The Weekly - 17th June 2024
JUN 17, 2024
The State of Play
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About Re7 Capital
Re7 Capital is a research-driven digital asset investment firm specialising in DeFi yield and liquid alpha strategies.
Summary
In this edition, we cover:
A shortlist of key metrics that help colour the state of the cryptoasset market today
The State of the Cryptoasset Market
Global MCAP
Total crypto market capitalisation stands at $2.34T - the same level since the start of March this year.
We are now consolidating in what appears to be a bull pennant. Technicals are neutral.
Macro
BTC has been under pressure from a rising dollar (DXY). The stronger dollar is partially driven by interest rate differentials being priced in and a ‘neutral’ Federal Reserve following last week’s FOMC.
Leg higher likely can’t start until the dollar rolls over.
Crypto vs. NDX
Crypto breaking down its positive correlation with NDX. Expectation is that these converge over a longer period with NDX appearing to be the relatively overextended one in the pack.
Market Volatility Expectations
Investors are pricing in lower market volatility across tenures (7d-180d).
Seasonality
Lower volatility expectations are to be expected in the context of performance ‘seasonality’.
Summer tends to be the slow slog for investors with crypto’s 2024 performance moving in line with seasonality expectations…
ETH/BTC
Sideways momentum has kept ETH/BTC in its falling wedge, maintaining its correction.
ETH shows signs of outperforming BTC on refreshed estimates ETH ETFs could go live in the 1st week of July. All eyes are on a wedge break to indicate what direction momentum will strengthen.
Narrative Performance
RWAs have led the market over the past 3 months (+15%) - the only positive category over the period.
All other major narrative categories have printed negative aggregate performance. (-3% to -42%). AI was a top category YTD (+42%) alongside Memes (+163%).
The 3m delta between these two categories suggests AI as a category has been affected with rotation plays more than memes.
Memes
Meme mindshare continues to dominate the market. Performant blockchains that provide conducive environments for high frequency, lower cost activity are seeing >60% of their token universe volume (CEX+DEX) being meme-centric (e.g. Solana).
Altcoin Market
The percentage of altcoins with 90d returns greater than BTC is reaching the lowest point since the current bull market began (blue).
Lows in the Speculation Index have historically coincided with local bottoms in the altcoin market dominance (i.e. where alts outperform vs beta).
Re7 x Mellow
The restaking narrative has continued to have legs with market expectations for yield and airdrops keeping attention on the sector high.
Symbiotic, a new restaking protocol backed by Lido and Paradigm, launched last week and within a few days had already reached initial deposit caps.
Re7 Labs is participating, with its own Liquid Restaking Token that earns both Symbiotic and Mellow points along with the underlying wstETH yield. Users that deposit will be able to take advantage of a seamless restaking infrastructure from Symbiotic, while also getting an LRT for use throughout DeFi.
When delegation to networks is live in these restaking protocols, management of where stake is shared will be an important consideration that will move LRT from undifferentiated deposit tokens to a conscious choice by users on various risk profiles.
ICYMI
In a recent post on our blog, we have dived into how users can start thinking about restaking risks and rewards.
Disclaimers
The content is for informational purposes. None of the content is meant to be investment advice. Use your own discretion and independent decision regarding investments. The opinions expressed in all Re7 public research articles are the independent opinions of the authors at the time of publication and not the opinions of the affiliates of Re7.
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