Total Market Cap $330.6 BN (-4.67%)
24 Hour Volume $105.1 BN (+23.21%)
BTC Dominance 58.6% (+0.86%)
Bifurcation and Volatility
U.S. stocks closed at a six-week low, driven once again by weakness in technology stocks. The Nasdaq 100 moved more than 1% on 13 of 14 days in September. And even though more than 70% of the S&P 500 stocks were higher, the index closed lower for the third week in a row. One of the market’s winners, Microstrategy (MSTR), continues to toe the line between tech stock and crypto stock, rising 13% after announcing another $175 million of Bitcoin purchases from their cash Treasury. As we noted last month, CFOs around the world are paying attention, if not to their declining purchasing power in cash, most certainly to MSTR’s stock price.
Similar dispersion and volatility emerged in digital assets. For the past few months, we’ve highlighted that Bitcoin and most legacy large cap tokens have not only underperformed the market, but have been quite uneventful relative to new up-and-coming tokens with better value accrual mechanisms. Last week, this trend reversed. Bitcoin untethered itself from its near-term correlation with tech stocks, and rose steadily throughout the week, ultimately gaining 6%, while Ethereum finally outperformed its Decentralized Finance (DeFi) counterparts, rising 2% vs the FTX DeFi perp -20%.
Bitcoin’s sharp decline to start the month, followed by a flat-line recovery and then a slow grind higher, looks eerily similar to that of June 2019, which of course culminated in an 80% rally from peak to trough in the final 10 days of trading.
Uniswap Just Changed the Game, and it is VERY Exciting
Imagine if Apple gave every early adopter of the iPhone some shares of Apple stock, or if Amazon gave all Amazon Prime members some form of financial upside. Every new technology company, from LinkedIn to Facebook to SoFi, owes a great deal of gratitude to their early customers and evangelists, yet most have no way of benefiting financially from the success of the companies that they helped build.
Immediately after the airdropping of Uni tokens to the Uniswap protocol’s users, some vocal U.S. law commentators (lawyers and others) thought that Uni tokens were beyond a doubt a security, that the airdropping was an illegal distribution, and that the Uniswap team laid down the gauntlet and dared the SEC to hold them to account. A flippant review of the facts (as well as past precedent, and official and unofficial regulatory statements) may lead one down that path. However, if one were to also consider that the Uniswap team is well funded, backed by seasoned VCs who have most likely lent their legal, regulatory, technical and other expertise, one might also take a more careful consideration of the facts and circumstances of this particular offering and why Uni tokens may very well be outside the enforcement framework of U.S. securities laws.
Digital assets market:
Market cap dropped by 19B (down 5.6%) from 330B to 311B
All top large cap coins in the red ranging in drops between 3.5% and 11%
$BTC trading at 10,500 levels after dropping 3.4% overnight that saw 55m long positions liquidated with hourly traded ranges around 200.
$BTC futures OI at 3.9B, peaking at 5B early September when $BTC was at 12K levels.
$ETH dropped 10% overnight to 340 levels as the DeFi sector tapers off with gas fees back down to double digits in the 90 range. $ETH has dropped 28% from its yearly high peak of 480 levels from early September
Alts and DeFi watch:
$LTC dropped to 10th on the list and expected to drop further with little to no major development in comparison to the other projects in 2020.
$DOT dropped the most out of the top 10 alts, down 10.5% from highs of 6.8 to currently 4.12 levels off four consecutive down days.
$YFI down 45% from 43K levels seen at the peak of the DeFi boom, a slide spanning seven consecutive days with $UNI staking on Uniswap taking away most of the TVL from the yearn.finance platform
Since the start of September, MEME has gained more than 900%, despite its supporters promoting the project through the slogan ‘don’t buy MEME.’ MEME is currently the 254th-ranked crypto asset with a $48 million market cap, with more than $17 million worth of MEME changing hands in the past 24 hours.
In spite of the ‘degenerate’ reputation of the sector, the survey found the typical yield farmer is a fairly level-headed crypto investor — with 68% of users responding that they do not leverage their positions to minimize risk, and 49% refusing to invest in unaudited protocols. Just 40% of DeFi users claimed they were able to interpret smart contracts underpinning the protocols they farm with.
After outperforming Bitcoin (BTC) and Ether (ETH) strongly in August, Decentralized Finance (DeFi) tokens are now plummeting as many registered losses of up to 50%. The overwhelming majority of DeFi tokens have dropped by 15% to 25% on the day. Even cryptocurrencies that are not directly considered to be DeFi tokens, like Chainlink (LINK), saw a 15% price drop. While the pullback of DeFi tokens coincides with the decline in Ether price, a take-profit correction was expected by many analysts.
The Block talked to a few members of D.C. institutions on how the money flowing into decentralized finance is seen in Washington. For the most part, it isn’t, but those more educated in the blockchain space say DeFi’s time is coming. When it does, it’ll likely be a battleground for debates on centralization in U.S. systems.
This new version, which has been audited, will work similar to the old version: YAM can be mined, this time through providing liquidity to the YAM-yUSD pool. The coins will then rebase towards one yUSD every 12 hours, thereby acting as a rebasing mechanism that tries to center YAM’s price action.
The round saw participation from Alameda Research, Arrington XRP Capital, Coingecko, and Parafi Capital partner Santiago Roel Santos, among others. APY claims to be building the "Wealthfront for yield farming," or a robo-advisor that helps optimize token lending for risk-adjusted gains. With the fresh capital in place, APY plans to speed up its platform development and launch it in mid-October.
A group of anonymous Uniswap users is trying to unite the many small holders of the UNI governance token to deal with potential problems in the automated market maker’s (AMM) governance. Yet that is what the launch of UNI last week was supposed to do.
News that caught our eye:
$ETH price recedes but network metrics suggest DeFi season is not over yet
US regulators offer new guidance on bank holdings in stablecoins
An unpersuasive Craig Wright has motion denied on “all grounds” by US court in Wright vs. Kleiman lawsuit