Hello everyone,
The purpose of this letter is to inform you about the current situation of the crypto-asset market as well as recent news in this field. This letter is not investment advice, but merely a sharing of my personal point of view.
News
More than one million ETH unstaked: what do the on-chain data say? A week after the Shapella update, over one million ETH were unstaked. While this figure seems significant, data provided by on-chain analysis nonetheless shows that staking is more popular than ever.
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Twitter partners with eToro to make buying cryptocurrencies easier for its users. This is a partnership that is bound to make waves. The giant Twitter has teamed up with the trading platform eToro to facilitate access to cryptocurrency and stock trading for the social network's users. Could this be the beginning of a revolution for Twitter?
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How are cryptocurrencies used by investors? In its latest study, CoinGecko looked at the different use cases of cryptocurrencies among ecosystem investors. Investment, payments, speculation, DeFi—shedding light on the statistics of these various pillars.
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Bitcoin: London Stock Exchange Group wants to provide derivatives services. Through its subsidiary SCH SA, London Stock Exchange Group will provide clearing services on the GFO-X Bitcoin index. Thus, BTC is embedding itself a little further into traditional finance.
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An inflation-indexed stablecoin? That is what Base, Coinbase's layer 2, wants. In an article suggesting ideas for application developers, Base, Coinbase's Layer 2, showed particular interest in the concept of the inflation-indexed stablecoin. Nevertheless, several issues arise with the emergence of flatcoins.
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Ledger completes its Series C with a new €100 million fundraising round. Ledger announced today a new fundraising round of 100 million euros, which completes its Series C, bringing the total to 456 million euros. This cash injection will allow the brand to bring its many projects to fruition, such as the new generation of hardware wallets embodied by the Ledger Stax.
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The airline Flybondi is now issuing all its tickets as NFTs – What does this change for passengers?. The Argentine airline Flybondi is integrating Web3 into its ticketing process by issuing its electronic tickets as non-fungible tokens (NFTs). Utilizing the Algorand (ALGO) blockchain, this initiative allows travelers to transfer or sell their «NFTickets» completely independently.
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Alyra: Paul's feedback on the blockchain developer training. Are you interested in blockchain development and considering taking a training course? Here is Paul's feedback to give you an idea of what you can expect from a training program organized by Alyra, a school specializing in training future professionals in the sector.
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Banking crisis: uncertainty remains «exceptionally high» according to the IMF head. The head of the International Monetary Fund (IMF) has looked back at the crisis shaking the banking sector in recent weeks. She asserts that uncertainty remains high, despite potential signs of appeasement. A review of financial institutions that trembled last week.
Fundamental Analysis
Source : https://www.coingecko.com/fr
At the time of writing, the price of Bitcoin is 29,333$ (on 04/19/23).
The Ethereum staking rush?
The latest Ethereum update, which enabled the double upgrade named «Shapella and Shanghai,» was successfully carried out in April. One week after the update, which consisted of allowing the withdrawal of staked Ethers as well as their rewards on the Beacon Chain, we can see that few investors have requested the withdrawal of their Ethers.
Many feared massive withdrawals, but this scenario did not happen. We had explained in our previous letters why we thought there would be few withdrawals. In reality, most indicators seem to show that investor confidence in Ethereum has been reinforced thanks to the latest upgrade.
Looking more closely at the withdrawals, it is interesting to note that the average number of staked ETH per validator dropped from 34 to 32.5. This is not insignificant, as 32 is the minimum amount of ETH required to run a validator. This suggests that in reality, current withdrawals could correspond to the rewards received since the deployment of the Beacon Chain smart contract:
Glassnode
Furthermore, it is also worth looking at new entrants. On this point, the trend has accelerated an increase in deposits has been observed for a few days.
Glassnode
Thus, more than 18.9 million ETH are currently staked on the Beacon Chain smart contract, representing over $38.9 billion and 15.6 % of total capitalization.
The bounce phase after the bear market?
As we can see in the long-term chart below, the last three bear cycles ended with a strong rebound. This rebound exceeded at least 60 % of the previous cycle's peak before the next halving. We therefore have good reason to believe that by the following halving (April 2024), the price will have clearly surpassed 40,000 $.
We do not expect a strong bull market like the ones at the end of 2014, the end of 2017, or the beginning of 2021 before 2024. Within these large cycles, there are smaller cycles that are interesting to study, and we will examine them in future newsletters.
A potential Alt Season?
There has been a sharp rise in prices since the beginning of the year. This increase has been driven (as after every exit from a bear market) by Bitcoin. The latter sees its dominance increase at the beginning of bull phases and during well-established bear markets. Conversely, Altcoins (from the top 50) see their dominance increase during well-established bull markets and often just before significant downward corrections.
You can see it below in an Alt Season indicator.
Source
This graph allows us to understand that we are close to an optimal period for shifting allocations toward Altcoins.
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The year 2022 was the worst year for bonds in over 100 years.
The massive measures adopted by governments to deal with the Covid-19 pandemic, the war in Ukraine, and the massive energy crisis derailed inflation. To put out the fire, central banks had to apply the brakes very forcefully and sharply raise their key interest rates. They then triggered a bond crash during this rate hike with the goal of (or rather, trying to) defeat inflation. Their prior ultra-flexible negative interest rate policy had sown the seeds of this situation.
Because bond prices are inversely correlated with rising interest rates, bonds suffered their worst year in over a century.
Econopolis, Bloomberg
The recent failures of a few banks (such as SVB, Credit Suisse, and others afterwards) are not insignificant and are partly linked to these unsustainable rate hikes.
A huge number of banks are currently sitting on very large unrealized losses following the drop in their bond prices. As long as few withdrawal requests are made by customers, these losses remain unrealized. If too many customers wish to withdraw their funds, forcing banks to sell their bonds at a loss, it is a house of cards collapsing for the most fragile banks. This situation is very dangerous, notably because most French life insurance policies are invested in this type of bonds.
As we explained in previous letters, the digital asset ecosystem is a market much less sensitive to interest rates compared to the bond and equity markets.
Our service
We offer a portfolio management service under mandate specializing in digital assets. We provide comprehensive, personalized support in this space by tailoring your portfolio allocation to your risk profile and situation.
Our turnkey management allows you to take advantage of this sector's growth without worrying about choosing the digital assets to put in your portfolio, conducting in-depth token research, dealing with volatility, or handling rebalancing, etc. All you have to do is read your monthly reports and invest regularly with a long-term horizon (4 years and more).
We do not engage in algorithmic trading or day trading; we invest for the long term in projects that we know and understand. We make monthly rebalancing adjustments in the portfolios and conduct in-depth research on the assets (especially their tokenomics) that we include in our portfolios.
Check out our website: https://www.mereau-finance.com/
If you have any questions, comments, or would like to know more about our service, please feel free to contact us at this email address: tristan.g@crypto-assets-management.com or to schedule a phone appointment with us via this link.
— Warning —
This is not investment advice, no one can predict the future.
You are solely responsible for your investment decisions.
We are not responsible for losses following a decision made on the basis of the information in this letter.
