Weekly Alpha Leak - Coinbase L2, Blur Season 2, Arbitrum Passes ETH

Weekly Synopsis, Insight, Data & Highlights

Theo Delarosa
February 24, 2023

🗓 February 18-24, 2023

Today’s newsletter is 1781 words. A brisk 9 minute read.

In the past week we saw:

Coinbase launched their own L2
Blur “Season 2” airdrop will reward the most loyal users
Nishad Singh, the former director of engineering at FTX, to plead guilty to criminal charges
Arbitrum surpassed Ethereum in daily transactions
NBA Top Shot Moments NFTs meet the requirements to be considered a security

And that’s just the tip of the iceberg. Never a dull moment in crypto.

In this issue you’ll find:

🗓 Weekly Synopsis
📊 Market Update
📈 Charts You Need to Be Paying Attention To
🚨 Narratives Update
✅ Top Crypto Highlights of the Week
🪂 Good Tweets

👥 Follow us: Twitter | LinkedIn

📷 Weekly Synopsis

What a week it’s been! Bitcoin has been running headfirst into $25k and repeatedly smacked down. Same with ETH at $1700. Wack wack wack - momentum has waned. Is this resilience or weakness?

One train of thought says ramming repeatedly into resistance weakens it. Another that the meekness price action is showing in the face of a still uncertain macro environment is worrisome. How is that macro doing, by the way?

This week, the Fed released minutes reiterating the central bank's plan to continue interest rate hikes to combat inflation with a target of 2% and a federal funds target rate of 4.5% to 4.75%.

Key Details:

The meeting saw debate among participants about raising interest rates by 50 basis points.
Unemployment remained low at 3.5% in December, but inflation remained high at 5%.
The committee agreed that monetary policy should remain restrictive until incoming data shows sustained downward pressure on inflation.
Investors will be watching for jobless claims and inflation readings.
Futures markets are pricing in a 76% chance of a 25 basis point increase on March 22.

Significance: The market has been playing chicken with the Fed all this time - absolutely certain that the Fed would eventually be forced to pivot and crypto would continue up only. The Fed’s language is pushing back on that line of thinking.

So far, they aren’t indicating they’ll be slowing down anytime soon, meaning the rest of this year may still be uncertain with that ongoing fight against inflation in the background.

Of course this doesn’t have to mean we’d nuke, but perhaps only that our upside may be limited and we may see more sideways action. Hard to see markets continuing up only in extravagant fashion when macro financial conditions will continue to be strict for a prolonged time but at the same time.

What major events are left to drag the market down? Most major players who were forced to sell have already done so. Some of the last players like DCG/Genesis seemed to squeak by without blowing up.

But then again it’s also important to remember that it can always get so much worse… Who knows what events we have left to tick off our 2023 crypto bingo cards.

📊 Market Update

Crypto Market Cap: $1.09T up barely from last week’s $1.08T

Stablecoin Exchange Reserves: $23.159B, down from last week’s $24.349B

Stablecoin Total Market Cap: $135.57B, down slightly from last week’s $136.29B

DeFi TVL: $49.62B, up slightly from last week’s $49.11B

Exchange Volume: $722.44B so far for the month of February vs $797.23B total in January

Dex Volume: $59.8B so far for the month of February vs $61.29B total in January

Ethereum NFT Volume: $1.1B so far for the month of February vs $777.62M total in January

📈 Charts You Need to Be Paying Attention To

Ethereum NFT volume has been surging - all fueled by Blur. The thing to keep in mind is that the vast majority of this volume is coming from whales trying to game the next airdrop.

This is different from organic growth as there are no other indications that retail has returned to the market. That being said, most metrics such as stablecoins, exchange volume, DeFi TVL haven’t been particularly inspiring as of late so it’s a welcome sight to see some metrics growing. NFTs are where it’s been lately.

Over on the Solana blockchain, NFT volume is also seeing a boost. Very interesting to see this degen liquidity sloshing around. $55.11M for February vs $19.64M for January.

The amount of money pales in comparison to Ethereum but it still reinforces the train of thought that NFTs are where most of the activity is.

While we’re at it, let’s look at how other blockchains are doing by comparison.

The top 5 blockchains by NFT sales over the past 30 days are:

Ethereum
Solana
Polygon
ImmutableX
Cardano

Ethereum NFT volume is up 107% over the past 30 days and completely overshadows everything else. Another interesting observation is that Arbitrum, which has been killing it and recently surpassed Ethereum in daily transactions, is up 323% in NFT volume but it still falls far below Cardano at the 5th spot. Curious.

🚨 Narratives Update

Coin of the Week: BLUR

This bad boy captured the attention of the market, fueled by its ongoing series of airdrops and maneuvers aiming to topple rival OpenSea. After an initial volatile launch that saw it reach roughly $5 on some exchanges, it eventually bottomed out around 43 cents before rocketing to a high of ~ $1.38. Momentum has since waned and it’s currently struggling to stay above $1.

LSDs

Best performer of the week is ANKR. QI, FIS, LDO, FXS have been grinding steadily up over the past 3 months despite recent rocky performance. We’re getting close to the Shanghai upgrade so expect more activity from this sector. Will we see a buy the rumor, sell the news event when Shanghai hits?

After an impressive runup early in February, most AI coins have been slumping. Some of the larger coins like AGIX and FET spent the past week grinding downwards, however few have been able to make new highs after the initial hype. Overall, most are still doing well on the 90 day timeframe and AI is still set to stay a trending topic.

ZKs

Matic was a strong mover the week before but over the past week, it’s been slipping along with most ZK related coins. Again, most of these are still looking good on the 90 day timeframe. Polygon’s upcoming zkEVM launch should reignite interest.

China Coins

This has been the standout category recently despite most coins peaking during the week. Conflux up strong after a series of partnerships in China. Alchemy Pay also did well on news of adding Google Pay for on-ramp fiat-crypto purchases. There’s a softening stance on Hong Kong retail crypto trading, Let’s see how the rotations do with this one.

✅ Top Crypto Highlights of the Week

📰 News

CZ denies Binance is considering delisting tokens from US projects
NBA Top Shot Moments NFTs meet the requirements to be considered a security
Nishad Singh, the former director of engineering at FTX, to plead guilty to criminal charges
SBF charged for unlawful political contributions and defrauding the federal elections commission
Hong Kong receiving softening stance on crypto from China
SEC objects to Binance.US’ $1B Voyager deal, alleging sale of unregistered securities
Traders frontran the Gains Network (GNS) listing on Binance
Crypto hedge fund Galois Capital to shut down and return its remaining money to investors
Bulgarian investigators claim fugitive 'Cryptoqueen' was murdered in 2018
Jump Crypto made $1.28B restoring UST’s peg in 2021 in exchange for discounted LUNA
Spotify is testing a new service called "token-enabled playlists,"
Bank of Russia to pilot CBDC in April
Polygon Labs cuts 20% of workforce
Dapper Labs said to lay off 20% more staff. In November laid off 22% of employees
Immutable cut 11% of its staff — the second round of layoffs since the end of July
Crypto intelligence firm Messari cut 15% of its employee base as part of a restructuring effort
Paxos in constructive discussions with the SEC and ends relationship with Binance
Solana Spaces storefronts will close its New York City and Miami locations
Outlier Ventures launching an accelerator program sponsored by the Aptos foundation

🆕 Project Updates

Coinbase is building its own Ethereum layer-2 network called 'Base' - no token
Blur “Season 2” token will airdrop some $300M worth of additional tokens to loyal users
The Shanghai upgrade will activate on the ETH testnet Sepolia network on Feb. 28
The Ethereum core developers are planning a new testnet called Holli
Mango Markets v4 will alter multi-sig feature to mitigate security threats after $114M exploit
Arbitrum surpasses Ethereum in daily transactions
Blur and LooksRare will no longer show third party flags in the UI by default
Arbitrum integrated onto Coinbase
OpenSea drops fee to 0% while also moving to a 0.5% “creator earnings model”
SUDO transferability enabled and token live
Helium migration date to the Solana blockchain scheduled for March 27, 2023
A developer adapted the Ordinals project for Litecoin blockchain
Chiliz is now integrated with Injective
TON governance votes to freeze 20% of TON supply
Microsoft partnered with decentralized blockchain infrastructure provider Ankr
DraftKings will launch an NFT fantasy golf game in partnership with the PGA Tour
Tencent Cloud entry into WEB3 with cooperation with Ankr, Avalanche, Scroll, and Sui
Web3 music streaming platform Audius integrates TikTok
Frax Finance votes to fully collateralize frxUSD
Ubisoft launches Rabbids NFT avatars for metaverse game The Sandbox via Polygon
Sushi plans derivatives exchange, Vortex, on Sei blockchain in Q2
Synthetix deployed v3 on the Ethereum mainnet
Google Cloud will serve as a validator on Tezos
LayerZero faces backlash over monetising ‘no value’ Ethereum Goerli ETH
⁠Uniswap NFT traders can now use any Ethereum token to purchase their NFTs
Yearn Finance - Introducing yETH, an LSD of LSDs
A16z backed Bitski launches digital currency wallet
Rollup provider Eclipse launches software to allow Solana apps to be compatible with Polygon

📝 Good Tweets

Airdrops you should have on your radar & strategies

#Airdrops to hunt 🧵 02/12 - 02/19
Blur airdropped, Lens' might be soon, zkSync entered a new phase, CollabLand unexpected airdrop, a lot is happening!
Today strategies & alpha on:
▪️ DeFiLlama
▪️ GammaX
▪️ Lens
▪️ Vela
▪️ zkSync
▪️ CollabLand
▪️ OpenSea
& Much More 🪂👇
— Shiro (@CryptoShiro_)
Feb 23, 2023

5 tips on making it all back

I lost 90% of my net worth due to greed during the last bull run.
1.5 years later I am sitting at portfolio ATH.
Let me share with you 5 tips I wish I would have known back then 🥂
— Louround 🥂 (@Louround_)
Feb 22, 2023

Best accounts under 15k followers

Making money in crypto is easier when you're following high-alpha accounts.
I've compiled a list of the BEST accounts under 15k followers, so you can spot trends EARLY!
Many of them are criminally underrated.
🧵 MEGA THREAD: 30+ small accounts that are must-follows.👇
— Miles Deutscher (@milesdeutscher)
Feb 23, 2023

Change the way you view the market with pairs trading

Ever since I Iearned about pairs trading something changed.
My first educational thread was a success so here's 🧵#2 : A thread on how I approach pairs trading, and how it made me 5x my account with insanely small drawdowns in 2022.
— Arthur Schmidt, CPO (@trdrtur)
Feb 22, 2023

Optimism is hot right now - catch up on what you need to know and interesting projects

Everybody is talking about Optimism right now.
Coinbase just announced they're launching a new L2 blockchain called “Base” built on the $OP stack.
In this thread, we’ll look at
1⃣ What Optimism is
2⃣ Why $OP is a top choice for DeFi
3⃣ DeFi protocols with huge potential
🧵/23
— Route 2 FI (@Route2FI)
Feb 23, 2023