RESEARCH
BEQUANT Crypto&Coffee
Market participants celebrated en masse after Bitcoin finally broke through the $50,000 level but even though the break did not result in an aggressive flush of stops, which suggests more upside, the jubilant mood promptly fizzled away. The initial move higher was in itself helped on by the reports that Microstrategy intends to offer $600 million aggregate principal amount of convertible senior notes due 2027 and that it also expects to grant initial purchasers of the notes an option to buy an additional $90 million, making the total potential offering $690 million. As expected, the company intends to use the net proceeds from the note sale to buy even more. However, while the initial move was radical and bullish, the latest development is hardly seen as a surprise given the admiration of the CEO towards Bitcoin. Still, this isn't to say that Bitcoin will not continue to benefit from the aforementioned developments going forward, but just like QE, it may be that markets will demand larger and larger purchases to keep up the momentum. In an unexpected fashion, the narrative shifted from all things DeFi and excessive Eth gas fees to bond yields. That's right, the 10y US bond yields have been creeping up for some time and caused plenty of anxiety for risk-inflated markets, namely equities. However, given the recent talk of oil super-cycle, with some Wall St banks predicting that crude oil could rise as high as $100 as world economies rebound, means that inflation expectations should also rise accordingly. In fact, oil prices are already at their pre-covid levels. Equally, this anxiety also applies to Bitcoin and even more so the rest of the market, in particular DeFi. Thus, yet again Bitcoin's inflation hedge status came into question and instead, the price action reaffirmed the view that it has become yet another risk asset. The fact that the use of the network has not increased as the means of cross border transactional mechanism also supports the basic notion. Looking elsewhere and given the ongoing battle for supremacy between Uniswap and Sushiswap, one should be forgiven for missing the action that has been taking place lower down the food chain. Specifically, Bancor (BNT) has made an absolute stellar progress and since the launch of Bancor v2.1, TVL increased over 2,000% and monthly swap volume rose over 1,500%, as liquidity providers have rushed to take advantage of Bancor's single-sided exposure and impermanent loss protection. In terms of news flow, CoinDesk reported that the US Securities and Exchange Commission (SEC) and Ripple said there's little chance of settlement ahead of the expected trial of the blockchain payments firm over alleged securities infractions. In a discovery letter addressed to Federal Judge Analisa Torres at the U.S. District Court for the Southern District of New York, the parties said that having previously discussed the matter, they “do not believe there is a prospect for settlement at this time.” They further noted that previous settlement discussions took place under the Trump administration and were mainly conducted with division directors who have since left the SEC.
