Bull Market

With the proper bull market, unfortunately this is becoming more of a monthly note; sincere apologies to the readers! It indeed is a “Happy New Year” for the community.

The pattern of this run-up is pretty consistent; consecutive green candles then an attempted correction that leads to >$1b in liquidations. If you look at funding rates across the board this is no surprise. How this market is different to that of ‘17 is the recoveries are almost within hours as corps/instos continue to TWAP their way into fat BTC holdings. BTC is taking a breather off it’s new ATH of 40k. What do you think happens next? Instos are playing a game of chicken while OGs sit on the sidelines and watch their FTX balance go up.

The shitcoin market is also booming. Who remembers $NANO? Well, it’s up 260% this week. CZ had momentary FOMO for the Polkadot ecosystem after months of focus on BSC related projects. $REEF peaked at 50x despite private investors dumping their first batch of tokens. GBV has been actively looking at these deals and it’s a tricky spot as Polkadot isn’t actually fully functional. Each project is going to be bidding for parachain slots later this year and many will elect to wait for prices to dip before doing so. Effectively, they have a very good excuse to build slowly. 

On the flip side, algo stablecoins were trending for a few weeks but looks like this forking cycle is over. Nonetheless, MITH Cash >$1b TVL in one day was pretty impressive; this is Jeff Huang’s attempted revival of the Mithril brand. There’s a big debate on what type of stablecoins will dominate DeFi in the long term. Is there really an issue with asset backed stablecoins like USDT and USDC? How well do we understand game theory when it comes to algo stablecoins and rebases? I’m not smart enough to answer these questions but I can tell you traders lose interest quickly as alpha decays.

The big event this week was the start of massive SOL distribution; well known to the market and a key reason SOL has U/PF in 4Q20. We’ve heard whales have been buying these locked tokens OTC (you can guess who) and our view is corrections will be a buying opp. SERUM continues to look like the best hope of an orderbook DEX with a CEX like UX. This project only succeeds with SOL by it’s side. SBF put out a long thread on FTT – those who FUD it in ‘19 and took profits at 10x. Unfortunately, I’m one of the early profit takers and even in hindsight, still doesn’t seem THAT bad given the info I had at the time. But obviously the timing of the thread hints that SOL will go through a similar cycle. This time I’m NOT selling.

Thanks for reading. See you on the moon.

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