What's Next for Crypto? Is $44k still in the cards!?

8/1/2024 -- Crypto Intel Inject

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Welcome back, Investors, Cryptopreneurs and DeFi Enjoyers!

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Crypto Macro

Here are today’s stats and market at a glance:

Courtesy of CoinGlass

It would appear that the dollar has been gaining strength recently, which as we all know is inversely correlated to BTC (as DXY goes up, BTC goes down; as DXY goes down, BTC goes up.. usually anyway).

Open interest is slightly down on the day, however, a majority of Crypto volume is driven by leverage and market makers, not spot.

Here is the BTC chart I’ve been staring at for the last month (warning, imaginary lines included minus astrological interpretation):

Analysis:

So as of late, BTC price action has mostly been driven by leverage traders and market makers. There’s been virtually no genuine spot demand for BTC, despite all the bullish talk about ETFs. This has been a very different cycle when compared to the last bull cycle.

As I explained in a previous iteration of the INTSUM, ETF “inflows” are actually a net detractor from spot volume. This is because, “self-directed” investors are pulling funds out of Bitcoin / Ethereum (blockchain rails), back to fiat, and into these ETF products (lol). So even though there appear to be “millions” in ETF inflows, it’s actually been a net negative on price action so far. I anticipate this trend will likely continue, as TradFi’s goal is to extract as much value as humanly possible out of crypto, without needing to actually get exposure to the underlying. We know this to be true because ETF providers (at least the biggest one / IBIT) like BlackRock have neat backdoor deals where Coinbase agrees to custody the Bitcoin needed to back the ETF product.

So… as long as Coinbase holds the BTC, BlackRock won’t be doing a whole lot of buying. Thanks, Larry. (Also, this totally jives with all the buying Coinbase has been doing lately.. although not a lot, they are still the biggest purchaser of BTC at the moment when compared to other CEXs).

That being said, BTC now remains at a very key level. I’d like to see bulls reclaim the $65k mark with some volume, and HODL there with conviction. Given that most bearish macro factors are starting to clear up, there’s no reason we shouldn’t be headed for higher, as market participants look to price in potential rate cuts leading into September. However, I still wouldn’t be surprised if market makers decided to take us down for one more dip in the $50k range before heading higher late August or early September.

I remain cautiously optimistic for higher highs, and lower lows for BTC moving forward from this range. However, here are some key events that could impact price action —

1. Observe market response to the heating Israel vs Iran conflict. The US has already announced that they intend to counter the upcoming Iranian attack on Israel within a few days. It’ll be interesting to see what Bitcoin does during this time, as we’ll really see if BTC is a good hedge against economic and geopolitical instability, or simply another risk-on asset.

2. Observe Trump’s behavior / performance leading into the election. It would appear that BTC / Crypto market sentiment is almost linearly correlated to Trump’s performance and chances of being elected. In hindsight, I’m beginning to wonder if politicizing Crypto / Bitcoin was a bad thing (at least in terms of short-term price action).

Trades and Positioning

With so much manipulation happening from our new friends over at BlackRock, as well as Market Makers, it’s hard for me to justify actually trading this god-awful range for very minimal benefit.

It’s actually been a lot more interesting playing the DeFi and “Memecoin” game. During periods of chopsolidation + downside volatility, it’s a lot better use of time to study other narratives within Crypto that have offer better ROR (rate of return).

That being said, I did just re-enter some XRP and BTC longs (20x leverage).

Here’s my schizo-art and rationale for the XRP Long:

As fate would have it, it appears that XRP is breaking out of a 7-year Pennant!

Here is the performance of our first XRP Long:

But as stated above, we just re-entered the long at $0.57731.

Beyond these cautiously deployed longs, I’ve rotated a ton of working capital into “memecoins” and other DeFi vehicles.

Here are the DeFi positions:

OVN-USD+ on Beefy (~510% APY), Risk Level — 🟡

haSUI-SUI Vault on Cetus (~16.6% APY), Risk Level — 🟢

DJ_ Hyperliquid Vault on Hyperliquid (~774% APY), Risk Level — 🟡

Here’s the performance of our OVN-USD+ so far:

RoR very substantial on a small bucket of deployed liquidity — ~$320k at deposit, will look to deploy more capital soon.

DJ_ Vault Performance (only 2 weeks in this vault lol):

Okay so needless to say, DeFi is where it’s at, especially if all you’re looking to do is get invested and HODL.

But for those of you more daring, and interested in exploring the future of humanity, I am happy to introduce you to what we call Tokenized Culture Coins. Here is a comprehensive list of Tokenized Culture holdings within our portfolio: