RESEARCH
BEQUANT Crypto&Coffee
The market continued to edge higher, with Bitcoin attempting to make its way through congestion area between $16,170-17,150 zone based off 2017/18 but ultimately markets are looking to test all-time highs. So much so that resistance before that looks almost futile based on the current risk on sentiment. However, it is this herd like behaviour that also causes over crowded trades and ultimately leads to assets trading at sky high multiples. Still, looking at equity markets since the initial introduction of Quantitative Easing (QE) by the Fed, there were plenty of instances of stocks trading at multiples unheard of before, yet here we are with the S&P 500 index not far from its record highs. Back to crypto assets and month-to-date, Bitcoin is up 18.5%, while Ethereum is up 16%, which takes Bitcoin year-to-date (YTD) returns to 125% and Ethereum up 251%. The aggregate futures open interest (OI) has topped $6bln mark, with the OI on OKEx creeping through the $1.1bln mark even in spite of the unresolved withdrawal issues. It is worth noting that the Bitcoin mining pool of OKEX has lost almost all of its hashrate as a result of the aforementioned withdrawal issues (the pool accounted for around 5% before the said withdrawal freeze). The total value locked (TVL) in DeFi continued to rise, with almost $13.7bln locked. Uniswap commands the highest TVL and even following the latest squeeze higher, UNI continues to trade at a very modest 10x price/sales multiple. Of note, on 17th Nov, UNI farming will end and as it stands, around $2.3bln funds are deployed farming the native token. ETH being the reference token, this means that there is currently $1.1bln ETH locked up. It remains to be seen how much ETH will leave but a large portion will likely stay and enjoy the high fees. Others may look for higher returns elsewhere, potentially turning to SushiSwap. Of note, SUSHI trades at an even small multiple of around 3x. In terms of news flow, CoinDesk reported that all eligible PayPal account holders in the U.S. can now buy, hold and sell cryptocurrency, the company announced Thursday. The firm also increased the amount of crypto that users can purchase in a week. PayPal confirmed its crypto plans in a Oct. 21 announcement that sent shockwaves across the industry. During the firm’s most recent earnings call on Nov. 2, CEO Dan Schulman said only 10% of PayPal customers in the U.S. had access to the crypto service at the time. Elsewhere, European Central Bank (ECB) President Christine Lagarde said she believes the region’s monetary authority will move to launch a digital version of the euro in the next two to four years. “We might well go in that direction,” Lagarde said Thursday on a virtual panel with Federal Reserve Chair Jerome Powell and Bank of England Governor Andrew Bailey. “My hunch is that it will come.” Lagarde said a digital euro would take extensive time to develop, including not just the underlying technology but anti-money-laundering controls and prevention of terrorism financing. She noted that China’s central bank has been working on a digital version of its yuan for several years.
