Research Summary
The report discusses the current state of the crypto market, highlighting the lack of significant movement and the focus on supply changes rather than demand drivers. It also notes the performance of certain DeFi projects and the impact of higher Treasury yields on the digital assets industry. The report further mentions the delay in repayments by Mt. Gox and the market’s attention on the supply of digital assets.
Key Takeaways
Stagnation in the Crypto Market
- Lack of Market Movement: The report notes a lack of significant movement in the crypto secondary market, with the FOMC meeting having little to no effect on the digital assets market.
- Treasury Market Volatility: The Treasury market is now more volatile than the crypto markets, with higher Treasury yields being a point of interest in the digital assets industry.
- Performance of BTC and ETH: BTC and ETH have seen declines from their 2021 all-time highs, with a 30-year Treasury bond issued 3 years ago barely outperforming these declines.
Impact of Higher Treasury Yields
- Revenue Generation: Projects with high cash balances are parking assets in Treasuries to earn yields and generate revenues. Tether and USDC are earning the most, with some DeFi projects following suit.
- Performance of DeFi Projects: Maker (MKR) and Lido (LDO) have outperformed ETH this year, with MKR driving over $150m in annual revenue.
- Focus on Treasury Yields: There is a significant focus within the crypto industry on importing treasury yields onchain.
Supply Changes and Demand Drivers
- Delay in Mt. Gox Repayments: Mt. Gox, the defunct crypto exchange, has delayed its repayments by 12 months to October 31, 2024.
- Market Focus on Supply: The market is currently focused on the supply of digital assets, with every noteworthy event being supply-based.
- Need for New Demand: The report emphasizes that a market rally can only happen when there is new demand, not just less supply.
Actionable Insights
- Monitor Treasury Yields: Given the current volatility in the Treasury market and its impact on the digital assets industry, it would be beneficial to keep a close watch on Treasury yields.
- Investigate the Potential of DeFi Projects: With DeFi projects like MKR and LDO outperforming ETH, there may be potential in exploring these and similar projects.
- Focus on Demand Drivers: As the report suggests, a market rally requires new demand. Therefore, it would be prudent to identify and focus on potential demand drivers in the crypto market.
