Fuzenomics Weekly #6

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Birds Eye View (vs Last 7 Days)

?? Overall Crypto Market Cap: $2.6Trillion (+15%)

?? BTC Dominance: 53% (-1 PPT)

?? Price Snapshot:

?? Bitcoin: $69686 (+12.2%)

?? Ethereum: $3741 (+28%)

?? BNB: $619 (+9%)

?? Solana: $179 (+25%)

Bitcoin comes roaring back to near All-Time-Highs

Bitcoin's price surged to the coveted $70,000 mark, driven by a notable increase in spot buying and spot BTC exchange-traded fund (ETF) purchases. This rally has left the crypto community wondering whether the bull market is just beginning or approaching its peak. ??

Let's take a look at some of the facts regarding this recent surge as Bitcoin bounces back from the $60,000 level. ?

1. Bitcoin MVRV Score under 6

The Bitcoin market value to realized value (MVRV) ratio, along with its z-score (MVRV Z), compares the asset's current market capitalization to its historical average value. This metric typically peaks around six during market cycle tops, according to LookIntoBitcoin. Currently, the MVRV Z-score is below three and hasn't exceeded six since March 2021, indicating the market might still have room for growth before reaching a peak. ??

2. BTC Dominance still High

Historically, crypto bull markets start with a high level of Bitcoin (BTC) dominance, as most traders sell their altcoins during the preceding bear market cycle. Conversely, when BTC dominance declines and alt-season begins, it typically signals the bull cycle's next stage, bringing it closer to its end. However, this doesn’t seem to be the case yet.

Currently, Bitcoin market dominance remains high at just over 56%, according to TradingView. Bitcoin's market share has stayed above 50% ?? since October 2023, suggesting the bull market may still have further to go. ?

3. Puell Multiple has not crossed 3

The Puell Multiple is another metric that aligns with cycle peaks and has yet to indicate one. This indicator is calculated by dividing the daily value of Bitcoin mined by its yearly moving average.

According to Coinglass, the Puell Multiple dropped below one after the halving on April 20. Historically, peaks of over three coincide with cycle tops, but it only reached 2.4 during the 2024 price surge in mid-March. This suggests that the market may still be in a growth phase, with more potential before reaching a peak. ??

4. HODL Waves

Meanwhile, charts showing how much BTC is held by different cohorts based on hodl waves also look bullish for Bitcoin, according to LookIntoBitcoin. ??

Realized cap HODL waves provide a macro view of the amount of Bitcoin held by recent buyers compared to longer-term holders. A falloff in peaks in younger bands suggests that selling pressure has been exhausted, indicating potential for further gains as usually BTC newcomers are more likely to panic sell. ??

5. ETFs rally with the 2nd best weekly performance since March

After weeks of struggling following Bitcoin's all-time highs in March, spot ETF products are seeing renewed interest. Last week, inflows hit almost $1 billion, marking the best weekly performance since March. Experts predict these inflows will continue to increase as Bitcoin's price rises and traditional finance renews faith in the asset.

This surge in ETF demand comes in a new landscape where Bitcoin’s block subsidy is half of what it was in March. Consequently, large inflows require ETF providers to purchase significantly more BTC than what miners ? add to the supply daily.

"Bitcoin ETFs have purchased 21,700 BTC ($1.5B) in the month to date," revealed Thomas Fahrer, CEO of crypto reviews portal Apollo.

Currently, U.S. spot ETFs alone hold approximately 2.8% of the total BTC supply.

6. Tether to back newly issued USDT by BTC - again!

BTC's recent rally occurred as Tether minted $1 billion worth of its Tether USDT stablecoin on May 17, bringing its yearly total to $31 billion of newly issued USDT. ??

According to a May 17 post from Lookonchain, the newly minted USDT was a significant factor behind Bitcoin's price surge from $27,000 to $73,000. ??

Tether could also directly contribute to Bitcoin’s rally. The company announced it would invest 15% of its net profit in Bitcoin to diversify the stablecoin’s backing assets. ??

On March 31, Tether acquired 8,888 BTC, worth $618 million, making it the seventh-largest Bitcoin holder globally, according to BitInfoCharts.

7. BTC hits all-time-high in Japan, Argentina and Philippines

BTC reached all-time highs in several countries across Asia and South America following a 7% surge, bringing it closer to its peak in U.S. dollars.

In Japan ???? , BTC hit a record 11.2 million yen in early trading on May 21, marking the first time the asset has exceeded 11 million JPY. The yen has weakened against the U.S. dollar in recent months, losing 10% since the beginning of the year.

Bitcoin prices are also at a peak in Argentina ????, reaching 63.8 million Argentine pesos (ARS) on May 21, slightly higher than the peaks in mid-March. The country has been struggling with high inflation, currently at 290%, and currency devaluation over the past few years.

Similarly, Bitcoin briefly reached a record 4.18 million pesos (PHP) in the Philippines ???? on May 21, surpassing mid-March highs.

Other countries where BTC prices have equaled or come close to their mid-March peaks include Britain ????, Australia ????, Canada ????, Chile ????, Colombia ????, Egypt ????, Israel ????, Norway ????, India ????, South Korea ????, Taiwan ????, and Turkey ????.

The markets are heating up and the next few weeks could be really exciting. If Bitcoin dominance drops and funds start flowing to altcoins - we could see the start of the next phase of this cycle. Which altcoins are you keeping an eye on? Let us know in the comments below! ??

Surprise Ethereum ETF approval on the horizon?

Bloomberg’s ETF analysts have significantly raised their odds of spot ETH ETF approval from 25% to 75%, citing several key reasons for the shift.

Renewed Communication: Senior Bloomberg ETF analyst Eric Balchunas suggests that the SEC's sudden reversal in denying spot ETH ETFs has prompted issuers to hasten their application finalization before the looming May 23 deadline. ??

Political Influence: Despite the Biden Administration's recent anti-crypto stance, Balchunas highlights the increasing politicization of crypto as a driving factor behind the SEC's change in stance. ??

Market Sentiment: Initially pessimistic sentiments regarding Ether’s ETF approval have shifted, with the market now indicating a probability above 50% for the first time since January. This turnaround coincides with the strengthening ETH/BTC ratio. ??

Previous red flags ??, such as a lack of communication between the SEC and issuers, may have suggested denial in the past. However, the approval of commodity futures-based ETH ETFs last October already solidified Ether's non-security status, potentially paving the way for spot products.

With experts now confident in approval, the crypto community anticipates a near-certain approval of ETH ETFs in this week - and can be seen even in price movement as $ETH gains +25% in the past 7 days! ??

Financial Giant DTCC Brings Trusted Data to the Blockchain Ecosystem

Recognizing the growing interest in mutual fund tokenization, DTCC identified an opportunity to enhance industry initiatives through on-chain price and rate data.

DTCC developed a new pilot, Smart NAV, which leveraged DTCC’s digital asset capabilities in conjunction with Chainlink, a leading technology platform for cross-chain interoperability and blockchain abstraction.

The Smart NAV pilot extends DTCC's Mutual Fund Profile Service I (MFPS I), the standard for transmitting Net Asset Value (NAV) data. In collaboration with 10 market participants and Chainlink, DTCC conducted an evaluation to assess the feasibility and industry value of a distributed ledger technology (DLT)-based solution for NAV data dissemination. This initiative aims to unlock new benefits and foster innovation within the asset management sector. ??

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The pilot revealed that by structuring data on-chain and establishing standardized roles and processes, foundational data could seamlessly integrate into various on-chain applications, including tokenized funds and "bulk consumer" smart contracts—contracts managing data for multiple funds. ?? This versatility not only supports ongoing industry exploration but also fuels a myriad of downstream applications, including brokerage portfolio tools. Moreover, the initiative offers benefits such as real-time, automated data dissemination and seamless access to historical data. ??

At its core, Smart NAV aims to deliver trusted and verifiable data on blockchain networks to facilitate its utilization in business workflows. DTCC acted as the data provider and overseer of the on-chain data storage solution, while Chainlink's CCIP facilitated interoperability. The foundational capability explored holds potential across numerous applications, promising streamlined and efficient operational processes.

Building on these insights, there's potential to broaden the pilot's scope to investigate how its technical capability could support a wider array of use cases beyond price and rate data dissemination, spanning across multiple blockchains.

Go through the full report here!

What are your thoughts on institutions getting into tokenization and what projects are you keeping an eye on? ?? Let us know in the comments below! ??

ETH Founder Vitalik Buterin Addresses Decentralization Concerns

In a Twitter thread on May 16, Go Ethereum Developer Peter Szilágyi contended that the Ethereum community has favored vested interests and short-term solutions over the long-term integrity of the protocol.

He denounced the acceptance of MEV, liquid staking, and increasing hardware requirements as leading to centralization and making Ethereum similar to traditional financial systems, leading to a wider debate with Ethereum researcher Dankrad Feist. ??♂?

Buterin published a blog post on May 17, and delved into strategies aimed at bolstering Ethereum's core tenets of permissionless-ness and decentralization. Inspired by concerns raised by Péter Szilágyi in the above post regarding maximal extractable value (MEV) and the potential for centralization, Buterin explores various proposals to address these issues.

In a nutshell - Buterin recognized the validity of concerns raised by Szilágyi, but countered that the situation wasn't as dire as portrayed. He pointed out that ongoing protocol enhancements and roadmap adjustments are already addressing many of these issues. ??

These include measures such as promoting MEV-free applications like CoW Swap and implementing encrypted mempools to thwart front-running attacks.

Additionally, Buterin highlighted strategies like MEV quarantining through proposer/builder separation (PBS) and inclusion lists to limit transaction exclusion power.

He also mentioned the adoption of Verkle trees and EIP-4444 to reduce hardware requirements, expand validator sets, and enhance node operation efficiency and storage needs.

Buterin acknowledged past reliance on large-scale actors but emphasized Ethereum's progress toward decentralization, indicating that while challenges remain, the trajectory is positive. ??

Conclusion

The prospect of Ethereum morphing into a traditional finance powerhouse akin to the captured TradFi sector would indeed be concerning. However, Buterin's recent post highlights Ethereum's significant strides away from this possibility through ongoing development initiatives, signaling a steadfast commitment to decentralization. ??

While Ethereum's complete decentralization may take years to achieve, the journey promises a transformative outcome: a resilient foundational layer capable of expansive scaling in every direction, particularly with Layer 2 (L2) networks. This vision underscores the importance of prioritizing decentralization efforts at present, rather than deferring them to the future.

What are your thoughts on Ethereum's long-standing decentralization problem? Are they resolving it at the right speed or are there more initiatives that need to be implemented? Let us know in the comments below! ??

Prometheum launches Ether custody service that treats ETH as a security: Reports

Digital asset trading and custody firm Prometheum has reportedly soft-launched its rather controversial Ether (ETH) custody service, which treats digital assets as securities.

According to a May 20 report from Fortune, the custody solution was rolled out to a few select companies on May 17, with a full-scale launch expected in June. ??

Prometheum is targeting its services at asset management firms, hedge funds, banks, and registered investment advisors, with plans to expand to retail clients later in 2024. ?

Prometheum gained significant attention in June last year after its co-founder and co-CEO Aaron Kaplan testified before a United States House Committee, expressing support for regulating crypto under current securities laws.

In February, Prometheum indicated that it would treat Ether as a security when launching its custodial services, a stance that has drawn criticism from the crypto community. ?

“It eliminates a lot of the arguments that things can’t be done under existing laws. It marks the first time that…an investment contract digital asset security is being custodied and treated under the securities laws.” - Aaron Kaplan, Co-Founder

Some initially saw the SEC’s nod for Prometheum and its treatment of Ether as a bad signal for spot Ether ETFs. The regulatory endorsement seemed to imply stricter oversight and classification of Ether as a security, which could complicate approval for spot Ether ETFs.

However, as we discussed earlier in this newsletter, reports have since emerged that the SEC is asking applicants to accelerate their 19b-4 filings, which has raised hopes once again. (And have led to EFT analysts Eric Balchunas and James Seyffart to raise their estimated odds of an approved spot Ether ETF from 25% to 75%.)

What are your thoughts on this rather controversial development and what impact will it actually have on the upcoming ETH ETF? Let us know in the comments below! ??

More than 80% of Binance Launchpad Token Listings are in the Red ??

Over 80% of newly listed cryptocurrencies are experiencing a decline in value on Binance, the largest cryptocurrency exchange by trading volume. This trend poses significant concerns for investors seeking to capitalize on the latest tokens.

An analysis of 31 tokens listed in the past six months reveals that only five have appreciated in value: Memecoin (MEME), Ordi (ORDI), Jupiter (JUP), Jito (JTO), and Dogwifhat (WIF). This data was shared by pseudonymous crypto researcher Flow in a May 17 post on X.

The fact that over 80% of newly launched tokens are in the red signals a challenging market environment, according to Anndy Lian, intergovernmental blockchain expert and author of NFT: From Zero to Hero.

Lian told Cointelegraph that the current state of the cryptocurrency market has been described as calm, with certain altcoins still trending despite a general lack of momentum overall. He added:

“Many of the projects listed on Binance may have a longer period of growth, the growth may not be instant like the previous bull market.”

However, the new tokens on Binance are listed with an average fully diluted valuation of over $4.2 billion despite not having a real user base. This can significantly limit their upside potential, according to pseudonymous researcher Flow:

“More often than not, tokens launching on Binance are not investment vehicles anymore - all their upside potential is already taken away. Instead, they represent exit liquidity for insiders who capitalize on retail lack of access to quality early investment opportunities.”

What is your strategy on investing in newly launched projects? Do you wait for listings on large exchanges like Binance or pick them up even earlier on DeFi platforms like Raydium/Uniswap instead? Let us know in the comments below! ??

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