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April 12, 2021

Weekly Market Roundup

There is more to digital assets than Bitcoin and the price action over the last 7 days continues to show just that. There is a growing appetite to explore broader ecosystems. 

Specifically, the MVIS small caps index is up close to 9%, while the large caps index equivalent is unchanged. What is more interesting is that DeFi based assets, including the potential competitors and “late” entrants are continuing to post strong gains. 

Binance’s BNB is now up over 1000% year-to-date, with BSC DeFi venues attracting significant inflows. It is not just Pancakeswap that now has significant total value locked but there are a number of other venues such as Venus and Ellipsis that have been able to attract a considerable amount of capital since their respective launches. The unexpected riser is TRX which, also largely driven by the DeFi play, has Total Value Locked (TVL) across TRON DeFi of over $14 billion.

The growing number of Bitcoin locked on Ethereum, which now stands at 188k, suggests hot money will continue to chase yields across the DeFi ecosystem and given the success of BSC, will likely encourage the so-called Ethereum killers to speed up their DeFi entry game plan. 

However, all this means for the core assets such as Bitcoin is further questions. Is it possible for DeFi to completely decouple from Bitcoin? While it may have decoupled based on the price action, the over reliance of securitised capital implies that more capital needs to enter organically before such a tectonic trend takes place. Still, it is something to contemplate going forward. Whilst institutional interest may be largely focused on Bitcoin, could this shift to other more exotic venues such as Maker, Compound, Uniswap and other DeFi participants?

For now though, institutional access will be provided through various funds such as those offered by Galaxy Digital and NYDIG. Morgan Stanley announced only recently that it is launching access to three of such funds. The bank considers it suitable for people with “an aggressive risk tolerance” who have at least $2 million in assets held by the firm. Investment firms need at least $5 million at the bank to qualify for the new stakes. So not for the fainthearted and with deep pockets.

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