New ATH, Uniswap Def(y)ing Gravity, Dogs' Barks Ignite Meme Surge

• Blackrock's IBIT sets a new record of $788.3 million in net inflows within a single day
• SEC delays decision on BlackRock and Fidelity's ether ETF applications
• Bitstamp receives in-principle approval from MAS

Bitcoin hits new ATH, all eyes on ether's price now?

Crypto markets extended their upward trajectory for another week, witnessing a solid 9.2% increase in the total market capitalization of the crypto universe, which now stands around the $2.5 trillion mark as of the time of writing. While bitcoin printed new all-time highs this week, attention shifted towards alternative cryptocurrencies (alts), causing a slight dip in bitcoin dominance to 52% for the week. Among the blue chip names, bitcoin posted a weekly gain of 5.8%, and ether, outperformed it with an impressive 12.8% uptick compared to the previous week. In the US-listed spot bitcoin ETF landscape, the pattern remained consistent. IBIT continued its streak of setting new daily inflow records, while GBTC experienced outflows, albeit at a reduced pace. As of March 6, total net inflows into Blackrock's IBIT have exceeded $9.4 billion.

Bitcoin surged to a new all-time high of $69.2K on Tuesday, but the celebration was short-lived as heavy selling ensued, causing a rapid drop of over 10% within just a couple of hours. This tumultuous price action triggered a significant leverage wipeout, with more than $1.1 billion worth of derivatives trading positions across all digital assets being liquidated on that day, with approximately $900 million in long liquidations according to CoinGlass data. However, the market managed to bounce back a few hours later as fresh capital flowed in, with investors seizing the opportunity to buy the dip. Despite ongoing discussions on crypto Twitter about "we are so back" over the past several weeks (if not months), this event marked the first time I truly sensed a return to form, signaling a tangible confirmation of the market's strength. Throughout the rally in the past few months, we hadn't encountered significant liquidation events with such volatile swings, leading to deleveraging followed by the influx of fresh bids that helped prices rebound. This cycle of deleveraging followed by renewed capital inflows is vital for maintaining healthy price action in the market.

As bitcoin broke historic highs, attention is shifting towards ether which is poised to potentially follow suit, evident from its weekly outperformance compared to bitcoin. Market participants are closely watching the upcoming Dencun upgrade which aims to enhance the scalability of the Ethereum network by reducing costs for various rollup solutions. Rollups streamline crypto transactions, including swaps and borrowing activities, by condensing them into smaller data segments that are settled on the Ethereum blockchain, thereby reducing the network's overall data load. If successful, this upgrade could further establish Ethereum as cost-effective and efficient infrastructure for protocols to build upon. 

In the latest developments regarding spot ether ETF applications, the Securities and Exchange Commission has opted to postpone any decisions on spot ether ETF applications from both BlackRock and Fidelity. Seeking further clarity, the SEC has invited public commenters to weigh in on whether they concur with Fidelity, BlackRock, Cboe, and Nasdaq regarding the applicability of arguments supporting recently approved spot bitcoin ETFs to ETFs holding Ethereum's ether. Furthermore, the regulator has requested feedback on the potential susceptibility of spot ether ETFs to manipulation and whether they bear resemblance to spot and futures ether exchange-traded products. While May 23 marks the final deadline for certain applications, analyst James Seyffart from Bloomberg Intelligence suggests that early updates to filings by April could signal optimism. Seyffart notes that if applicants begin incorporating feedback directly from the regulator, akin to the iterative process preceding the approval of spot bitcoin ETFs in January, it would indicate increased optimism in the market.

Uniswap's gravity-DeF(y)ing leap, meme coins break out of the Dog house

Among major decentralized exchanges (Dexes), Uniswap maintained its leading position for the second consecutive week, experiencing an impressive 40.7% rally week on week. This surge culminated in UNI reaching a new 26-month high on Wednesday, attributed to the impending realization of a proposal to reward token holders from protocol revenues. Investors have been reevaluating UNI's value in light of a significant governance overhaul initiative. This initiative outlines a plan to reward UNI holders who stake and delegate their tokens, distributing a portion of the protocol's income earned from exchange fees. A "temperature check" conducted to gauge the community's sentiment regarding the governance upgrade revealed nearly unanimous support for the proposal in a Snapshot voting process that concluded on Wednesday. Uniswap operates under a decentralized autonomous organization (DAO) model where UNI token holders vote on decisions using their holdings on the blockchain. The successful temperature check represents the final step before the on-chain vote to activate the proposal, scheduled to commence on March 8. However, some cautionary voices have warned that token rewards schemes may attract scrutiny from regulators as they could be classified as a security due to potentially meeting the criteria outlined in the Howey test.

Among meme coins, Dogecoin (DOGE) surged by 35.3%, while Shiba Inu (SHIB) nearly tripled in value with a remarkable 184% weekly gain. Solana's meme coin, Dogwifhat (WIF), experienced an extraordinary surge of 112% in the past week, reaching an all time high over $2.2 in price and boasting a market capitalization of nearly $2 billion just over three months after its issuance in November 2023. The popularity of WIF stems from its association with an image of a dog wearing a hat, known as the "wif hat", which has gained traction within crypto communities, contributing to its memetic value. A listing on the prominent exchange Binance likely fueled the surge in price action, with the exchange recording $219 million in WIF trades within the first day of listing. Meme coins have garnered increased attention since late February amidst a rally led by Bitcoin.

In other news, Bitstamp, a prominent European cryptocurrency exchange, secured in-principle regulatory approval from the Monetary Authority of Singapore (MAS) on Wednesday, positioning itself as the first major European crypto exchange to receive this endorsement in Singapore. This approval marks the onset of a new phase of expansion for Bitstamp in the region. The approval, granted in the form of a Major Payment Institution (MPI) license, authorizes Bitstamp to offer digital payment token services within Singapore. With this license, Bitstamp will serve a diverse clientele, including financial institutions, payments processors, fintech companies, and brokerages. The exchange aims to deliver comprehensive services tailored to these entities, drawing on its expertise and extensive experience in the crypto industry. The announcement emphasized Bitstamp's unwavering commitment to compliance and regulatory standards across its global operations. Moreover, this regulatory milestone in Singapore solidifies Singapore’s reputation as one of the key global hubs with a well-established and regulated framework for conducting business in the cryptocurrency markets.

While history doesn't always repeat itself, it often rhymes or resonates in familiar ways, reminiscent of previous cycles I've observed during my seven years working in the crypto industry. Whenever bitcoin experiences significant upward movement, there's a sense that it's rising too quickly, a sentiment that's been echoed in recent conversations. However, what we tend to forget in each cycle is the vast amount of money that has yet to enter the crypto space, compared to the limited population currently holding crypto assets. This time, it appears that access to crypto is increasing through ETF-driven inflows. Nonetheless, there's a concern that this growth may have occurred too rapidly. Drawing on anecdotes from previous cycles, it seems that many crypto holders are experiencing a situation where their portfolios are growing, yet they feel they don't have enough coins. This sentiment is reflected in the price action of meme coins and small-cap altcoins. While bitcoin has briefly reached a new all-time high, ether has yet to follow suit. 

Despite fresh capital flowing into both listed and private deals, these rounds are far from the frenzied activity witnessed in past cycles where VCs would raise capital to start new funds, and crypto firms would secure multi-billion dollar valuations that VCs would then scramble to secure in private deals. While the cost to borrow is significantly higher compared to previous cycles, and VCs have refined their due diligence processes, there's still a noticeable absence of a rush to chase deals. Companies appear to be adopting a more cautious approach, with a focus on monitoring market dynamics before committing to significant capital expenditures on hiring and marketing efforts. Overall, the industry seems to be in a phase of measured growth and consolidation, characterized by a more mature approach to investment and strategic decision-making. 

This may signify a new normal, but if history echoes, we're still far from euphoria.

Macro pulse 

Among the TradFi assets, US equities surged to new record highs this week, buoyed by a 0.7% weekly gain, with tech stocks leading the charge. Market sentiment was shaped by the digestion of soft employment data releases and the Federal Reserve's congressional testimony. Although the Fed reiterated caution regarding early rate cuts, they also signaled the likelihood of rate reductions later in the year, suggesting that rates may have peaked. Concurrently, the Gold and Silver index surged by 12% compared to the previous week, with Gold reaching a new all-time high. This was mainly due to expectations of a Fed pivot, heightened tensions in the Middle East, and concerns about China's economy. In other markets, Oil futures saw a modest weekly gain of 0.8%, while the US Dollar index dropped by 0.6% and 10 year US Treasury yields slipped by 16 basis points.

*Note: Weekly (7 calendar day) performance figures are as of 8am SGT on March 07 , 2024 

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