for the discussion about restarting at this stage is that as FTX "recovers" more assets, its financial situation has improved. However, the so-called "recovery" is actually mainly due to the overall rise in the cryptocurrency market (most assets belong to Class A crypto assets), so the value of $7.3 billion still has a large possibility of fluctuation, in other words, its financial situation is also unstable.
Secondly, Dietderich has only proposed this suggestion. There are still many unresolved issues about whether and how to implement this plan. One of the most critical issues is that restarting the exchange business will inevitably require huge funds. Should these funds be directly used from FTX's existing assets or raised through third-party capital financing? This is also the biggest point of contention within FTX regarding the "restart".
As Dietderich himself said, restarting FTX is just one of the possibilities for the future, and any current option is far from the final outcome.
4.FTX Japan
FTX creditors tweeted, citing disclosure documents, saying that the reason FTX Japan canceled the auction exchange was because it planned to restart. The document shows that "Japan has provided an update on the next steps for the possible reopening of the exchange and provided guidance on the work required to reopen trading." Earlier, FTX Japan resumed users' fiat and cryptocurrency withdrawals on February 21, local time.
5.Metalpha plans to raise $100 million fund
Metalpha, a digital asset management service provider based in Hong Kong, China, plans to raise a $100 million fund to invest in Bitcoin and other crypto products of Grayscale Investments LLC and provide a compliant participation channel for Chinese crypto investors. Metalpha has raised $20 million for the new fund since March.
6. HashKey Group launches wealth management services for institutions
HashKey Group will launch wealth management services through its new wealth management division, HashKey Wealth, which will target institutions and family offices, aiming to cater to such investors’ demand for digital assets.
5. Crypto Ecosystem Tracking
Data collation of each sector
NFT
Blue Chip Index: The NFT market and the currency market are completely decoupled, and the blue chip index continues to fluctuate downward. Among them, the price of BAYC once returned to around 54 ETH. With the continuous increase in pledged Ethereum after the Shanghai upgrade, perhaps now is an opportunity to buy blue chips at a low price.
Market value & trading volume: The overall market value fluctuated within a range. On the 14th, there was a rebound as the cryptocurrency market rebounded, but it returned to 9.4M ETH as blue-chip NFTs fell.
Top collection: cryptopunks, BAYC, and Monkeyland ranked the top three, while other small and medium-sized blue chips generally shrunk severely, but it is worth noting that Azuki rebounded against the trend
Gamefi Chain Games
Overall review
Overall, the Gamefi industry's currency prices rebounded this week, but most of them lagged behind the growth of BTC and ETH.
From the perspective of token prices, 90% of the top 10 blockchain game tokens by market value have increased. The top three blockchain games with the highest increases in market value this week are Treasure Dao, Illuvium, and The Otherside.
https://degame.com/zh/ranking/game/ALL_GAME
According to the on-chain contract interaction volume, among the top ten active blockchain games, the interaction activity increased by 50% in the past week. Among them, Iskra replaced Alien World as the "eternal leader" and topped the list for the first time. (Iskra is a blockchain game platform that recently launched a new game 3KM. According to the official website, there are five more games to be launched next.)
Data source: https://dappradar.com/rankings/category/games
DeFi & L2 Track Data
As of writing, DeFi TVL is 53.59B, up 3.07B from last week, setting a record for the largest weekly increase in recent times. The top five protocols by TVL are: Lido, MakerDao, AAVE, Curve, and Uniswap. Lido and Curve rose 13.77% and fell 9.01% this week, respectively.
https://defillama.com/
As of writing, Layer2 TVL is 10.48B, up 1.31B from last week, a 15.18% increase.
Among them, Arbitrum One, Op, zkSync Era, and Starknet TVL ranked first, second, fourth, and tenth respectively. zkSync Era and Starknet TVL increased by 42.33% and 24.23% respectively in the past week. According to a simple analogy with ETH TVL, zkSync Era is currently equivalent to the level of Arbitrum One in September 2021 and Optimism in December 21.
https://l2beat.com/scaling/tvl
This week's key events & projects
Render ($RDNR)
Decentralized GPU provides computing power for metaverse/nft/game rendering. AI currently adds new narratives
Specific mode:
Token situation:
It is expected that there will be more demand for computing power in the future, and the value that RNDR can capture will be greater
November 21 was the historical high point, and it has been bearish since then, fluctuating at a low level for more than half a year. In January 23, it rebounded and broke the structure, and in March 23, it fell back. Reversal is expected, but we still need to pay attention to the poor chip structure of old coins.
etherfi
Recommended reason: A newcomer in the LSD track, Arthur Hayes Family Office Fund Maelstrom participated in the investment
etherfi is a decentralized, non-custodial delegated staking protocol. Stakers can control their own keys throughout the staking process from creation to redemption, and can exit the validator at any time to recover their ETH, thereby preventing node operators from doing so. It does a good job of "Your keys, Your crypto". ether.fi reduces the risks for all parties, including node operators who no longer need to maintain wallet connections or rely on trusted intermediaries for coordination.
**Ether.fi is divided into 4 categories of users: pledgers who are Bond holders, pledgers who only hold eETH, node operators, and node service users. **Ether.fi's delegated pledge mechanism promotes the development of the node service market, where node operators and pledgers can register their nodes to provide infrastructure services.
**The ether.fi roadmap is divided into three phases, with the goal of achieving more thorough decentralization at the end of each phase. **1) Delegated staking: ether.fi plans to migrate the early ETH staker pool to the V1 liquidity pool on the mainnet on April 30, during which time the staking users will receive eETH (which can be exchanged for ETH) and have the opportunity to receive rewards;
2) Liquidity Pool: Q2-Q3 2023. Stakers with less than 32 ETH or who do not want to bear the responsibility of monitoring validator nodes can participate in ether.fi staking by minting eETH in the NFT liquidity pool, which contains mixed assets consisting of ETH and T-NFT;
3) Node service: Q1-Q2 2024. It is expected to cooperate with EigenLayer to support its node service layer mechanism.
De.Fi
Recommended reason: web3 security tools, organizing on-chain assets
Security issues in the encryption field have always plagued the development of the industry, and how to keep funds safe has become one of the most concerned issues for project parties and users.
De.Fi consists of two components:
1) Scanner: Able to perform comprehensive technical and liquidity analysis of any token in seconds, including smart contract audits;
2) Shield: Automatically scans high-risk tokens and approvals in user wallets. After we entered a scam contract address found in the Random wallet but not yet detected by Etherscan in De.Fi, it only took a few seconds for De.Fi to find out all the details of this contract, including transfer fees and limits.
Additionally, you can use De.Fi to check whether your wallet has any vulnerabilities.
about Us
JZL Capital is a professional institution registered overseas, focusing on blockchain ecosystem research and investment. The founder has extensive work experience and has served as CEO and executive director of many overseas listed companies, and has led and participated in eToro's global investment. Team members come from top universities such as the University of Chicago, Columbia University, University of Washington, Carnegie Mellon University, University of Illinois at Urbana-Champaign, and Nanyang Technological University, and have served internationally renowned companies such as Morgan Stanley, Barclays Bank, Ernst & Young, KPMG, HNA Group, and Bank of America.
【Disclaimer】The market is risky, so be cautious when investing. This article does not constitute investment advice, and users should consider whether any opinions, views or conclusions in this article are suitable for their specific circumstances. Investing based on this information is at your own risk.
