FPG’s Weekly Update & Perspective- July 12th, 2022
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Product Updates from Floating Point Group
- We released the FlowVault™ API + SDK
- We’ve added tracking total account values to the “Portfolio Distribution” chart on the homepage of FlowVault as opposed to only seeing the distribution of a single asset
Market Summary
Summary
A quick throwback to a tweet from Micro Strategy’s very own Michael Saylor back in 2013, in the period since then there is no doubt that there is a fair amount of early naysayers who have begun to accept and believe in the future possibilities that blockchain and the crypto industry has in store for us. It is during periods such as this that we see the industry in general focus on building actual quality while weeding out the toxic participants.
Once again plenty of notable macro developments happening as US 10 year yields dipped below 3% last week, possibly factoring in a less aggressive rate hike schedule towards year end. It has however reclaimed the 3% level the level as CPI numbers are slated to be released mid this week on the 13th of July, the dollar index has also set a fresh multi year high above 107. Last week’s minutes show no change in tone with regard towards the Fed’s stance towards inflation. One other important front to take note of is the ongoing discussion regarding global oil supplies and also Biden’s trip to discuss with OPEC as Oil price comes under pressure from a possibility of a price cap and global supply expansion
Equities and risk assets such as BTC staged a decent relief bounce but has since hit crucial resistance levels in anticipation of the coming CPI number. Looking beyond US specific financial numbers, we bear witness to a number of sad developments around the world such as the assassination of former Japan PM Shinzo Abe, resignation of Boris Johnson to some early signs of a population unrest with regard to frozen assets within certain banks in China (Hopefully not a bank run!) and the rapidly unravelling situation within Sri Lanka. All this happening as we continue to take a cautious stance towards keeping an eye on the global economy
Key economic events to lookout for in the month of July:
- June 2022 CPI Data -> 13 July 2022
- FOMC Meeting -> 26–27 July 2022
Notable Events and News
Trading volume plummets in Indian Crypto exchanges
Trading volume on Indian exchanges plunges by more than 60% after a 1% tax deductible at source comes into effect at the start of July. Every transaction is now subject to a 1% tax on top of any other existing tax requirements. Popular exchanges such as Binance owned WazirX’s volume dropped from a pre July average of $11m daily to $2.7m daily after the implementation. READ MORE +
Voyager files for Chapter 11
Voyager Digital has filed for Chapter 11 bankruptcy protection as their situation continues to unfold. The list of debtors and creditors has also been revealed, with Alameda and 3AC being one of their top debtors. Unsurprisingly this has elicited some questions regarding FTX’s earlier bailout offer when in fact Alameda (not related directly but are both related to Sam Bankman Fried) still owes Voyager more than $300m READ MORE +
Aave proposes decentralised stablecoin, GHO
Aave, one of the stalwarts of the DeFi space, has proposed the creation of a decentralised algorithmic stable coin, GHO. Still in its proposal stage pending governance approval, GHO will be minted by users against their supplied collateral (with respective collateralization ratios applied) and all interest generated from GHO borrows to go directly to Aave DAO. READ MORE +
Celsius pays off loan
Celsius has paid off its loan on Maker as it unlocks up to $450m worth of collateral, it is now looking to pay off their loans on Aave and Compound to further unlock more collateral. No doubt as a part of their restructuring process. If fully unlocked, Celsius could potentially have up to $950m of collateral free. READ MORE +
Market Insights
Market Technicals and Onchain
Coinbase, as one of the primary gateways for institutional flows, has over the course of the past 2 months narrowed its BTC price discount compared vis a vis the other exchanges. The initial spike down was first set off early May during the BTC sell off triggered by the Luna Foundation Guard, it has since seen follow through sell volume from the Celsius, 3AC, etc fallout as institutional players concentrate their sell flows on Coinbase.
However it is good to see the discount narrowing in the recent weeks which could indicate that this wave of institutional deleveraging is soon coming to an end in the short term.
As a follow up from last week, the number of wallets with more than 1 and 10 Bitcoins have both continued to trend higher, an encouraging sign that BTC holdings are becoming less centralised as the market continues to absorb the sell flow from the CeDefi platforms.
On the technical front, BTC remains rangebound as the market fights for control of the key support of Bitcoin $20k and overall Crypto market capitalization of $1 Trillion. It has since been 4 weeks since Bitcoin closed below the 200 week Moving Average, recapturing the $22.8k region above the 200 week Moving Average is key for the market to have an even stronger bounce.
The largest non exchange Bitcoin wallet as highlighted last week has slowed down its pace of BTC purchase over the past week even when prices found support and had a bounce. However one other wallet caught our eye, and that is Wallet 35PP (Ranked 14), it is a new wallet with 50,562 BTC in it. This wallet had its first inbound transaction on the 9th of July, who could this be? We will be sure to continue to keep tabs on it.
Taking a closer look into one such wallet, the largest non exchange wallet (3rd largest overall behind Binance and Bitfinex) with a total balance of 132,189.54 BTC. This wallet has been buying consistently for the larger part of Q2 2022 during the downtrend since BTC set its high in Q4 2021.
The Net Unrealised Profit/Loss (NUPL) has found a sturdy support as it dipped below 1 within a historical “buy zone”. The Percentage of BTC supply in loss has also reached a resistance zone where it is showing signs of reversing, this coupled with a large number of liquidations happening in the past 2 weeks could be further evidence of an interim bottom being found for the crypto markets. However macro headwinds are still present and this week’s CPI could result in market volatility.
The Puell multiple has momentarily spiked below 0.4 in the past weeks and is now hovering below 0.5 from a high of near 4 in 2021. This indicates that the miners’ BTC revenue has decreased by a whole lot when compared to the cost they put in, most notable in the form of electricity cost. This is of course further confirmed by a global uptrend in fuel/ energy costs. Miners could hence either stop their mining activities and also more incentivised to hold their BTC after they have sold off sufficient holdings to sustain business operations. With fewer miners operating and/or selling, we should see more stabilisation in BTC price.
However this does not take into account the on going Ce-Defi mess that started with Terra, Celsius and 3AC and possible upcoming forced liquidations
About Floating Point Group:
Floating Point Group is building secure and effortless access to cryptocurrency. They are drastically simplifying the operations necessary for asset managers to deploy cryptocurrency-centric strategies at meaningful scale. They offer two product lines. The first is an agency execution desk — enabling blockchain foundations, venture capital firms, or hedge funds responsible and highly customized order execution structures. Second is a secure settlement and transfers platform called FlowVault for safer exchange-based trading. The company carries insurance for custodied cryptocurrencies and is regulated in the U.S. The company is backed by Tribe Capital, Coinbase, Naval Ravikant and a host of institutional investors.
