Market
It has been a volatile week for BTC, as it sold off 7%, starting last Sunday night, dropping as low as $40,000 before coming back to $42,000 by the end of the week. The selloff seems to be driven by a healthy flush of leverage in the market, as indicated by big changes in the funding rate on Bybit exchange. While there might be early signs of investors taking profit from BTC and rotating to riskier assets, we continue to see strong tailwinds behind BTC performance into the new year. In addition to the potential approval of BTC spot ETFs, The recent change in FASB rule allowing fair value accounting for BTC paves the way for corporations to hold BTC on their balance sheets.
One encouraging sign for the continued BTC rally is the performance of Bitcoin miners. Public miners saw meaningful gains last week, with MARA up ~15% and RIOT up ~5%, despite a relatively flat week for BTC. The two largest publicly traded miners have returned more than 4X the return of BTC, indicating mainstream investors’ interest in using miner stocks as a leveraged bet on BTC. Although the potential approval date for a spot ETF may fall before the January 10 deadline, the approval pertains to 19b-4, and issuers still need S-1 approval to launch ETFs. We anticipate sustained interest in miners as investors seek leveraged bets on BTC, even if a spot ETF is approved, given their levered nature and liquidity.
Furthermore, the BTC hashprice, a metric indicating miners’ profitability, is on the rise again, thanks to the rise of ordinals and the BRC20 token standard. The current market cap for BRC20 tokens is $3B, a mere 0.36% of the BTC market cap, while ERC20 tokens represent about 11% of the ETH market cap. As the bitcoin ecosystem continues to innovate, we believe there is more room for miner revenues.
On the other hand, Solana’s rally remains strong as we approach the year-end, the SOL/ETH and SOL/BTC ratios have just broken their resistance levels, last observed in Apr 2022, when SOL’s price reached a local peak of $137.
On the macro side, Fed has finally changed its tone on the rate policy in the December FOMC meeting. In addition to keeping the current rate unchanged, the median dot plot suggests a potential 75bps rate cut in 2024. The change in tone is attributed to eased inflation; more notably, chairman Powell mentioned that the Fed does not necessarily require a recession to implement rate cuts. Considering that 2024 is also an election year, it’s highly likely that we are witnessing a combination of loosening monetary and fiscal policies, along with moderate economic growth, creating a positive setup for risky assets.
DeFi update
The Solana memecoin BONK emerged as one of the top gainers last week, experiencing a rally of up to 175% as of mid-Friday, before relinquishing some of the gains over the weekend. The surge was triggered by news that Solana Saga Phone owners are entitled to receive BONK airdrop. This announcement led to a rapid increase in Saga phone sales, and they were completely sold out by December 15. The estimated value of the airdropped BONK surpassed the phone’s value, based on its peak price on Friday. BONK has climbed to the #3 memecoin by market cap, achieving a remarkable 20X rally in just 10 months.
When comparing the performance history of the top 5 meme coins, BONK has outperformed SHIB, PEPE, and FLOKI in both peak-to-inception and peak-to-bottom returns. However, in comparison to DOGE, there still seems to be approximately 40X more room for growth.
The key factor contributing to a memecoin's success is its community. Launched on Christmas Day 2022 and airdropped to Solana participants, especially developers, BONK has swiftly risen to become the leading memecoin on Solana, boasting 649k+ holders and 100+ integrations. It serves as the culture coin, occupying a unique position in the DeFi ecosystem with no notable competition on the network. As the Solana ecosystem continues to expand, and with BONK becoming more accessible to retail investors through listing on major exchanges, there is a potential trajectory for BONK to follow in the footsteps of DOGE and grow its market cap further.
Top 7d Gainers and Losers
Top 100 MCAP Winners
Internet Computer (+88.07%)
Osmosis (+83.06%)
Bonk (+75.65%)
HNT(+71.17.29%)
WOO Network (+61.57%)
Top 100 MCAP Losers
Pyth Network (-16.02%)
FTX Token (-15.71%)
Pepe (-13.76%)
Chainlink (-13.12%)
Terra Classic (-11.32%)
About Decentral Park
Decentral Park is a founder-led cryptoasset investment firm comprised of team members who’ve honed their skills as technology entrepreneurs, operators, venture capitalists, researchers, and advisors.
Decentral Park applies a principled digital asset investment strategy and partners with founders to enable their token-based decentralized networks to scale globally.
The information above does not constitute an offer to sell digital assets or a solicitation of an offer to buy digital assets. None of the information here is a recommendation to invest in any securities.