The Market
BTC had a good week rising close to $72K level, buoyed by strong spot ETF inflows returning last week. As of June 3rd, the global holdings of BTC in ETPs have reached $74B, closing the gap between Gold spot ETPs, which currently sits at $106B.
The market was also encouraged by the rate cuts from Canada and the ECB. Four of the G10 countries have started rate cuts this year. What’s more interesting is ECB’s cut comes at a time when their inflation is still above the 2% target.
While this is encouraging development, it may not impact the Fed’s rate decisions in the near term. The market is still predicting a slightly above 50/50 chance of a rate cut in September. In fact, when the May jobs report came with higher-than-expected job gains last Friday, it triggered a ~5% drawdown in BTC and ~12% drawdown in altcoins. We believe that in the short term, the market will continue to be influenced by the macro environment, especially given the two Fed Policy meetings in June and July.
After an accelerated period of increase in stablecoin supply since late October, issuance has slowed down in USDT and reversed the trend in USDC since April. The limited new money into the crypto market has constrained the performance of the crypto market in general, and even more so in altcoins, as BTC is still attracting fiat inflows from ETFs. In fact, the Altseason index is back to the low level seen in H1 2023, with only 24 of the top 100 digital assets outperforming BTC in the last 90 days.
Source: Blockchaincenter.net
DeFi Update
While crypto summer is yet to come, increased activities are emerging in selected parts of the crypto market. Base Onchain Summer II has just started in June. The Onchain Summer I last year has bootstrapped Base’s user base and TVL from 0 to $500M. This summer, the onchain activities could be turbocharged by the launch of Coinbase’s smart wallet. The smart wallet enables wallet creation from passkey, without the need for downloading any apps, extensions or seed phrases. It addresses the biggest hurdle for mainstream users to onboard Web3. Without the cumbersome process of creating a wallet and safekeeping the seed phrase, they can now use Web3 in the same familiar fashion as Web2.
The biggest beneficiaries of the Smart Wallet are dApps built on base as the test net version is already available for builders. For example, Moonwell, the largest Borrowing & Lending protocol on Base by TVL, has already enabled smart contract wallet creation in their app. According to founder Luke Youngblood, dApps built on Base can not only attract Coinbase’s broad user base using easy onboarding tools but also apply for base gas credit to give users a gasless experience, leveraging Account Abstraction.
As Onchain Summer II unfolds, Base memes became the best performing sector last week. Just like how Solana DEXes such as Juipter and Raydium could benefit from the Solana meme frenzy, we believe Aerodrome, the Base native DEX, stands to benefit the most from the growth of Base memes and the Base ecosystem overall.
Source: CoinGecko, 6/8/24
DeFi Update
Top 100 MCAP Winners
ORDI (+24.99%)
Stacks(+21.30%)
Kaspa (+18.92%)
Monero (+15.59%)
BNB (+12.87%)
Top 100 MCAP Losers
Beam (-21.19%)
Lido DAO (-20.87%)
Celestia (-20.49%)
Chiliz (-20.39%)
dogwifhat (-18.07%)
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.
About the Author
Kelly is Portfolio Manager and Head of Research at Decentral Park Capital. Investing across sectors with a thesis driven, deep research approach.
Prior to this, Kelly has led research and product efforts at CoinDesk Indices and Fidelity Digital Asset Management. Kelly has been a TradFi investor for 15 years before joining the crypto space.
You can follow Kelly on Twitter and LinkedIn for more frequent analysis and updates.