M6 Labs L1, L2 & DeFi Weekly

GM, Anon! Market uncertainty continues to cast a shadow over the near term, despite the overall positive long-term trend. Now, let's delve into today's report!

Alpha Take Of The Week

State Of The Market: No Man’s Land

TLDR

• BTC prices have fallen below 40K, and analysts expect further declines into the lower 30s before a potential rebound to new all-time highs.

• Global liquidity stimulus, exemplified by China injecting funds into banks, supports crypto in the medium and long term.

• Grayscale is selling Bitcoin as GBTC ETF investors exit, while BlackRock and Fidelity ETFs perform well.

• Starknet protocol faces controversy after a change in leadership and downplaying the importance of airdrop hunters and users.

• Terraform Labs filed for bankruptcy, Alameda dropped a lawsuit against Grayscale, and Trump opposed Central Bank Digital Currencies.

• Stablecoin market capitalization increased slightly

• Altlayer, Rabby, the Cosmos ecosystem and many others are planning airdrops.

• Staking remains strong, and the long-term impact on Ethereum's deflationary nature is being watched.

The crypto market has witnessed a significant drop in BTC prices, falling below the 40K mark. Many analysts anticipate further declines into the lower 30s before witnessing a price reversal and achieving new all-time highs. 

• It's important to consider the global liquidity landscape, as the world is currently in a cycle of liquidity stimulus which is a positive for crypto in the medium and long term. One example is how China has injected substantial funds into commercial banks to bolster medium-term liquidity, surpassing market expectations as a measure to support its struggling economy. 

• Meanwhile, Grayscale continues to sell Bitcoin as investors exit the GBTC ETF, with FTX making a notable sale of approximately 22 million shares valued at nearly $1B. 

• In contrast, ETFs offered by BlackRock and Fidelity are attracting users and performing well, despite fluctuations in the BTC market.

•  Additionally, Hong Kong is planning to introduce its spot ETF by mid-year.

In other developments, there have been concerning events within the Starknet protocol, one of the most highly anticipated protocols in recent years, especially for its airdrop program that rewards loyal users. 

• Starknet recently experienced a change in leadership, with Uri Kolodny stepping down and Eli Ben-Sasson assuming leadership. 

• Subsequently, the Stark team faced criticism for downplaying the importance of airdrop hunters, users, and the community, emphasizing their focus on developers as the primary contributors of value to the blockchain. 

• This stance triggered a widespread reaction in the crypto space and beyond, with various opinions emerging. 

• While some agreed with the utility of airdrops, others emphasized the significance of the community. 

• Some members of the Stark team later reconsidered their statements. Currently, the situation has calmed down, but the fate of the Stark airdrop remains uncertain, awaiting further developments.

Additionally, there were some notable major developments in the crypto space. Terraform Labs officially filed for bankruptcy, marking a significant event in the industry. Surprisingly, Alameda decided to drop its lawsuit against Grayscale, which caught the attention of many market participants.

In a more positive turn of events, former U.S. President Trump has expressed his opposition to Central Bank Digital Currencies. However, it's worth noting that given the global trajectory of CBDC development, such opposition seems unlikely to halt their progress. Nevertheless, it is encouraging to see political discussions and resistance against this emerging trend in the crypto world.

Metrics

Examining key on-chain metrics indicates that the market has remained relatively stable with no significant downward fluctuations. The total market capitalization of stablecoins has seen a slight increase, with USDT maintaining its dominance in the stablecoin supply.

When reviewing the state of staking, there are some noteworthy observations. While many protocols have experienced decreases, Lido has shown positive developments. It's important for users to be aware of the yields offered by the leading protocols in the industry, which are outlined below.

On-chain metrics indicate that the user appetite for staking their significant spot holdings remains strong. The long-term impact of staking, especially with Ethereum's deflationary nature, raises intriguing questions. If a substantial portion of the supply gets locked up through staking, and institutions increasingly recognize the advantages of ETH staking in the future, it will be fascinating to observe how this will influence the price of ETH and supply dynamics.

Additionally, among the two largest and most developed Layer 2 solutions, Optimism and Arbitrum, Arbitrum has been consistently generating substantially higher fees. This trend can be attributed to the flourishing DeFi ecosystem and the various incentives and rewards offered to protocols and users on the Arbitrum network.

Finally, it's worth noting that daily DEX volume has been fluctuating from day to day, with January experiencing some recent low points, although nothing of significant concern. The overall market remains resilient despite the prevailing uncertainty in the near term.

Airdrops

Airdrops remain a consistent way to reward loyal users in the crypto space. 

• Altlayer has recently announced its plans to airdrop tokens to TIA stakers and Eigenlayer users. Interestingly, the DYM airdrop allocation is being doubled following the fact that nearly half of the users failed to claim their tokens. 

• Additionally, Rabby is gearing up for its airdrop in the near future. Not to be forgotten, the Cosmos ecosystem is also actively rewarding users who have staked TIA, OSMO, ATOM, and other significant coins associated with the Cosmos network. 

• It's worth mentioning that Zetachain has unveiled its airdrop plans, although some members of the community have raised questions about the protocol's methodology. 

• Looking ahead, the crypto community is eagerly anticipating upcoming airdrops from projects like Aleo,  different Ordinals collections, and Eigenlayer, among others. These are just a few examples of the potential airdrops on the horizon in the near future.

Blue Chip and Majors Overview

Bitcoin

The hype around the spot Bitcoin ETF approval saw Bitcoin cross the $48K mark following the approval. However, since then, its price has been on a steady downward trajectory and is currently around the $40K mark. 

• This price drop has been attributed to Grayscale’s GBTC, which saw considerable outflows, selling its Bitcoin. Others have attributed the drop to selling by Bitcoin holders (short-term and whales) who took profits from BTC’s surge.

Ethereum

Ethereum, the world’s second-largest crypto after Bitcoin, has faced considerable selling pressure over the past few days and experienced a considerable decline during the trading day, dropping to a low of $2186. 

• The price has staged a minor recovery and is currently trading at $2232. The price drop could be attributed to divergent views on the approval of a spot Ethereum ETF. Some believe approval is a matter of time, while some state that the current sentiment within the SEC is a “hard no.” As of writing, the SEC has delayed decision on BlackRock’s Spot ETH ETF.

Noticeable Moves

• SOL - Over the past week, SOL has seen a drop of over 15%, dropping below $80 on the 23rd of January. However, the price has since recovered, rising by 7.5% and moving to $87.94 before dropping to $85. Despite the recovery, analysts have predicted that SOL could see a further decline and drop to $70, suggesting SOL’s price may have charted a “B wave triangle.”

• DOGE - Dogecoin is still struggling to recover from its price drop. The past month has seen the meme token drop 16%. The price tanked to $0.075 on the 19th of January before recovering strongly and rising to $0.089. However, it resumed its downward trajectory, falling back to $0.076. Currently, DOGE is trading at $0.079, having recovered 3.3% over the past 24 hours.

• DogWifHat - DogWifHat (WIF) saw a staggering increase that saw the meme coin burst into the top five by market capitalization on the Solana network. The token has seen a staggering increase of nearly 160% over the past 14 days. The meme coin is currently trading at $0.32, an increase of 52% in 24 hours.

• COQ INU - COQ INU is a meme coin released in December 2023. Within a week, the token reached its all-time high, peaking at $0.000004219. However, its value has plummeted since, dropping 57% over the past 30 days. However, the price has rallied over the past 24 hours, rising by just over 22%.

• MULTI - Multichain has registered an increase of nearly 80% over the past two weeks. The price surged from $1.52 on the 23rd of January, rising to $3.36. Currently, MULTI is trading at $2.77, a drop of 16% over the past 24 hours.

• SYNAPSE - Synapse is down 84% since it hit its all-time high of $4.92 in 2021. However, the past month has seen the token surge by over 70% over the past month. Currently, the token is trading at $0.77, an increase of 31% over the past 24 hours.

• SIDE SHIFT- The SideShift token (XAI) is the native token of the no-sign-up exchange SideShift.ai. Users can stake XAI and receive 25% of the exchange’s revenue. The token is currently trading at $0.162702. The token has seen a staggering increase of 216 % over the past year and has jumped from $0.137 to $0.420 over the past hour.

• PICASSO - Picasso (PICA) recently hit its all-time high, reaching $0.028 on the 6th of January. However, the token has tanked 44% since then, falling to $0.012. The token has slightly recovered over the past 24 hours, rising by just over 1%, and is currently trading at $0.105.

• METIS - The METIS price recently saw an unprecedented surge of 350% over the past month. The surge in value comes against the backdrop of the MetisDAO Foundation launching the Ecosystem Development Fund (EDF). The rise in the value of the METIS token can be attributed to the growing confidence in MetisDAO’s potential after its recent integration with the Bitget wallet.

• Arb - The Arbitrum token (ARB) recently reached its all-time high, surging to $2.39 as the network’s total value locked crossed $2.5B. The surge saw the token’s value rise by 10% in 24 hours. However, since then, the token’s value has taken a tumble, dropping 30% from its all-time high. The price has slightly recovered and is currently up by just over 5%, trading at $1.71.

• OP - In December 2023, it was predicted that the Optimism (OP) price could crash as $81.9M worth of tokens were due to hit the market on the 30th of December. Despite these predictions, OP hit its all-time high, surging to $4.23. However, the price has dropped, falling by 20% over the past week. Currently, the token is trading at $2.83, up by nearly 5% over the past 24 hours.

• Tia - Celestia (TIA) has seen its price face considerable volatility over the past few days. The token hit Its all-time high of $20.16 just 9 days ago. However, the price has dropped considerably since, dropping to $14.12 before recovering and rising to $16. Currently, the token is down 20% from its all-time high. The recovery can be attributed to developers adopting Celestia’s modular network and leveraging its technology to build and scale apps.

• Ondo - Ondo Finance recently launched its ONDO token on the 18th of January. The token has since registered a considerable increase, rising to $0.30. However, the ONDO token’s price has dropped, currently trading at $0.23 since then.

• Kujira - Kujira (KUJI) has been experiencing considerable volatility over the past month or so. The token hit its all-time high of $5.56 on the 14th of December 2023. However, the price has dropped considerably since, and by the 23rd of January, the price had fallen to $3.20. Overall, KUJI has shed nearly 26% over the past month but has slightly recovered over the past 24 hours, rising by 4.4%.

• TAO - Bittensor’s TAO has seen impressive growth over the past month. The token has registered an increase of 44% over the past two weeks and has surged by 19.9% in the past 24 hours. This increase comes despite the broader crypto markets facing a considerable decline of over 8%. This momentum is primarily driven by growing sentiment around decentralized AI and the crucial role played by Bittensor in advancing the technology.

• dYdX - dYdX’s climb to the pinnacle of the decentralized exchange ecosystem has been nothing short of spectacular. The cosmos-based decentralized exchange accounted for 12% of the market share, topping Uniswap’s 9.7% share. Currently, the dYdX token is trading at $2.60 and is down by just over 30% on its all-time high of $3.73.

• LINK - Chainlink’s (LINK) on-chart data and other indicators have been displaying bullish signals, with many expecting its price to register a significant increase in upcoming trading sessions. The token has reported a 100% increase over the past 1 year.

• OKB - OKB is OKX’s native token with a market capitalization of $2.8B, making it the 4th largest exchange token in the market. On the 23rd of January, the token slumped by over 50% in three minutes after a series of liquidations that were triggered due to an abnormal price fluctuation. The token has since recovered, rising from a low of $25 and rising to its current level of $47.11.

• ICP - The Internet Computer (ICP) token has been trading in the red for the past couple of weeks. However, the token has recovered over the past 24 hours, registering an increase of 8.6%. Currently, the token is trading at $11.26.

• Rune - ThorChain (RUNE) has spent the past month stranded in the red as the tokens bear market goes from bad to worse. On the 3rd of January, the token hit a price of $6.09 before going on a downward trajectory. Since then, the price has dropped by 28%. However, the price has been positive during the past 24 hours, rising by 5.5%.

• INJ - Injective (INJ) hit its all-time high on the 9th of January, 2024, when it peaked at $45.01. Since then, the price has experienced considerable volatility and has remained in the red. However, blockchain data suggests that the price could rebound in 2024. Currently, the token is trading at $33.30, an increase of 4.4% over the past 24 hours.

• MNT - The Mantle (MNT) price registered a spectacular surge two weeks ago when it surged to its all-time high of $0.84. However, the token could not hold on to its gains and was down to $0.70 by the 15th of January. Currently, MNT is trading at $0.61, having lost over 13% during the past week.

• Manta Network - The Manta Network token has been on an absolute tear since its launch in January. The native token was surging from one all-time high to another and reached another peak hours ago, rising to $3.16 and gaining over 30% over the past 24 hours, with its trading volume jumping over $500M across platforms such as Binance.

• SEI - The new year has brought plenty of cheer to SEI holders, as the token set an all-time high barely two days into 2024. The token was launched in August 2023 and has registered considerable gains since. The token has registered an increase of almost 55% over the past 30 days. The token is currently trading at $0.63.

• SATS - SATS has been on a steady downward trajectory since it hit its all-time high in December 2023. The token has dropped nearly 50% over the past 30 days and could drop even lower.

• ORDI - Another token that has spent 2024 in the red is ORDI. The token has been on a downward trajectory since it hit its all-time high of $89. Since then, ORDI has lost over 40% of its value and is currently trading at $53.27.

• RNDR - The Render token (RNDR) is currently trading at $3.78 and has been in the red for the past 30 days, dropping by just over 18%. However, the token is predicted to surge by over 70% after the upcoming Bitcoin halving. This is based on its impressive growth following previous Bitcoin halvings.

• AKT - AKT is the native token of the Akash Network and has registered an impressive increase after touching $22 on the 22nd of January. After witnessing a sharp decline over the weekend, the token registered a sharp increase, rising to $2.77, before dropping to its current level of $2.53.

• UMA - The UMA token has been on an upward trajectory in 2024 and is currently trading at $5.29. While this represents a drop of over 8% in 24 hours, the overall sentiment around the token is bullish. UMA has registered a 160% increase over the past seven days.

Smart Money Movements

• Smart Money is detected in wBAI, a new AI Agents project. The recent popularity of it is because of the main competitor's bad team actions, such as selling the tokens. OLAS team has been selling some tokens, which resulted in people looking for other AI Agents projects and trying to get exposure to the OLAS betas because of it.

• Balance AI caught the attention of smart money right after their LBP launch, and also after the LBP.

• $CAD was another project that was favored by the smart money in the last week, a new project that held an LBP recently similar to $wBAI. It's a perps aggregator with a solid team, including Ex MetaMask and Kraken members. It utilises AA (Account Abstraction) and Autonomous Agents to provide an enhanced service.

• Smart money has been still accumulating PT-eETH, looking to make ~10% on their ETH until June 2024.

• $RSTK has been among the smart money's accumulations too, apparently, they're frontrunning the next cap raise of EigenLayer.

• Smart Money has been buying $ALT as well, which just launched and had an airdrop. A restaked rollup that caught the eyes of market participants. They're leveraging EigenLayer for their rollup, so that's the main reason they absorbed a good amount of attention.

Yield-Farms

Smart farmers have been bridging into Mantle recently, taking advantage of the newly launched DeFi protocols in the early stages.

• Velocimeter on Mantle has caught the attention of smart farmers.

• Aerodrome's WETH/USDC pool is still popular among smart farmers.

• Farming USDC/NOTE on Ambient has been a popular strategy among smart farmers as well.

• Cleopatra has been favored by the smart Mantle yield farmers.

• Merchant Moe is still shining on Mantle and has been a popular choice among smart farmers.

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