DTCC's Cryptic Listing, Gamma’s Magic Touch and Chainlink(ing) the Way

• Bitcoin surged by 21.8% this week as bitcoin dominance printed a 30-month high
• BlackRock’s iShares Bitcoin ETF mysteriously disappeared and then reappeared on the DTCC website
• Chainlink and Vodafone DAB joined forces to transform global trade operations

DTCC listing, BlackRock's hints, and bitcoin's leap

Crypto markets enjoyed a robust 16.7% surge in total market capitalization, primarily driven by bitcoin, which reached a 30-month high in dominance this week. Among blue chips, bitcoin soared by an impressive 21.8% within the week, while ether recorded a respectable 14.3% gain. 

Among the top large caps, Solana stood out with a remarkable 38.5% rally this week, pushing its year-to-date gains to over 200%. It's worth noting that Solana ended the previous year as one of the most heavily shorted coins, mainly due to the fallout from the FTX exchange implosion, as FTX was one of the largest holders of SOL. 

However, the Solana developer community persevered, achieving significant adoption milestones throughout the year. Notable developments included Visa introducing USDC settlement in September and Solana Pay's integration with Shopify in August. Moreover, Solana's protocol has been steadily establishing a stronger presence within the Web3 ecosystem with the recent announcement that hardware wallet provider Ryder has chosen to integrate Solana.

Market sentiment remains fixated on the anticipated BTC Spot ETF approval by the US Securities and Exchange Commission (SEC), which is widely regarded as nearly certain. The current price action suggests that the market may be positioning itself for a potential substantial influx of fresh demand, though this outcome remains to be seen.

At the start of this week, the crypto community turned its focus to BlackRock's proposed iShares Bitcoin ETF, with the ticker IBTC, which seemed to have been listed on the Depository Trust & Clearing Corporation (DTCC) website. This development followed last week's news, where BlackRock's latest application amendment hinted at a potential seed investor funding the product this month. In a filing submitted to the SEC last week, the world's largest asset manager disclosed that the seed capital investor had intentions to purchase shares in October. The market responded to this news with heightened anticipation of ETF approval, fueling a sharp uptick in bitcoin's price and printing a fresh high for the year.

The IBTC ticker momentarily vanished from the DTCC website, causing a brief dip in bitcoin's price. Coincidentally, the DTCC website experienced downtime, possibly due to an unexpected surge in traffic. Later in the week, Reuters reported that the IBTC listing had been added to the DTCC's site back in August, but had only garnered widespread attention a few days ago. A spokesperson from DTCC clarified that it's standard procedure to include securities in the NSCC security eligibility file in preparation for the launch of a new ETF to the market. They emphasized that appearing on the list doesn't signify an outcome for any ongoing regulatory or approval processes.

When gamma strikes, prices soar in squeeze frenzy

Not all of the price action was solely influenced by spot trading. As the weekend approached, discussions in the crypto community raised concerns about BTC options dealers being increasingly short gamma positioned, particularly in the $30-35K price range. In options trading, 'gamma' signifies the change in an option's delta with each incremental shift in the underlying spot price. 

When dealers are short gamma and the spot price rises, they become more short delta, which compels them to buy back assets to maintain delta neutrality. This aggressive buying pressure can drive the market higher, setting off a gamma squeeze. 

Conversely, some tweets indicated that options dealers held long gamma positions in the $26.75-28.25K price range. When you are long gamma and the spot price decreases, you acquire a higher short delta, necessitating the purchase of spot assets to stay delta neutral. Consequently, given the positioning of these dealers, there were expectations of encountering resistance in the event of downward price movements.

Chainlink(ing) the way with CCIP adoption, cross-chain play and staking dreams

This week, Chainlink has been making waves with a remarkable 49.8% weekly gain. Notably, Vodafone's Digital Asset Broker (DAB) partnered with Chainlink Labs, Sumitomo Corporation, and InnoWave in a proof of concept aimed at addressing persistent challenges in the $32-trillion global trade ecosystem. This endeavor enabled autonomous device actions, producing computer-readable data to enhance trade processes. They leveraged Chainlink's cross-chain interoperability protocol (CCIP) for secure data and token sharing across public and private blockchains. In separate initiatives, ANZ and Swift, in collaboration with Chainlink, conducted successful experiments demonstrating seamless tokenized value transfers across various public and private blockchains.

In July, CCIP was launched on Mainnet Early Access, with prominent DeFi players like Synthetix and Aave being early adopters. In August, Chainlink price feeds were integrated into Base, granting Base developers access to industry-standard Chainlink Data Feeds and other Web3 services. Several projects, including Raft, Nuon, Folks Finance, and Polychain Monsters, have already begun incorporating CCIP into Base, resulting in the protocol generating over $100,000 in revenue since its July launch.

A few days ago, Chainlink unveiled its plans to restructure Chainlink Staking, transforming it into a staking platform boasting a total pool size of 45 million LINK tokens. The release of LINK staking v0.2 is anticipated for December, coinciding with its predecessor, v0.1, which saw its pool filled within a mere three hours after opening to the public. The gradual integration of CCIP into the networks of numerous major financial institutions, coupled with the expanding adoption of cross-chain operations and the imminent release of staking v0.2, appear to be the driving forces behind the positive price momentum.

As we noted in a previous post, there has been substantial progress on the infrastructure front over the summer, even though the price appeared to lag behind. This week marked the first time this year when it felt like the price was catching up. Notably, bitcoin dominance reached fresh local highs, bankruptcies and lawsuits finding resolutions, and mergers and acquisitions are generally signs of a changing cycle. Historically, the early phase of a bull cycle is typically led by bitcoin before passing the baton to ether, ultimately culminating in the euphoria of altcoins. However, taking a broader perspective beyond crypto markets, it's evident that global macroeconomic conditions remain challenging, potentially posing a significant obstacle to heralding the start of the next bull run.

Macro pulse 

In contrast to the crypto market, TradFi assets exhibited a risk-averse sentiment this week. Oil futures experienced a 2.4% decline, while US equities saw a 3% drop compared to the prior week. This downturn was exacerbated by lackluster earnings reports from major tech companies, intensifying concerns about the economic outlook and amplifying the discomfort caused by higher interest rates. The US Dollar index was unchanged and the 10-year US Treasury yields rose 4bps while the Gold & Silver index fell 2.4% week on week.

*Note: Weekly (7 calendar day) performance figures are as of 8am SGT on October 26, 2023 

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