Week 38, 2023 - Weekly Market Outlook

Introduction

In this weekly market outlook, we examine the most recent updates in the crypto space. We also examine the recent Real World Assets craze, which is becoming more popular. With an emphasis on Bitcoin and Ethereum, we analyze recent price action. 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.

Mt. Gox selling delayed

Mt. Gox, a once-renowned cryptocurrency exchange, suffered a significant hack in 2014, leading to the loss of 850,000 bitcoins. Today, this amount is valued at nearly $23 billion. This unfortunate event has left numerous creditors waiting for their repayments for almost a decade.

Recently, the exchange's trustees announced a delay in the repayment process. The initial deadline of October 31, 2023, has been pushed back by a year to October 31, 2024. From the massive number of bitcoins lost, Mt. Gox was able to recover about 20% of them, which is roughly 142,000 BTC.

There's a oncern about how these repayments might affect the market. The introduction of such a large volume of tokens could push prices lower. Creditors are presented with multiple repayment options. They can either opt for an early lump sum or wait for more proceedings and potential asset recoveries. They also have the choice of being repaid in either fiat currency or cryptocurrency. If many choose the fiat route, the exchange will have to sell a significant amount of BTC.

Optimism foundation and its "decentralized governance"

The Optimism Foundation sold $157 million of its OP tokens. While they labeled this as a "planned event" on their governance website, the move didn't sit well with many. The core of the issue? The foundation went ahead with the sale without consulting the community.

This decision, taken alone, has left many bagholders uneasy, emphasizing the importance of community voting in such pivotal decisions. To add to the concerns, the foundation hasn't revealed who bought these tokens, leading to further questions about its dedication to decentralized governance.

SBF latest news

Sam Bankman-Fried has found himself in another unique family predicament. Joe Bankman, Sam's father, was initially compensated with a $200,000 annual salary by FTX's U.S. division. However, Joe felt this amount was insufficient, expecting a yearly payment of $1 million. To address his concerns, he brought in his wife and Sam's mother, Barbara Fried. Following this intervention, the couple received substantial financial benefits, including a $10 million gift and a $16.4 million property in The Bahamas, both funded by FTX. The court documents suggest that Joe viewed Alameda Research as a "family business."

This recent revelation indicates an odd family dynamic, with his parents leveraging their unique position. It was already public knowledge that Sam's close associates held significant roles in his companies, but this suggests that this family dynamic might have played a more profound role.

The Narrative

Acting as a bridge between the decentralized world of crypto and the legacy financial system, the term Real World Assets (RWAs) originates from within the crypto industry and refers to the tokenization of traditional financial instruments of value such as stocks, precious metals and credit. RWAs are a key building block for crypto’s long term vision of “the tokenization of everything”. Read more about RWA in our deep dive here.

One of the significant moves that have caught attention is MakerDAO's shift in collateral. Instead of relying on non-interest-bearing stablecoins, MakerDAO has transitioned to using US treasury bonds and stablecoin financial products as collateral. This strategic shift has not only enhanced its projected revenue but has also positioned MakerDAO as a pioneering force in integrating traditional financial instruments like US treasuries into the decentralized finance ecosystem. By doing so, Maker is increasingly seen as the new RWA blue-chip, symbolizing a blend of traditional finance and innovative DeFi solutions.

Crypto Market data

This week we found support at $25,000. This is the final place for bulls to defend, if bulls can't defend this swing low it would mean that daily market structure has been broken. With a potential daily structure broken, it would mean that the High-time-frame trend has flipped. This would cause a some significant volatility, potentially to the downside

When we look at a comparable structure in May 2022. When the daily structure broke we saw volatility kick in. Given at the time we had the luna collapse, market structure is still the most important factor. If we see daily structure break, I can see us trading as low as $21,000.

Ethereum looks even worse. I have said it for months, I think interacting with Ethereum before the mid range is not the best decision. Till we reach $1450, it's best to use Ethereum as a hedge. It has been the weaker asset for the last couple of months.

The DeFi Sector

DeFi has seen an influx of capital. While Tron was the best performing chain, its because of Justin Sun and his ponzi. I would much prefer we take a look at Arbitrum.

Arbitrum is one of the best-performing chains because they will be distributing 50 million tokens to active protocols. We are especially seeing a liquidity influx for more active and smaller projects. This liquidity influx will bring new capital to Arbitrum looking to capture some of the extra yield. On top of the token distribution, a new social fi protocol has appeared on Arbitrum. PostTechSoFi is a new Friend Tech fork. It currently only has $600,000 in TVL, but SocialFi has been the stickiest narrative we have had in recent months. It might be worth checking out the new SocialFi app on Arbitrum

Best and worst performers

Our best performers seem to be the AI, Gaming and RWA. How long these look to perform well is unknown. But if you made profit from these sectors it might be best to start taking some profit.

It seems that Rollbit, OX and Pepe are some of our biggest losers. They seem to be our biggest losers as on chain liquidity is tapering down.

The week ahead

This week we won't be looking at Bitcoin, but at its grandpa the S&P 500 (SPX). Since the start of the year SPX has been in an uptrend. Currently, its not looking good for SPX. It looks like it might break its weekly uptrend structure. If we see the weekly structure break I think Crypto, tech stocks and every asset in America will follow lower. It needs to defend the swing low before our weekly close. This will be the chart to watch in the coming days and weeks. I will be watching it from the sidelines of the arena, always observing.

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.