The Market
BTC’s price seemed to find support at around $43,000 last week. The GBTC outflow has slowed down to below $200M from $500M in the first 8 days since the spot ETF launch. The net inflow to the spot BTC ETF suite has remained positive for a full week, indicating steady demand from mainstream investors.
Overall, we are experiencing the slowest BTC recovery market in this cycle. According to Glassnode, the magnitude of Realized Cap drawdown is similar to previous cycles, but the time it has taken to recover is longer, resulting in a much lower recovery percentage per day (0.05%) compared to previous cycles.
🥇 2012-13 Cycle: 0.22% per day
🥉 2015-16 Cycle: 0.09% per Day
🥈 2019-20 Cycle: 0.17% per Day
🐢 2023-24 Cycle: 0.05% per Day
On the macro side, the FOMC meeting on January 31 resulted in no rate change. Comparing their tone with the last meeting in December, the Fed seems less concerned about the tight financial conditions as robust GDP and jobs data roll in for Q4 2023. Meanwhile, they also acknowledge the uncertainty of the economic outlook and the need to access incoming data to gain greater confidence on the inflation trajectory before considering a rate cut. Consequently, the market is leaning towards expecting rate cuts more likely in May rather than March.
The broader risk market rallied after the FOMC meeting, celebrating the progress of taming inflation without causing a recession. This is also supported by strong earnings reports from tech giants Apple, Meta and Amazon for Q4 2023. With China ramping up its liquidity support to the market, we appear to be on track to match the start of an expanding liquidity cycle.
With the macro outlook appearing promising and the flow to spot ETFs stabilizing, BTC volatility has decreased by 50% from its peak level during ETF approval to levels similar to those seen in mid-October 2023, just before the Q3 BTC rally took off.
DeFi Update
The number of new addresses on Solana reached an ATH in January, coinciding with the Token Generation Event (TGE) of Jupiter, the largest Solana DEX aggregator on January 31. The DEX achieved over $1.2B i n trading volume on its TGE day, topping all DEXes, including Uniswap. While there were some glitches in using Jupiter’s DCA function to buy JUP, and controversy over JUP’s launchpad practice, the JUP token price has remained resilient, boasting a circulating market cap close to $800M and a FDV of $5.7B.
Comparing JUP’s post-TGE performance with other popular tokens, using the FDV ratio to their largest Ethereum competitors, JUP doesn’t seem as hyped as JTO but still is more popular than PYTH. The FDV of JUP, the leader in volume in both spot and perp trading on Solana, currently stands around 80% of the combined FDV of Uniswap and dYdX, the leaders on Ethereum. In contrast, JTO’s FDV to LDO, both leading LSD protocols on their respective chain, peaked at 160% after TGE before settling down to 60% in two months.
Compared to Uniswap’s TGE in September 2020, the FDV ratio between JUP and SOL is around a similar 10% range. This indicates the market is assigning a valuation to JUP based on information learned from the Ethereum ecosystem. The FDV ratio between UNI and ETH rose to as high as 17% during DeFi summer but has come down to 2% currently. As Jupiter continues to expand its product roadmap, the market will reassess the valuation ratio going forward.
Among the top 10 Solana DeFi TVL contributors, MarginFi, Kamino, Drift, and Meteora are highly anticipated to have a TGE this year. We expect Solana DEX volume will continue to rival Ethereum’s in 2024.
Top 7d Gainers and Losers
Top 100 MCAP Winners
Flare (+29.04%)
Pendle (+26.45%)
Chainlink (+23.72%)
Pyth Network (+20.04%)
Render (+18.27%)
Top 100 MCAP Losers
Jupiter (-64.28%)*
FTX Token (-34.56%)
Manta Network (-19.50%)
SATS (-12.89%)
Bonk (-11.47%)
*Based on an opening price of $1.2707 on CoinMarketCap.
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.