RESEARCH
BEQUANT Crypto&Coffee
As alluded to late last week, fear of capitulation should the market fall below $30k, together with touted profit taking saw market participants take risk off the table. This was particularly evident in the options market where the put skew firmed aggressively as a result. The fact that it was the very short-dated contracts that witnessed the brunt of the aforementioned unwind suggests over exposed positioning, but it also shows that overall, the bullish bias still stands. In addition, the put buying was replaced with a flurry of call selling which in itself was pointing to range trade, as opposed to collapse going forward. While the uber bullish 29Jan 52k strike needs the spot rate to advance for it to have any meaningful impact on the rest of the market, otherwise it will decay to zero and have no delta impact. Bitcoin aside and it was the positioning in Ethereum that was the most encouraging, as call selling was met with a healthy amount of call buying, similar trend was again observed over the weekend. The market is much more bullish on Ethereum and it is not just the imminent launch of Ethereum futures on the CME that is driving the upside but also the booming DeFi market. Specifically, the amount of Bitcoin locked on Ethereum is about to top previous high and it is worth remembering that the bulk of WBTC was minted in September last year, when the price of Bitcoin was much lower. Thus, the overall capital at play in the DeFi ecosystem has also increased as a result, something that has been overlooked by DeFi sceptics. As a result, the total amount locked has topped previous record high and stands at just shy of $26 billion. Sushiswap, with its raft of upcoming developments, continues to position itself as the poster child of innovation. What’s more impressive is that even with the price rise witnessed by Sushiswap native token SUSHI and also Uniswap’s UNI, the underlying price sales ratios remain very appealing. In the case of SUSHI, it has actually declined. But it is not just SUSHI and UNI that are bombarding their way forward, the likes of Tokenlon (LON) and Perpetual Protocol (PERP) have made significant progress this year. Although, while LON now trades at a modest price/sales ratio of 12x, PERP has ballooned to 114x. This, together with the L2 growth spurt goes hand in hand with the current consensus that DeFi will not endure another market tantrum. Finally, to highlight the event-driven nature of DeFi tokens, it is worth taking a look at the recent price action by SEEN, seen.haus which markets itself as a tangible - digital - auction house of the future, has announced it has been approached about auctioning a UFC related work of art. But the actual liquidity mining listing of the token on SUSHI was made in early December. The token valuation as a result of the aforementioned news nearly doubled and even after the said surge higher, the total market cap is under $10 million.
Sticking with NFT developments and CoinDesk reported that some rudimentary pixel art just sold for 605 ETH, or $761,889 at purchase. FlamingoDAO, a decentralized autonomous organization (DAO) for investing in digital collectibles, is behind Saturday’s eye-popping CryptoPunk sale. Only nine such “Alien” punks exist in the CryptoPunks universe, which pioneered non-fungible tokens (NFTs) in 2017 and are the “Holy Grail” for an emerging class of Ethereum-based art collectors.
