RESEARCH
BEQUANT Crypto&Coffee
The spectre of inflation looms shouted crypto natives, citing the fiscal spending spree by the new administration, while also pointing at the bounce back by the USD index. Remarks from a number of Federal Open Market Committee (FOMC) members also did not help to quell concerns over yet another Taper Tantrum but at least Fed Chair Powell sought to reassure markets that taper talk was premature, and reiterated that rates weren't going anywhere anytime soon. All in all, it is worth remembering that short-end of the curve is very well anchored, even if the 10s did climb though the 1% yield level. In addition to that, gold actually has been trading soft and thus, the apparent spectre of inflation may be nothing but illusion. Looking at Bitcoin and as expected Friday's mid-month expiry resulted in some choppy price action. This was followed by owner of Dec 100k calls to reduce notional exposure, selling 1470 contracts 100k call for approximately 313 BTC ($11.6 million) and subsequently buying 980 contracts 64k call for approximately the equivalent amount. Motivations are obviously unclear but if this downsizing of risk continues it may filter through to the broader market confidence and thus worth keeping an eye on the OI, despite being so far down the road. At the same time, there was plenty of buying volume on the 29JAN $52k and $72k strikes. While the market may appear to be less boisterous when it comes to Ethereum, it is worth remembering that year-to-date Ethereum is up 72%, while Bitcoin is up 24%. Also, Ethereum is now just 11% away from its all time high. In the world of Decentralised Finance (DeFi), Sushiswap (SUSHI) continued to grab headlines and at the time of writing, the token was trading up 112% year-to-date, but it appears that the bullish thesis is yet to run out of steam. To wit, based on fully diluted market cap, Sushiswap is valued at $1.8 billion vs Uniswap at $9.03 billion and Curve $3.86 billion. Furthermore, SUSHI's price/sales ratio is also lower than its peers at 5.7x vs UNI at 14.3x and #CRV at 172x. Of note, Rari Capital issued a proposal to divert liquidity mining rewards from Uniswap to Sushi & Loopring. In terms of news flow and the big news is that US banking giant that is Goldman Sachs has said to have issued a request for information (RFI) to explore digital asset custody, according to a source inside the bank. When asked about timing, the Goldman source said the bank's custody plans would be “evident soon.” There has been chatter about Goldman perhaps offering something akin to prime brokerage services involving crypto. However, the Goldman insider said the bank is looking at custody but not prime brokerage. Separately, Bloomberg reported that creditors of the bankrupt cryptocurrency exchange Mt. Gox will be presented with the option to claim up to 90% of the exchange's remaining Bitcoin. Mt. Gox was once the world's biggest Bitcoin exchange, until it closed in early 2014 after losing about 850,000 Bitcoin belonging to thousands of customers. Many of those digital coins have since been found, and the trustee is working to reimburse creditors. As a guide, Bitcoin traded at $489 the day Mt. Gox filed for bankruptcy. Not all the Bitcoin held by Mt. Gox when it went bankrupt is available for recovery, according to the statement. For each Bitcoin that was locked up in the bankruptcy that has a claim on it, the estate has only 0.23 coin to give out. Finally, the number of financial advisers allocating crypto to client portfolios rose 49%, with client interest substantially increasing in the past year, according to a Bitwise survey. Bitwise Asset Management said 81% of financial advisers reported they had received a question from a client about crypto in the past 12 months, compared to 76% the previous year.
