Research Summary
The report provides an analysis of the week-over-week price changes in the digital assets market, highlighting the performance of various cryptocurrencies, smart contract platforms, and digital asset sub-sectors. It also discusses the impact of recent regulatory decisions on the crypto market and offers six suggestions for improving the digital assets market.
Key Takeaways
Market Performance
- Positive Week for Digital Assets: The report indicates that most large cap tokens gained between 5-10% over the past week, with Solana (SOL), Arweave (AR), and Chainlink (LINK) being notable outperformers. The Bloomberg Galaxy Crypto Index (BGCI) and Bitcoin (BTC) saw week-over-week increases of 9.3% and 7.9% respectively.
- Regulatory Impact: The report suggests that the recent reversal of SAB 121 by the Senate and the confirmation of a larger and more diversified Bitcoin ETF audience through 13F filings have likely contributed to a positive shift in crypto market sentiment.
Improving the Digital Assets Market
- Token Launch Practices: The report criticizes the practice of low float, high FDV token launches, arguing that they harm retail investors and generate mistrust between investors and exchanges. It suggests that token launches should have a larger initial float and lower starting prices.
- Regulatory Challenges: The report highlights the regulatory challenges facing the digital assets market, particularly in the U.S., where token sales are largely restricted to Accredited Investors and Qualified Institutional Buyers. It suggests that token issuers should stop making private sales after their token is publicly traded.
- Improving Governance: The report suggests that governance, particularly in Decentralized Autonomous Organizations (DAOs), could be improved by having a defined cadence for proposal submissions and voting.
Understanding Ethereum and Bitcoin
- Ethereum as an App Store: The report suggests that Ethereum and other smart contract protocols should be viewed as app stores, with ETH serving as the “Apple Pay” for transactions within the Ethereum ecosystem.
- Bitcoin as an Asset: The report argues that Bitcoin should be viewed as an asset rather than an asset class or digital gold. It suggests that the entire crypto universe may not be an asset class, as all other asset classes can be represented in tokenized form.
Actionable Insights
- Reconsider Token Launch Practices: Digital asset issuers and exchanges should reconsider their token launch practices to ensure they are fair and transparent, and do not harm retail investors.
- Engage with Regulatory Bodies: Stakeholders in the digital assets market should engage with regulatory bodies to address the challenges facing token sales and to promote a more inclusive and transparent market.
- Improve Governance Mechanisms: DAOs and other decentralized entities should improve their governance mechanisms by establishing a defined cadence for proposal submissions and voting.
- Clarify Asset Classifications: Market participants should work towards a clearer understanding and classification of digital assets like Ethereum and Bitcoin.
