Welcome back to Efficient Frontier's biweekly newsletter
A sharp 8% jump in Bitcoin’s price from March 27th to 28th brought BTC to $48,192, marking the climax of two weeks of rising price. Then, for an additional week, the price backtracked, trading between $48,000 and $44,200.
On the first day of Bitcoin 2022 Miami Conference, this Wednesday, April 6th, a relatively sharp drop brought Bitcoin back to a low of $42,804, currently at $43,545.
From March 28th to April 2nd open interest in Bitcoin futures dropped 6.4% (while Bitcoin fell only 3.3%). Combined with low liquidations, this indicates traders closed their positions profitably and de-leveraged.
On April 6th, as Bitcoin’s price went below $45,000 again, it triggered $405 million in liquidations, the most forced liquidations since this January.
The mood of the market particpants was affected - the $48,192 high on March 28th brought crypto Greed & Fear index to a modest greed score of 60 and yesterday's drop brought the mood sharply back into the fear zone, now at 34.
The returning fear was reflected in decrease in futures basis since April 5th
More interesting developments:
19% of Bitcoin hashrate is currently controlled by publicly traded Bitcoin mining companies.
Luna Foundation’s BTC reserves reached 27,785 BTC.
Exchange traded Bitcoin funds experienced the biggest inflow since November 2021, adding 12,272 BTC.
Despite the drop in crypto prices since November 2021, DeFi TVL is not far from its all time high with $230B worth of tokens hosted in DeFi contracts.
Competing blockchains now claim an additional 10% of total TVL, threatening Etheruem’s DeFi dominance which is currently at 54%.
GBTC undervalued by $7 billion
Grayscale’s GBTC exchange traded fund has been trading below its underlying value for over a year. It reached a 10% discount to Bitcoin last April and is currently at -25%. With 641,000 BTC in the fund its trading at a $7B discount to NAV.
Grayscale have recently threatened to sue the SEC for not approving GBTC as an ETF, a change which would allow them to balance the fund and bring the price back to normal. Meanwhile the CEO of Grayscale is encouraging the public to petition the SEC with letters asking to approve GBTC as an ETF.
Is this a discount buying opportunity? Maybe, but it could stay underwater for a while.
“The adoption cycle [of Bitcoin] is starting to hit breakout velocity. And we can see it because sovereign wealth funds are buying in now. Institutions are buying it. They’re buying it for the same reason that individuals bought it 6 or 5 years ago.”
-Michael Novogratz, CEO of Galaxy Investment at Bitcoin 2022 conference
News & links
Goldman Sachs to offer OTC Ethereum options in addition to BTC
Exxon mines Bitcoin in North Dakota
Goldman Sachs: 51% of surveyed institutions have exposure to crypto
Miami 2022: Taro announce stablecoins on Lightning, Robinhood release crypto wallet
UK Government publish plan to become a crypto asset hub, request Royal Mint to mint an NFT
This week our blog explores DeFi engineering from a liquidity provider's perspective. Part 1 introduces DeFi and our objectives with it. Part 2 gets really interesting as we share the four main challenges faced by engineers dealing with this constantly changing technology.