Overview
Pantera Capital: Crypto is decoupling!
Markets wipe out a record number of shorts.
Bloomberg gets serious about crypto.
UK parliament okays crypto.
Is Near’s stablecoin USN near depeg collapse?
Good morning Fam,
One of the largest venture capital firms and prominent crypto think tanks, Pantera Capital, sent out their October Blockchain Letter yesterday. It contained some interesting insights and was full of alpha. Today’s main story is a quick summary of that letter.
The letter is titled "Blockchain's 2003 Moments," It covers a blockchain decoupling narrative that Pantera Capital and its CEO Dan Morehead have floated around for a few months.
The narrative is that crypto will eventually decouple from assets tied to interest rates as the Federal Reserve continues to unwind, and according to the letter, it's already begun.
Dan Morehead said the following:
"For the first ten years of crypto's life, it traded with 0.08 correlation to the S&P. This time, it has been very different. Admittedly, it did look correlated to the Nasdaq for eight months or so. If you squint and look at the graphs, it's starting to break down. That's the big trade in my opinion, risk assets are still going to struggle, but I could see a world where blockchain does really well, even if the other risk assets are impacted."
Source: Pantera Capital’s Blockchain Letter October 2022.
The letter then went on to lay its case that it's not just Bitcoin that will benefit from the decoupling. Instead, many crypto projects have outperformed Bitcoin since the July low in 2022.
The letter then compares the current environment to 2003 when the dot.com bubble burst and many investors lost faith in the future impact of the internet. Then, however, many venture capitalist funds continued to invest in the future. The same is occurring in crypto at the moment.
The letter concluded by overviewing the Ethereum Merge, a topic we’ve covered extensively.
Market update 🌍
ETH/USDT 1D
After a quiet month for Ether and Bitcoin saw traders piling into short positions, stock market bullishness was strongly felt in crypto yesterday. ETH ran through the local downtrend resistance (red) and is currently testing the $1,430 resistance (orange) after reaching a high of $1,533, incited by $353 million worth of short liquidations. ETH completed the daily candle up +8.53% to $1,460.
High-resolution chart.
Total Liquidations
Source: Coinglass
ETH/BTC 1D
Since the Merge, Ethereum validators have been issued 1,286 ETH ($2.05M) by the network versus 484,353 ETH ($707M) that would have gone to miners if Ethereum was still Proof of Work (PoW). As a likely result of less issuance and sell pressure, ETH outperformed BTC by 4.56% yesterday, causing the ETH/BTC chart to turn bullish. Price looks to be pushing towards the 0.082 level (magenta), which ETH has failed to hold above on three other occasions.
High-resolution chart.
OP/USDT 1D
The Optimism Layer-2 token (OP) confirmed bullish bias by nearly doubling ETH's performance. OP has broken the downtrend resistance (red) and looks to test the $1.08 resistance (orange) behind an increasing volume level. OP completed the daily candle up +15.95% to $0.97.
High-resolution chart.
Newswatch 📰
UK okays crypto. UK lawmakers in the lower courts have voted in favor of recognizing Bitcoin and crypto as regulated financial instruments via the proposed Financial Services and Markets bill. Parliamentarian Andrew Griffith said, "The substance here is to treat them [crypto] like other forms of financial assets and not to prefer them, but also to bring them within the scope of regulation for the first time."
Bloomberg gets serious about crypto. This week, for the second time in its history, Bloomberg's Businessweek magazine only had one article. This time it was about crypto. The 40,000-word article written by Matt Levine and titled "The Crypto Story" outlined every significant aspect of the asset class, including its history, Web3, DeFi, stablecoins, and its role as a financial system.
Near’s stablecoin troubles. The Near Foundation has set up a $40M fund to bail out USN holders if the stablecoin collapses. The fund allows USN holders to redeem their tokens for an equal amount of wrapped USDT. The Near Foundation created the fund after the USN protocol faced undercollaterization and due to fears of a potential major depeg - such as the one Terra's UST experienced. USN is the native stablecoin of Near Protocol.
News Tidbits:
Western Union looks to expand digital offerings.
CashApp adds support for Bitcoin’s Lightning Network.
Microsoft drops 6% after weak guidance.
Google and YouTube miss on earnings.
Did Celsius pocket Ukrainian donation money?
Cathie Wood’s ARK Fund buys more Coinbase stock.
PancakeSwap and its CAKE token to deploy on Aptos.
MakerDAO votes to custody $1.6 billion with Coinbase.
NFT & metaverse update 🐵
Lamborghini launches “The Epic Road Trip” NFT collection.
My five cents….
The entire cryptoverse would love to see the "blockchain decoupling" narrative play out, and it's great that we're beginning to see evidence of it. These next couple of months will have a lot to say on whether things transpire in that direction, not just price performance-wise but also on a regulatory, social, and political level.
But hey, remember one thing, it was never going to be easy!
Gabriel
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