Crazy volatility in the markets and an impending product launch have meant that we have not been able to send out newsletters these past two days. We will try and make up for this in today’s edition, which is packed with information.

The last few weeks in the markets, especially since the launch of Libra,have seen extreme price swings not seen since late 2017. The price of Bitcoin jumped by over 20% in the last few days, reaching a (local) high of $14k in price, and is currently trading in the high $11ks.

While it is easy to start drawing comparisons between the current price rally and that of late 2017, underlying data seems to indicate that the recent purchasing activity is largely without retail investors; Retail was the key reason the price of bitcoin rose above $20k in the previous mega bull run.

Trading volume data from p2p exchange network localbitcoins seems to suggest that the daily global trading volume has largely remained flat through most of 2019, despite the significant appreciation in the price of Bitcoin. During the 2017 bull run, daily trading volumes on localbitcoins had reached an all-time high of $130 million and had been on a secular downward trend since then, before flattening out at around $40-50 million per day. We plan to dive more into this on Monday, but it looks like retail involvement in this particular run-up is a fair bit muted as compared to the last time around, which means that this run-up has some ways to go. What is a bull run without the inevitable retail FOMO investor trying to clamber off towards the fag end, ending up losing their shirt more often than not.

Trading briefs by @ShreyasChari

Since our last analysis, BTC broke out solidly as we had predicted and had one of the best performances in recent history, climbing more than 20% at press time. Highs in this move were mostly in the $13k range and current levels of nearly 12k show steady consolidation. The effect seems to be due to some set of large investors/whales and this brings us back to the top 100 wallet theory that we presented.

As we can see that has been steadily climbing over the past week as well.

Volatility markets are pricing upside calls very wide meaning there is a lot of uncertainty in the upside from the market maker community. This bodes well for further upside. Puts are reasonable in spreads thereby indicating that exposure to the downside is better understood than the upside.

Median transaction fees have climbed in this high volume bull run (Derivative exchanges have tripled in volume) and are at yearly highs. Still a long way from the 2017 highs but at $3.71 currently they are local highs.

Bid/Ask sums as noted before blew out on June 24th with Asks at way higher spreads indicating a squeezed market. That has since come down to more tolerable levels and therefore there is further room to the upside now that the pressure has released over the past 4 days.

Near term prognosis therefore is still pretty bullish and any other positive announcement in the space would probably take out the near term high.

Now onto our Friday Metrics Watch…

We touched upon the recent decline in the volume of ETH locked in DeFi apps over the past few weeks. You can read about it here.

Ethereum Locked in DeFi

MakerDAO still accounts for a lion’s share of ETH locked up in collateral, with more than 1.56 million of ETH locked up. Uniswap showed a w/w decline of 3% in ETH locked up and Augur showed a w/w decline of 3%. Compound recorded a strong w/w growth of 23%.

Lightning Network Growth:

Capacity per channel showed a moderate increase of 1% w/w. The total number of nodes increased w/w by 1%, and the total number of channels decreased by 1%.

(For reference, some previous articles on LN, here).

DEX Tracker:

Trading volumes on DEXs have increased on a w/w basis, with the average daily trading volume averaging 35k ETH for this week. IDEX remains the biggest DEX in terms of trading volume and DAI is the highest traded cryptocurrency on DEXs.

(For reference, some previous articles on DEXs, here and here).

Crypto Loans Tracker:

Compound Loans:

Total loans issued on Compound for the last week stands at approx. $3.4 million for the week, more than a 2x increase from $1.4 million in the previous week. WETH is the most borrowed cryptocurrency on Compound followed by DAI and BAT.

Dharma Loans:

Total loans issued on Dharma Lever for the last week stands at approx. $170k for the week, a modest increase from the previous week. DAI is the most borrowed cryptocurrency on Compound followed by WETH and USDC.

MakerDAO Loans:

DAI loans issued on MakerDAO for this week stand at ~$14.1 million, a meaningful increase from $3.5 million last week. The total outstanding DAI debt currently stands at ~$85 million.

(For reference, some previous articles on MakerDao, here and here).

You can also check out last week’s Metrics Watch here.

Crypto Twitter Pick

Another thing worth pointing out is that there is virtually no spike in Google searches for the largest cryptocurrency exchanges (Binance, Coinbase, Bitfinex). But there is a noticeable spike in Google searches for exchanges with predominantly Asian demographics (OKEx and Huobi). pic.twitter.com/Oa99AEvjwH — Larry Cermak (@lawmaster) June 28, 2019

What We’re Reading / Listening To

Facebook’s Libra Masterplan by Eric Wall

The Perfect Crypto Quants featuring James Slazas