Weekly Market Wrap

Denis Vinokourov

Bulls remain firmly in control of the markets, with Bitcoin continuing to push higher,  past $16,000 and edging ever closer to its all-time high. There does appear to be some congestion for Bitcoin to make it past $17,150, but there is also little to suggest that there is any appetite to short at these levels. The upside traction has been such that month-to-date (MTD), Bitcoin is up 19 percent and Ethereum up 18 percent.

Underlying network fundamentals have been supportive, with the hashrate recovering aggressively as a significant number of miners transitioned their ASIC hardware to coal-powered northern regions like Inner Mongolia and Xinjiang following the end of the rainy season in China’s Sichuan province.

The recovery was particularly aided by a large mining difficulty adjustment of -15 percent and as it stands, the next mining difficulty adjustment is also expected to result in a downward change albeit a much more modest -2.5 percent.

The growing interest in trading digital assets is undeniable, with the latest Bitcoin futures aggregate open interest (OI) climbing to a new record high of over $6 billion and, more importantly, it wasn’t just the unregulated exchanges that saw their OI grow.

In fact, the OI on the CME is now just shy of $1 billion, similar to levels commanded by Binance, the largest cryptocurrency exchange. Looking at the broader market, it wasn’t just the large caps that continued to benefit from the risk-on sentiment: small and mid-cap assets also posted strong gains, especially those that are dominant in the fast growing DeFi ecosystem. For example, Uniswap is up 37 percent month to date (MTD) and SuhiSwap is up 30 percent.

In addition, the total value locked (TVL) also rose to a new record high of $13.7 billion. However even with the recent move higher by Uniswap and Sushiswap, the two remain cheap based on the underlying price/sales ratios relative to their peers.

Something to keep in mind for Uniswap going forward is that on 17th Nov, UNI farming will end and, as it stands, around $2.3 billion funds are deployed farming the native token. Ethereum being the reference token means that there is currently $1.1 billion ETH locked. It remains to be seen how much ETH will leave but a large portion will likely stay and enjoy the high fees. Others may look for higher returns elsewhere, potentially turning to SushiSwap.

Also of note, it was reported that Ripple, for the first time, bought $46 million worth of XRP during the third quarter despite already owning nearly half of the supply. The company said the purchase was made to support “healthy markets,” possibly referring to creating interest around XRP. Another development that also took place not long ago is the merger of Voyager and LGO Markets.

Now the interesting part is that as part of the merger, the next version of the Voyager token will be minted, which will allow holders of the VGX and LGO token holders to swap into the new token. The holder ownership percentages will be commensurate with the existing fully diluted market caps of the tokens. The new token will include decentralized finance features such as community governance, as well as advanced utility including staking with an initial 7% interest.

As a reminder, Voyager is publicly listed on the Canadian Securities Exchange. Buybacks and mergers may be nothing new in equity markets but for digital assets-based companies, this presents another huge opportunity and something that should be paid attention to.

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