M6 Labs L1, L2 & DeFi Weekly

GM! The anticipation surrounding numerous ETF approvals, coupled with significant regulatory developments and market trends, has kept investors and enthusiasts on their toes. The market is surging leading up to the expected deadlines in January. Let’s get into it!

Alpha Take Of The Week

Strap in Anon. It’s game time.

State Of The Market: Market Exploding Pre-ETF

TLDR

• Market resilience amid anticipation of Bitcoin ETF approvals.

• Minor outflows in digital assets, with regional variations and significant altcoin inflows.

• Surge in transaction fees due to increased Ordinals minting.

• Record low annualized  BTC volatility, indicating maturity.

• Significant collaborations and increasing crypto acceptance in mainstream finance.

• Growth in Layer 1 blockchains, AI crypto projects, meme coins, and BitcoinFI tokens.

ETF Approval and Market Resilience: Despite occasional fluctuations, the market has demonstrated remarkable resilience. The anticipation of ETF approval has kept investors keenly focused, with many closely monitoring market movements. The SEC's recent postponement of several Ethereum ETH ETFs and updates from major players like BlackRock on their Bitcoin ETF filings have only heightened this anticipation. Industry leaders, including VanEck's CEO, predict a simultaneous approval of multiple ETFs, a move that could significantly impact the market.

Inflows & Outflows: Digital asset investment products experienced minor outflows of $16M, ending an 11-week streak of inflows. Despite the outflows, trading activity remained high for the week, totaling US$3.6B, significantly above the year average.

• The outflows were mainly concentrated in the US, with $18M in outflows, while Germany saw minor outflows of $10M. However, Canada and Switzerland continued to receive inflows of $6.9M and $9.1M, respectively. These mixed regional flows suggest that the outflows were driven more by profit-taking than a shift in sentiment.

• Altcoins, including Solana, Cardano, XRP, and Chainlink, defied the trend by attracting $21M in inflows. Among them, Solana received the highest inflow at US$10.6M.

• Bitcoin experienced the most significant outflows, with $33M leaving the asset. Short-bitcoin also saw minor outflows totaling US$0.3M.

• Ethereum and Avalanche saw minor outflows of US$4.4M and US$1M, respectively.

• Blockchain equities continued to attract positive sentiment, with substantial inflows totaling US$122M for the week. This brought the cumulative inflows over the past 9 weeks to a record-high of $294M.

Bitcoin transaction fees have seen a significant increase, currently reaching the highest levels in over two and a half years. Bitinfocharts data indicates that the average cost of a Bitcoin transaction is now around $37.58, a level not seen since April 2021.

• Investor interest in Ordinals has led to more of them being minted, occupying block space that was previously used for regular BTC transactions. As a result, miners are charging higher fees due to the increased workload in processing these transactions.

BTC registered its lowest annualized volatility to date, measuring at 41.53%. This implies substantial consolidation, despite encountering regulatory hurdles and market fluctuations. The declining volatility of BTC may signify its evolution into a more mature asset class, building on developments seen in Q4 2022.

Regulatory Developments: Regulatory milestones have been a defining feature of the past year. Tether's collaboration with the FBI, DOJ, and Secret Service marks a significant moment, reflecting the growing importance of crypto in the financial system, despite the controversy it stirs within the crypto community. 

• On another front, Ripple's whitepaper on CBDCs indicates steady progress in this area. Furthermore, the Bank of International Settlements' announcement allowing central banks to hold up to 2% of their reserves in crypto from January 1st, 2025, underscores the increasing acceptance of digital assets in mainstream finance.

Layer 1 Blockchains and AI-Related Projects: Layer 1 blockchains like Solana, Avalanche, and Cosmos-related projects have maintained strong market positions, witnessing significant price movements. Additionally, AI-related crypto projects continue to capture the market's imagination, reflecting the growing intersection of advanced technology and finance.

The Meme Coin Phenomenon: Meme coins have emerged as a market sensation, with tokens like $BONK, $COQ, $TOSHI, and $HUSKY on Solana and Avalanche chains experiencing exponential growth. 

• These coins, often seen as a blend of humor and investment opportunity, have attracted a diverse range of sentiments from investors. Their popularity underscores a unique aspect of crypto culture and hints at the potential development of robust ecosystems around these projects.

The Rise of Inscriptions and BitcoinFI Tokens: Inscriptions, initially a feature unique to the Bitcoin ecosystem, have gained traction across various chains. BitcoinFI tokens such as $MUBI, $DOVA, $BSSB, and $TURT have seen remarkable gains. This area of the market is a new addition and is likely to be a major part of the next bull market. 

Dive Deeper

• SocialFi will be one of the biggest narratives in the next bull run. Dive into this thread by @MoneyCrptBunny

• If you are bullish on EigenLayer, then you need to be paying attention to Kelp DAO. This great read by @jake_pahor will take you through it. 

• Arbitrum TVL and zkSync use continue to explode. @defiinfant has you covered with these developments with this thread. 

• @ayyyeandy discusses the shift from onchain to offchain governance in DAOs, highlighting issues with onchain voting such as high costs and low voter participation in this great write-up.

Opportunity 

GRVT, the first official appchain of zkSync Hyperchain, offers a high-performance orderbook with self-custody features. It has raised $7.1 million from investors like Matter Labs, Delphi Digital, CMS Holdings, and Matrix VC, and boasts partnerships with over 30 institutions. The team includes professionals from Goldman Sachs, Facebook, and OKX. GRVT is currently inviting users to join its waitlist, which offers opportunities like earning points for referrals, potential airdrops, and a zkSync mystery box. The GRVT token is expected to launch in 2024. Sign up here.

Blue Chip and Majors Overview

Bonk

BONK has experienced a significant surge, peaking at a valuation of over $2B following its listing on Coinbase, which led to over $500M in BONK being traded on Coinbase, doubling its value since the initial confirmation. BONK has since retraced, and the market cap is currently around $1.16B. The hype behind BONK has also boosted the sale of the Solana Saga phones in anticipation of a free airdrop. 

Husky

HUSKY faced a sharp retracement this week as the price dropped by more than 36%. Overall marketcap is trending above $7.5M, while the price has dropped to the $0.000000085 support level. HUSKY has been the best-performing memecoin of the Avalanche ecosystem.

• Sats (SATS) have jumped by 45% following the OKX listing and are currently trending around $0.00000070.

• Coq Inu (COQ) is an Avalanche memecoin that exploded by 640% this past week before retracing below $0.000003. A lucky trader turned $450 into $2M betting on COQ.

• Ronin (RON) has surged by over 95% this past month, and the overall marketcap is trending a hair below $40M. As per Nansen, Ronin saw a remarkable increase in active addresses in November, signaling rising activity.

• Injective (INJ) soared to an all-time high of $39.15 on Tuesday, marking a 3,000% increase in 2023. Despite having only $18M in total value locked, Injective has seen a substantial $600M trading volume over the past 24 hours.

• Immutable (IMX) marketcap crossed $3M as the token price jumped by 20% this past week.

• Multibit (MULTI) jumped by over 150% this past week, with marketcap approaching $265M.

• Celestia (TIA) has seen a significant 45% increase in the past week, reaching a price of $13.481 and a market capitalization of $2.025M. With a 24-hour trading volume of $350.696M, TIA's performance is drawing considerable interest from investors and crypto enthusiasts.

• Solana (SOL) has reached a 20-month high, surpassing XRP as the fifth-largest cryptocurrency with a market cap of $33.7B, driven by a thriving DeFi ecosystem and meme coin popularity. This week, its total value locked (TVL) exceeded $1B for the first time since FTX's collapse.

• BitStable Finance (BSSB) is currently priced at $7.19, experiencing a 7.20% decrease in the last 24 hours, yet it has witnessed a notable 159.10% rise over the past week. The crypto has seen a 24-hour trading volume of >$5.5M.

• Turt (TURT) has jumped by 170% this past week and over 1200% this past month. Currently, TURT is trying to break past the $0.10 resistance level.

• ORDI (ORDI), after a striking 2370% surge from $2.82 in September to a peak of $69.76 in early December. It has since retreated to below $55. 

• Avalanche (AVAX) has emerged as a major force in the crypto market, with the AVAX token's recent rise above $40 highlighting increasing investor trust in its ecosystem. This is mostly due to the rise of AVAX-based memecoins.

• Shiba Inu (SHIB) has experienced a significant influx of 4.8 trillion SHIB into the wallets of major investors, marking a 375% increase in 24 hours, as reported by IntoTheBlock's Large Holders Inflow metric. Additionally, Shiba Inu is introducing a new '.shib' domain specifically for SHIB holders.

• Helium (HNT) has seen a remarkable increase of over 80% in the past week, approaching the $10 mark, a price point last reached in June 2022. This surge is largely attributed to the heightened interest in the newly launched Helium Mobile, which provides US users unlimited access to the Helium network for $20 per month.

• Bounce (AUCTION) is currently trading at $44, witnessing a significant 118% rise over the past week. The token has a market cap of ~$285M and is undergoing a 1:100 token swap from its original Bounce "BOT" token.

• Aleph Zero (AZERO) is trading at $1.77, up 37% over the past week, with a current market capitalization of ~$445M. The token has rallied due to its focus on privacy.

• Orca (ORCA) has reached $8, marking an increase of over 1,821% from its lowest point this year, largely driven by its association with the rapidly expanding Solana ecosystem. Orca TVL is also nearing $175M.

• ALEX Lab (ALEX) has experienced an 80% rise over the past week, bringing its price to $0.466 and a market cap of approximately $300M. This growth coincides with the recent listing of ALEX on Bitget's BTC Ecosystem Zone on December 15.

• Decentralized Social (DESO) has seen substantial growth in its value, with a 19.40% increase in the last 24 hours and a 51.00% rise over the past week, bringing its price to $28.80 and its market capitalization to approximately $304.76M. DESO operates as a Layer 1 blockchain, uniquely designed to decentralize social media for a vast user base.

• Internet Computer (ICP) has seen its native token surge by over 81% in the last three trading days, breaking the $7.19 resistance level. Despite this rapid growth, largely fueled by community and bullish investors, the token is currently facing a significant price correction, dropping by over 6% in the last 24 hours and falling below the $9 mark.

• Woo Network (WOO) has recently seen an uptick in its token value, trading at $0.45 with a substantial 75.0% rise over the last week. The network's exchange, WOO X, has strengthened its position by partnering with Wintermute, a major liquidity provider.

• Osmosis (OSMO) is currently trading above $1.40, following an impressive 76.3% surge in the past week. This significant growth, including a 380% rise from its lowest point in 2023, is partly attributed to its successful merger with Umee, another major player in the Cosmos network.

• Blur (BLUR) has exhibited a positive trend, with its price increasing by 7.5% to around $0.48 following recent token unlocks. Amidst these unlocks, about 49.8M tokens valued at approximately $23.2M were moved to Coinbase Prime.

• Akash Network (AKT) has seen a 5.30% rise in its price to $2.38 in the last 24 hours and a 13.30% increase over the past week. Market capitalization has crossed $530M.

• IoTeX (IOTX) has experienced significant growth, with almost a 100% rise over the past week, bringing its price to $0.061778 and its market cap to a little less than $585M.

• NEAR Protocol (NEAR) has risen by 23.5% this past week, trading at $2.85 and a market capitalization of about $2.88B. This price surge, along with a 300% increase in derivatives market volume to $1.27B and a 40% rise in open interest to $144.70M, reflects growing investor interest and a positive market sentiment.

• Stacks (STX), a Bitcoin layer two blockchain, has experienced a significant 26.72% increase in its price over the last 24 hours. This surge in value follows billionaire investor Tim Draper's endorsement of the protocol, which has resonated positively with the market and social media, leading to its current price momentum.

Smart Money Movements

• Smart money is anticipating the launch of Pontem Network. The network aims to bring performance benefits of alternative systems, such as Aptos and Sui, to Ethereum. It focuses on decentralization, trustlessness, and resistance to censorship. The long-term vision of the network is to enhance Ethereum's capabilities by integrating the performance of these alternative systems. This development is important as it signifies a major step towards improving Ethereum's infrastructure, potentially leading to wider adoption and more efficient blockchain operations.

• Smart Money is detected in $ROKO, an AI layer play. Investors are keenly observing potential advancements and opportunities within this artificial intelligence-focused project.

• Moreover, Smart Money has been accumulating $HIGH, showcasing interest in a metaverse project that seeks to redefine retail experiences within the virtual world. The growing attention towards metaverse projects is evident in this strategic move.

• Another intriguing detection is in $Nola, a new memecoin on Arbitrum. The token has garnered significant attention, and tracking Smart Money movements provides insights into emerging trends within the Arbitrum ecosystem.

• Continuing the trend, Smart Money is actively accumulating $EMP, a leading project in the Account Abstraction narrative. This reflects a strategic investment approach aligned with the narrative's potential growth.

• Furthermore, $MAP is under the radar of Smart Money. As a new Bitcoin L2 and a p2p omnichain infrastructure, its appeal to investors is evident. Tracking Smart Money movements in such projects provides valuable insights for market participants.

• Notably, $AUCTION has attracted Smart Money attention as a launchpad project, gaining increased visibility after BSSB's launch on their platform.

  Interesting Onchain Movements:

• Shifting focus to onchain movements, the $INSP team has executed a significant move, transferring 13.5% of the circulating supply to two new addresses. Monitoring such transactions can provide clues about the project's future developments. Transaction 1 / Transaction 2.

• In a significant acquisition, GSR acquired $9.4 million worth of $BEAM from CitizenX, depositing half of it into Binance. The involvement of GSR in previous GameFi tokens, such as $BIGTIME, resulting in a substantial price increase, adds to the intrigue. Transaction Link.

• The $Pendle team's movement of tokens into a new Gnosis Safe raises questions about potential incentives, with Smart Money also showing interest in this particular movement.

• Observing buy pressure on $TRB from fresh wallets, sourced from Coinbase and withdrawn, highlights significant market activity. The 16% pump in TRB today suggests potential correlations with these movements.

• Fresh wallets accumulating $STORJ on a notable scale indicate a growing interest in this particular token, warranting further investigation into potential catalysts.

 Yield Farms

• Shifting towards yield farming strategies, Smart Farmers are increasingly engaging in rsETH farming on Kelp Dao. The platform offers opportunities to earn EigenLayer points and Kelp miles simultaneously, showcasing the multifaceted appeal of this ETH restaking platform.

• In response to the growing interest in AVAX, Smart Farmers are employing various strategies on Avalanche. Farming in USDC and AVAX pools on Pharaoh with enticing APRs is one such approach.

• Additionally, using BENQ to borrow $AVAX against stablecoins and subsequently, farming on Pharaoh minimizes exposure to AVAX directly, providing a risk-mitigated strategy.

• Farming wstETH/LDO on Velodrome has become a popular choice among Smart Farmers, emphasising the diverse opportunities available within decentralized finance.

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