On the drop, we retraced around a month's worth of price action. At the top, futures never were egregiously in contango, compared to being backwardated -50% APR as recently as early Jul
This indicates that market was only slightly overextended via derivs
2/ Short interest in DeFi coins continue to grow on the way down with LINK OI doubling on the drop in the last week.
3/ The negative sentiment in perps is also reflected in the below normal funding on LINKUSDT & DEFIUSDT on Binance Futures
4/ Market Structure & Flows
Most large trading firms and "lone traders" have mostly taken off their DeFi exposure now with low to none in the actively traded portion of their book with it being shifted to cash or BTC
5/ Qualitatively, price discovery is much less unhinged with traders being much more disciplined in profit-taking preventing prices running too far ahead of the range that the market could consider "fair value"
Less overextension = Less retrace
6/ Average CT seems to still have many degens fully deployed, although there are many with decent cash stacks as well
True retail doesn't seem to have entered much yet, and I'm still debating whether/how that happens this cycle
7/ In terms of new funds entering, I'm aware of at least a dozen that have recently raised or just finished raising. Many of these intend to play in the public secondary markets.
Unclear how much gets deployed over what timeline
8/ Fundamentals
In terms of DeFi activity growth, TVL continues to advance parabolically after a small dip even in the face of price stagnation indicating more assets moving in
TVL is at 3x the level as the last time @FTX_Official DeFi index was last at this level in late July
9/ For both public and private DeFi projects, the innovation and pace of development continues forward at a blistering pace - even faster than it was two months ago.
Early players created the building blocks for new developers to build off of or take inspiration from
10/ So what happens over this next period?
Probably some consolidation and range trading (Index +/- 30%) for a few weeks as overexposed players continue to rebalance and some new funds flow in buying these re-rated assets
All the while, development & innovation will continue
11/ But with BTC, and thus all crypto markets now tied to global macro, where DeFi prices go depend heavily on stonks and gold. If global markets rally, then probably all of crypto does as well. If they go the other way, then crypto probably will as well
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This was pretty insane memecoin alpha from AVAX foundation
Whenever a big player says they are buying, it never fails to ignite momentum when market conditions are ok (CZ/Binance in March, early Saylor buys, etc). Suddenly, the technology improves
Think you see this strategy replicated across all chains/foundations in the future, just as all of them launched DeFi incentive programs
It’s a very high ROI/probability way to increase onchain activity, bridging inflows, community members, etc
It’s the same reflexive loop that chains saw with NFTs last cycle where people needed to buy the chains coins to buy the NFTs and every chain wanted NFT collections but I think there’s more power in this loop because tokens are better speculative vehicles than their NF counterparts
1/ The road ahead for Arbitrum ($ARB) - Mega thread
2021
- Arbitrum launch
2022
- Nitro upgrade for improved performance
- Arbitrum Odyssey introduced but paused
- Arbitrum Nova, a separate chain built for lost-cost transactions focused on gaming and social apps was launched
2/ 2023 was the year of big launches and announcements
- Launched highly anticipated $ARB token, with 1.162B tokens distributed to ~580k wallets
- TVL doubled since the start of the year
- 4th highest TVL chain - more than Solana and Optimism combined
- Resuming Arbitrum Odyssey
3/ But things are just getting started for Arbitrum.
Believe that these following catalysts/narrative will really kickstart the arbitrum flywheel going into 2024:
1/ At $5B and $2B TVL, Aave and Compound are currently the largest money markets in crypto
By innovating while others cruise, @RDNTCapital is the top competitor to challenge the throne and has the potential to become the new King of Money Markets in all of crypto
2/ At a glance:
-$260m TVL across Arb/BSC
-First functional cross-chain MM (lend on X chain, borrow on Y)
-Launching on ETH & zkSync next
-Safely adding more collateral like $ARB (other MMs move slowly)
-Token design optimized for demand & protocol growth
Accumulated spot position in $STX last 2 weeks as well
As an investment, it hits the sweet spots of good supply schedule, strong marketability, cheap relative valuation, important catalysts ahead, proven bear market resistant builders
Main catalyst is the Bitcoin Halving in a year and I think Hal's comparison to LDO & the merge is pretty apt
Second big catalyst would be potential catalysts for DeFi on Stacks - potentially catalzying a 9-10 figure DeFi ecosystem built around $BTC
On relative valuation, my proxy would be Lightning network who i believe if they had a token would be valued at least multi-billion FDV just based on brand value alone, regardless of usage
But if DeFi on Stacks takes off, it probably leap frogs Lightning on actual usage
A thread presenting evidence for a mid term bottom and oncoming "echo bubble" with thorough confluence from technical analysis, onchain data, and exchange/derivatives data
/2 From a TA perspective, we have just given every person that considers technicals in their trading/investing reason to start to look for long exposure. $BTC & $ETH have broken above diagonal trendlines & MAs, started weekly momentum crossovers, reclaimed important supports
3/ The most important indicator of an oncoming rally is the weekly RSI crossover from a previous very long period of bearish momentum implying large potential energy for a move higher based on a supply squeeze.