What new info do we have that is causing a crypto panic? Let's evaluate one at at time

5 reasons:

1) Macro
2) Jump selling
3) ETF flows
4) Kamala jumping in the polls vs Trump
5) Middle East
6) Supply 1) Macro signal Friday was obvious short-term sell signal. 10yr UST fell -40 bps, oil smoked, equities continue to bleed & the VIX spiked +25% Friday.

But long-term, VIX is conditioned to retreat, Fed will cut rates in Sept, and still an election year

TRADE? Buy this dip

Been tweeting / replying a lot today about the FTX court approved sale of crypto assets, so if you missed key points, here's a summary with a few updates:

1) Galaxy Asset Mgmt, not their trading desk, won the bid. They must act as a fiduciary & sell gradually & opportunistically

https://twitter.com/jdorman81/status/1702018296479105123

2) Galaxy is receiving massive amounts of reverse inquiry already (some from real funds, some fishing expeditions). But OTC sales will dominate the buying. Less likely to see a lot of selling on exchange or via TWAPs. As good bids come in, they will engage.

My 2 sats on SEC vs Binance

Mostly irrelevant since no one operates in the US anymore and a bunch of non-criminal charges for past wrongdoings don’t really matter.

I see 2 actual negatives from this: ⬇️ 1) SEC explicitly defining certain tokens randomly as securities could lead to delistings on Kraken & coinbase or any other US exchange

2) negative sentiment effect if CZ is out and people loved him

That’s about all I see. Pretty benign otherwise.

1) The $DYDX tokenomics model is broken, with several key issues:

- Revenues flow to dYdX Trading instead of to tokenholders
- High Inflation & Large upcoming unlocks
- V4 Shipping delays

A thread on the problems & suggestions 👇

h/t @Crypto_Alex17 @MattHepler8 2) Over the past 6 months we observed other $DYDX stakeholders highlight these same issues on DYDX’s public channels. We expect significant improvements to the value & sustainability if the tokenomics are fixed, especially as users move from CeFi to DeFi derivatives post-FTX

Last week, Genesis filed for Chapter 11 bankruptcy protection bringing restructuring negotiations to the public. While we cannot predict how negotiations will end, we pored through filings to synthesize lessons learned and where we might be headed.

Here are 4 key conclusions: #1: The Genesis bankruptcy represents the end of the forced selling of assets—especially the Grayscale trusts. Gemeni liquidated about 5% of GBTC shares in November that was being used as collateral from Gemeni causing an artificial widening of spreads of GBTC to record levels.

The SBF saga / theatre at this point has no bearing on the market.

Here are 10 much more relevant digital assets stories to follow: 👇 1) Audits

Have you ever gone thru a crypto audit? The auditors are still learning themselves. It's one thing to prove you have assets in the wallet; it's quite another LONG ordeal to prove you have access to all of them.

FOMC meeting --- yawn. Here's how it should have gone:

Q1: How did all 12 Fed governors vote unanimously for 75 bps when there are hundreds of possible permutations that affect trillions of dollars?

A1: Group think - we let markets decide for us then we appease them Q2: How will you get inflation down to 2% when you have missed every inflation target the Fed has ever set? Literally everyone one. You've never successfully caused inflation when you wanted it nor brought it down when needed?

IMO, digital assets decoupled from macro 2 months ago but no one realized it because two very idiosyncratic events happened to occur at the exact same time.

Very quick thread: 1) From Nov 2021 to May 2022, it was all one trade.
Inflation expectations were higher than expected, the FOMC responded late but aggressively, and everything moved together (rates, equities, commodities, DXY, digital assets).

Wait til yield farmers & stETH holders learn about bonds:

$MSTR, $COIN & $GLXY bonds now yielding more than anything in #DeFi:

1) MSTR: 0% converts due '27 @ $47 = 17% yield + very OTM call option attached

MSTR has $2.4 bn of debt vs $2.6 bn worth of BTC on their balance sheet 2) The most egregious: $GLXY 3% converts due '26 @ 68 = 12.75% yield + OTM Call option

GLXY has $500mm of debt versus $845mm of cash and $2.2 bn of digital assets on their balance sheet

Equity ($1.7 bn) trades well below book value (~$3 bn) and debt is covered 6x by assets!

A historically bad week for digital assets, and the rest of global markets, led to me spinning up 11 random thoughts about this bear market

ar.ca/blog/11-random…

#ThatsOurTwoSatoshis 1) Why $BTC & $ETH are underperforming

2) #DeFi is kicking the crap out of #CeFi

3) #DeFi is being held back by lack of adoption of stablecoins, not DeFi itself

4) USDC = USDT; BlockFi = Celsius; Grayscale = Lido - Stop pretending they are different

Three reasons why we believe $ATOM is one of the most undervalued tokens in the market

a thread 👇 courtesy of @Bodhi_Pinkner Reason #1: ATOM is undervalued relative to itself

The IBC ecosystem is exhibiting over 68mm monthly transactions throughout the $74bn of protocols built on it. Yet, $ATOM and the Cosmos Hub, the ecosystem’s nuclei, are worth only $7bn

Hmm...

Strange price action today. Digital asset prices didn't react at all to Russian bank sanctions overnight until FX markets opened this afternoon, leading to x-asset quant/macro guys selling everything.

Liquid crypto markets were open all weekend, but "tail wagging the dog" here Most have no idea (including me) and are jumping on the narrative that they want to play out.

If you’re short / in cash - your stance is “sell everything it’s all going lower”.

If you’re long - your stance is "money has to go somewhere --> likely into the US, gold, & $BTC"

1/ Arca has posted a governance proposal to add much-needed utility to $ANC. Anchor, Terra, & UST are some of the fastest-growing protocols, but ANC has underperformed the broader sector. ANC lacks utility and is heavily incentivizing $Luna rather than $ANC

Thread below 2/ ANC’s TVL has increased to $11.3Bn since inception less than a year ago while its token price has fallen 16%. MeanwhileTerra (Luna) has increased by 233%. (ANC underperformed by 249%)

The easiest part of investing is finding a good idea.

The hardest part of investing is finding the best pure play way to express that idea

A short thread on a few ideas and how we're expressing them 👇

(Hint: $BTC, $ATOM, $RON, $CHZ, $LUNA, $IMX) Pure play investing allows you to simplify a view & take other factors out of the equation.

e.g. Cruises, airlines & hotels were pure plays on increased travel. Regional bank stocks are pure plays on rising rates. Paul Tudor Jones expressed pure play ways to bet on inflation.

1) A lot of folks asking "wen bottom"... that's obviously impossible to answer. But you can look for signs that narratives are shifting the other way even when consensus is all one way... for example...

(a thread 👇) 2) Everything that could go wrong has gone wrong for DeFi / Layer 1s this week. Yet, all of the applications survived the 3rd biggest stress test we've had in the last 2 years (May 2021 & March 2020 being the others).

Resiliency leads to confidence!

ar.ca/blog/defi-is-b…

Wrote a few pieces recently about controversial / misunderstood topics ... would love to hear feedback

see below 👇

1) Why FDV is a flawed and oft-misinterpreted metric ar.ca/blog/fully-dil… 2) Using $RON as a case study for why the "sellside" (OTC dealers/exchanges) aren't doing enough to educate their customers on new opportunities ar.ca/blog/debunking…

Here we go again -- time to debunk macro theses regarding the Fed, rate hikes and their likely impact on digital assets and equities.

Three charts showing why the Fed rate hike cycle is likely not bearish for digital assets anytime soon... history lesson 👇 1) The last time hawkish Fed statements caused a market meltdown was 4Q '18; $SPY -7% in Oct & -9% in Dec. This was AFTER 2 years of rate hikes from 2016-2018 (equities rallied during the hike period). The -23% taper tantrum led to the Fed lowering rates again, & stocks rallied.

Arca has been very involved in the $AXS Ecosystem.

Recently, KPIs (Revenues, DAUs, overall activity) have slipped, largely due to very fixable problems related to $SLP. With $RON pricing soon, we believe Axie now has many levers to pull to right the ship.

A thread 👇 2/ The problem:

The net issuance of $SLP since the announcement of Katana on 11/3 (and inception of $RON incentivized pools) has been a detriment to the price of SLP.

10.9 bn net SLP minted since 11/3, which is 54% of total SLP mkt cap, with avg mint/burn ratio of 4.75

The vast majority of responses to my question boil down to 3 "crypto bear theses"

1) "Macro conditions"
2) 2018 PTSD
3) No Valuations / high correlation

A quick rebuttal to all 3 below 👇

https://twitter.com/jdorman81/status/1470968831325605889

1) "Macro Conditions"

The general consensus is that "dollar up, rates up, central bank tightening = bad for risk assets like tech stocks and digital assets"

There is some truth to this, but it's nuanced...

Clearly, there have been internal issues at $SUSHI. Today @arca is releasing a re-structuring proposal of Sushi-Core to address this, & the lack of transparency, so SUSHI can scale & continue to ship world class community-owned DeFi products.

Thread 👇

forum.sushi.com/t/sushi-dao-re… 1) After @0xMaki moved to an advisor role, $SUSHI transitioned to a flat org structure, w/out clear leadership and responsibility over products. This led to product delays, team infighting, & lack of transparency.

1) IMO, fat protocol thesis still isn’t proven. The crazy rise in Layer 1 valuations are due to 2 reasons:

A) retail & TradFi investors lack resources/skills to analyze applications, so layer 1s become the “lazy man’s index” - a catch all solution for overall growth 2) B) digital asset investing is still dominated by early stage VCs who focus on TAM over financials, and seek out what “could be” over “what currently is”. Few technologies have higher potential upsides, so layer 1s fit their strategy better