The last week in Crypto was filled with many exciting highlights, as usual, prominent of them was the Coin Base IPO.
The $COIN IPO is finally a successful case of a cryptocurrency that made it into the public traditional market, Anton started his review of the week. The listing is not only important as a validation for the crypto market but made history as the biggest direct listing in the US equity market.
The excitement of the IPO is going to drag up valuations of companies in the crypto space is going to be important for founders, Anton noted.
Futures Market and Liquidation
Sales from the IPO coincided with a new all-time high for Bitcoin but by the weekend, a sharp decline was experienced with Bitcoin sold from $65,000 down to $52,000.
The reasons for this can be premised on potentially what were the fundamental reasons, as well as the impact of the market, Anton noted. One such fundamental cases were related to the drop in the Bitcoin hashrate which allegedly was a consequence of a few miners in China, going down due to electricity issues.
The market perspective also says the drop was because of severe auto liquidation happening, particularly in the futures market at a single exchange worth several billion dollars in a short period.
“In my personal opinion, the trend is still the same and the bull run is still on. You will have these market reactions that could cause the price to overshoot downward in this case but I still think that the fundamentals are very strong, especially what we see on our side as a market maker. It’s the bull run is still on” Anton stated.
Although when liquidations happen and the price goes down, everybody is unhappy, the fact remains that people get liquidated when the price goes up as well, Anton reiterated.
Funding for A Longer-Term Correction
(04:57) The crash that happened in March last year when the COVID-19 pandemic started put a lot of companies out of business because many were not prepared for such a sharp drop.
This is not the case today Anton noted.
(05:29) “Even if we have a severe correction to about USD 40K, the companies that are still there are very strong. We have a strong balance sheet and strong funding that can survive if a further correction happens” Anton said.
Even if the correction goes further down, there will be a lot of ready buyers, Anton believes.
“What we see in the market is that the appetite is still very strong, both on the retail side and from the institutional side which is price sensitive so this is a great opportunity for them to buy. On the retail side, the metrics are showing again that everybody is still buying crypto” Anton said.
While the markets are strong, support for companies may be needed when Bitcoin drops to a USD 50k or USD 40k level.
The Future of Bitcoin Mining
The current fluctuations of Bitcoin have been linked with a drop in the hashrate speculatively because of miners in China going offline.
The solution may be in hashrate futures, Anton suggested. This would be an innovative product as a hedge for the miners, the vested parties and speculators. As the appetite for mining and the first exposure in the blockchain and crypto infrastructure is still very present, this provides an opportunity for market makers to provide liquidity.
UniSwap v3 and Reducing Trading Fees.
(11:59) The massive success story of UniSwap has been because they have made it easy to pretty much list any token and set up a simple pricing mechanism instead of the burden of the high fees the Ethereum network.
“UniSwap is becoming an exchange in the sense that now they are enabling you to target a certain price bucket with the liquidity that you want to supply and they’re indirectly creating an order book,” Anton explained.
UniSwap is evolving from a trading venue with a simple setup pricing to an exchange as it pitches itself but is actually a market-making protocol wrapped within a trading venue. This may gradually make it difficult for unprofessional retailers to participate like they previously have.
“With the v3 that is supposed to come out in May, you really will have to be skilful, fast and clever to know how to supply liquidity in certain price buckets. From that moment on, retail and unsophisticated or unprofessional traders will still be able to supply liquidity, but to the extent that they do so optimally… at that point, UniSwap will become a tool for professional traders and professional market makers,” Anton argued.