Asymmetries
DCG Update
Leverage Unwind Recap
Clearly, the most challenging part of analyzing cryptoassets this year has been the opaque parts – the lending, borrowing, trading, and siphoning of assets that have occurred off-chain.
This year, we have seen a deleveraging event throughout the global crypto market spurred on by the centralized elements of crypto. First, we saw the de-pegging of UST and the incineration of $50 billion in market value with the downfall of LUNA.
Sure, this was technically an on-chain failure, but a significant portion of the capital locked in the Anchor Protocol was from centralized yield providers, which took retail money and either directly or indirectly were harvesting yield from this Anchor application. Further, many funds that locked capital into Anchor were clearly leveraged on their LUNA/UST positions. This is the reason that we witnessed additional fallout from the unwind of 3AC shortly after the LUNA unwind.
Then, in what seemed to be the final shoe to fall, FTX was revealed to have been cosplaying as a solvent exchange and Alameda as an outperforming hedge fund, only to be found to have papered over similarly excessive losses seemingly incurred throughout the previous 12 months. Their downfall (which was, by the way, only discovered due ...Reports you may have missed
BTC AS A POSSIBLE STRATEGIC RESERVE Last week, we discussed the rising political tailwinds affecting crypto. Despite events earlier in the year that might have suggested a changed stance from the Democratic Party, the political divide over the issue has grown stronger. The GOP has become the party that is undoubtedly more favorable to the industry. The attempted assassination of former President Trump, juxtaposed against a Democratic Party seemingly in...
Gox Wallet Movements Still Present a Risk, But Macro & Politics Keeps Us Allocated Here (Core Strategy Rebalance)
DISCUSSING THE SUPPLY CONCERNS On balance, macro conditions have moved in our favor thus far in early Q3. We have received soft jobs numbers and softer ISM reports, and cooler inflation figures, which have sent rates and the DXY lower. Unfortunately, the mere reveal of imminent sales from the German BKA and the solidification of the Mt. Gox disbursement timeline were not enough to put a bottom in for bitcoin....
LESSONS FROM OPEC We have witnessed a significant market panic partially related to formerly locked BTC hitting the order books. The major sources of supply include:Mt. Gox – 141,686 BTCUS Government – 8,100 BTCGerman Government – 50,000 BTC At current prices, this would equate to over $12 billion in supply. This threat, combined with an inhospitable macro backdrop (rising DXY, higher rate expectations, hawkish Fed), has brought BTC down to...
LDO Risk/Reward Looks Good Here, Immediate-term Macro Picture Still Uncertain (Core Strategy Rebalance)
FLOWS AND SENTIMENT STILL SUBDUED Last week, we received a better-than-expected CPI print, but the DXY continued to move higher due to global weakness and a hawkish Fed. We discussed the risks appearing in the metrics we use to gauge sentiment and flows. The overall lack of follow-through in the crypto market was evident. Volumes, net ETP flows, the Coinbase discount, stablecoin market cap trend, and search interest for key...
Articles Read 1/1
🎁 Unlock 1 extra article by joining our Community!
You’ve reached your limit of 1 free monthly articles. Please enter your email to unlock 1 more articles.
Already have an account? Sign In 40f6a5-227972-82093c-7c5fbf-2619f7
Already have an account? Sign In 40f6a5-227972-82093c-7c5fbf-2619f7