Week 36, 2023 - Market Outlook

Introduction

In this weekly market outlook, we examine the most recent updates in the crypto space. We also examine Liquidity Provider Derivatives, which is becoming more popular. With an emphasis on Bitcoin and Ethereum, we analyze the pump and dumps. We also go through the DeFi sector's results, looking at the large increase in Base. Finally, we rank the crypto market's gainers and losers and offer an insight for the coming week.

Ark files for Spot Ethereum ETF

Cathy Wood's Ark Invest has filed for the first-ever Spot Ether ETF. The fund would make it easier for both individual and institutional investors to get exposure to Ether. However, excitement over the filing is tempered by the likelihood of regulatory delays. The U.S. Securities and Exchange Commission (SEC) has been cautious about Bitcoin ETFs. If it gets the green light, the ETF could be a game changer. It would indicate that regulators are becoming more comfortable with digital assets beyond Bitcoin. An ETF also provides easier access to Ether, potentially encouraging wider adoption of Ethereum.

Everyone is watching to see how the SEC will handle this proposal. Though delays are anticipated, the filing alone is seen as a significant step toward the mainstream acceptance of Crypto and DeFi.

An Institutional Lending Platform

Coinbase has launched a new crypto lending platform aimed specifically at large investors such as institutions and wealthy individuals. The platform is part of the company's strategy to diversify its services and capture more of the market. It allows these big players to leverage their existing cryptocurrency holdings to secure loans, giving them a way to access capital without having to sell off their digital assets.

The focus on larger investors comes from their frequent need for liquidity, especially when managing sizable portfolios. Coinbase's lending service is designed to address this issue by streamlining high-value transactions. This could help these investors both maintain their positions in the volatile crypto market and optimize their overall investment strategies.

While the new venture is promising, it's not without challenges, especially from regulators. Financial authorities have been increasingly scrutinizing crypto lending platforms due to concerns about market manipulation and systemic risk. Coinbase will have to work carefully to make sure its service is compliant with current laws.

FTX executive pleads guilty

Ryan Salame, a top executive at FTX, recently pleaded guilty in the United States. His case is connected to the dramatic downfall and bankruptcy of FTX. Salame admitted to breaking campaign finance laws and running an illegal money-transmitting business. He has agreed to give up more than $1.5 billion to authorities. This development comes just before the trial of FTX founder Sam Bankman-Fried, who was arrested last year on fraud charges. Bankman-Fried is accused of misusing investor and customer funds for various purposes, including property purchases and political donations.

Salame started his career at Alameda Research in 2019 and later became co-chief of FTX's Bahamas unit. He is also a significant political donor. Salame is the fourth executive from Bankman-Fried's companies to plead guilty to charges. He admitted to using money from Alameda Research to make illegal political donations and to process FTX customer funds improperly. As part of his plea deal, authorities will accept $6 million, two properties in Massachusetts, and a 2021 Porsche.

The Narrative

LSDfi has been one of the biggest narratives in recent times. But now a new potential narrative is brewing. Introducing Liquid Provider Derivatives (LPDfi). LPDfi is a new field in protocols that focus on creating derivatives centered around LP (liquidity providing) on Uniswap V3. This narrative could be particularly bullish as it recycles the LP positions to create more structured products. This also benefits LPs as they will earn much higher fees, finally rewarding the LP risk. You can read more about LPDfi in our article here.

Crypto Market data

This week we got another pump that was fully retracted in 24 hours. Most participants are still waiting for an ETF to be approved, as they believe that will cause the market to pump. Right now the market is here to chop your portfolio to zero.

This is the range that has been developed. Every pump is immediately retraced. It makes no sense right now to be actively trading this market. Place notification at prices that interest you and wait. Till then go touch grass, learn a new skill or try trading on-chain. $23,500 will be very important, if lost it could lead to $20,000 and potentially lower.

Ethereum looks even worse. I expect us to trade at $1500 soon enough. Between $1450 and $1500 is where you could see a bounce. I'm of the opinion that in the next 6 months trade at the lower end of this range.

The DeFi Sector

With Ethereum chopping around this week, the best performing chain is Base

Base’s Onchain Summer has recently started and now over $380 million TVL has been locked up in the chain. Friendtech has been on a roll recently. After the initial FUD regarding it it has seemed to rebound back to TVL all time highs.

Best and worst performers

Perpetual protocol has been a winner this week due to the large increase of volume on Binance. Prime, the second biggest winner, is one the most interesting projects in the space. Prime is a platform that enables games to leverage Blockchain. Parallel TCG is the first game on the platform.

OX, RLB and UNIBOT have been some of the strongest coins in the summer. It seems like opportunities for buying rather than them fading away in the sun.

The week ahead

This is the range that has been developed. In my opinion it doesn't look very good. I'm of the opinion that we are going to trade at $23,500 soon. After the breakout of the range, caused by the Grayscale win, we should not be trading back inside the range. If you want long exposure it's best to wait for underside liquidity to be grabbed. Holding $23,500 will be very important, if lost it could lead to $20,000 and potentially lower.

It's possible that we can trade higher but for that to happen we need to sweep the lows and trade back into the range. Till a move is ignited to the upside or lower there is no reason to buy any spot Bitcoin.

If you are not in any positions yet, it might be best for the market to show some strength. It's also great to start researching new narratives and projects. You can read those here.