ETH Showing Signs of Life, Arbitrum Introduces Locking Mechanism
Market Update
- Risk assets are starting the week on a strong note after a week marked by dovish data and the US Treasury's accommodating refunding schedule. Despite today's bounce in interest rates, the DXY remains relatively flat. Major equity indexes are showing slight gains, with healthcare and technology stocks leading the way. In the crypto market, assets are generally on the rise, with the recent rally broadening to other areas of the market. BTC is hovering around the $35k level, while ETH and related assets have shown signs of life, with ETH up approximately 5% relative to BTC since last Thursday. Notable outperformers today include AAVE, the leading multichain borrow/lend protocol, Thorchain (RUNE), a decentralized cross-chain liquidity protocol, and XRP, which appears to be rallying in anticipation of the SEC's November 9th deadline to settle its lawsuit against Ripple for institutional sales.
- The Arbitrum DAO has approved a governance proposal enabling ARB 0.13% token holders to lock their tokens in exchange for a yield funded by the treasury, distributed over 12 months via a smart contract. The proposal, which received majority support for the lowest 1% allocation of the ARB supply for staking, presents an estimated annualized yield ranging from 7.84% to 78.43% based on staked percentages. A subsequent proposal will address implementation details, including selecting a technology service provider, specifying contracts, and choosing an auditor, with a two-week community review period before implementation. Given its early-stage nature, the use of treasury funds for locking incentives raises valid questions. While this is being touted as a way to share realized growth with tokenholders, this seems like it might just be a way to mitigate sell pressure ahead of a large token unlock. To clarify, we maintain a positive stance on ARB, an asset featured in our Core Strategy, regardless of this proposal's outcome.
- The Securities and Futures Commission (SFC) in Hong Kong is considering allowing retail investors to purchase spot crypto Exchange Traded Funds (ETFs), indicating a shift in their approach to retail exposure to digital assets. SFC CEO Julia Leung has expressed a willingness to embrace innovative technology that enhances efficiency and the customer experience, provided that new risks are properly managed. In January, the SFC implemented stricter regulations, restricting access to crypto spot ETFs to professional investors with substantial portfolios. However, in October, they updated the rules to allow a broader range of investors to participate in spot-crypto and ETF investments, contingent on passing a knowledge test and meeting specific net worth requirements. This shift reflects the ongoing trend of China, through its Hong Kong proxy, adopting a more accommodating stance towards crypto, as evidenced by Bitcoin's recent performance during Asian market hours.
- Reflecting the increasingly positive investor sentiment, digital asset investment products attracted $261 million in inflows for the sixth consecutive week of positive flows, bringing the total over the past six weeks to $767 million, surpassing the entirety of last year's inflows. The majority of these funds were allocated to Bitcoin products ($229 million), while Ethereum products saw an influx of $17.5 million, coinciding with the recent ETHBTC rebound. Additionally, Solana ETPs received an additional $10.8 million in inflows.
Daily Technical Strategy
Mark L. Newton, CMT
Head of Technical Strategy
Ethereum's technical breakout above $1900 should help fuel an upward acceleration in price in the days ahead and should lead to a test and eventual breakout above April 2023 highs just above $2141. ETH has proven to be a notable laggard vs. Bitcoin over the past 14 months, and it's thought that this breakout can finally help ETH to show some mean revision which will improve its relative strength. Initial areas of importance lie near $2012, then $2141. Moreover, the ability to surpass $2141 should help to drive gains up to near $2400 which lies near the first 38.2% Fibonacci retracement of the entire bear market decline from 11/21 into 6/22. While short-term momentum gauges have reached overbought levels, neither weekly nor monthly momentum is overbought given the extent of the consolidation over the last seven months. Dips will make ETH even more attractive from a risk/reward standpoint with $1775-$1800 providing support to near-term pullbacks.
Daily Important Metrics
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All metrics as of November 6, 2023 9:28 AM
All Funding rates are in bps
Crypto Prices
| Symbol | Market Cap | Last Price | Daily Change | Year to Date | Relative to BTC YTD |
 BTC | $683B | $34,972 | ↓ -0.49% | ↑ 111% | |
 ETH | $228B | $1,897 | ↓ -0.50% | ↑ 58% | ↓ -53% |
 SOL | $17B | $40.34 | ↓ -2.27% | ↑ 308% | ↑ 196% |
 ADA | $13B | $0.3563 | ↑ 2.01% | ↑ 44% | ↓ -67% |
 DOGE | $10B | $0.0740 | ↑ 4.08% | ↑ 5.47% | ↓ -106% |
 LINK | $7.0B | $12.49 | ↑ 4.07% | ↑ 125% | ↑ 14% |
 MATIC | $6.6B | $0.7107 | ↑ 2.18% | ↓ -6.75% | ↓ -118% |
 DOT | $6.0B | $4.86 | ↑ 0.22% | ↑ 12% | ↓ -99% |
 NEAR | $1.6B | $1.57 | ↓ -5.14% | ↑ 23% | ↓ -88% |
Exchange Traded Products (ETPs)
| Symbol | Premium to Nav | Last Price | Daily Change | Year to Date | Relative to BTC YTD |
| GBTC | ↓ -13% | $27.53 | ↑ 1.77% | ↑ 232% | ↑ 121% |
| BITW | ↓ -33% | $18.59 | ↑ 1.17% | ↑ 246% | ↑ 135% |
| ETHE | ↓ -22% | $14.32 | ↑ 4.30% | ↑ 201% | ↑ 90% |
| BTCC | ↑ 0.19% | $6.39 | ↑ 1.11% | ↑ 111% | ↓ -0.22% |
News
MARKET DATA
Coin Telegraph NFT sales volume jumps to $129M in November: Data Blockchain analytics company Nansen reported that NFT sales volumes reached 68,342 ETH in the week ending Nov. 6. ... |
DOSE OF DEFI
Coin Telegraph Aave pauses several markets after reports of feature issue The pause affects multiple markets, including Aave V2 Ethereum Market and certain assets on Aave V2 on Avalanche. In a... |
REGULATION
The Block Bank of England, FCA seek feedback on proposals for stablecoin regulation The Bank of England and the FCA have issued a request for feedback on their proposed approach to regulating stablecoins. |
The Block SEC should consider proposing rules to regulate crypto, Republican commissioner says The SEC's Mark Uyeda said the agency needs to consider proposing rules or guidance to regulate cryptocurrencies. |
Decrypt.co Self-Custodial Wallets Could Challenge Stablecoin Issuers' Ability to Satisfy Regulations: BoE The Bank of England's latest paper examines the regulatory challenges posed by unhosted crypto wallets in an economy powered by stablecoins. |
The Block Hong Kong considers allowing retail access to spot crypto ETFs: report The Securities and Futures Commission is assessing spot crypto ETFs as the city aims to establish itself as an Asia crypto hub. |
WEB 3.0
The Block Arbitrum DAO approves proposal to activate token staking Arbitrum DAO has approved a governance proposal that will enable holders of ARB tokens to stake their holdings in exchange for a yield. |
Coin Telegraph Telegram Wallet avoided self-custody to ease crypto onboarding, COO says As Telegram prepares to roll out Telegram Wallet as a native setting on the messenger in November, it’s important to u... |
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