Crypto Corner: Week Summary 13 September
The Bitcoin price is up by nearly 7% this week quoting at $47,950 at the time of writing. The cryptocurrency markets are still recovering from last week’s correction. The largest ‘celebrity’ HODLers provided support near the $45,000 level, either by buying the dip, revealing increased Bitcoin inventory figures, or increasing their Bitcoin price prediction.
Microstrategy’s CEO Michael Saylor revealed on BloombergTV that the company holds more than $5 billion of bitcoin: it is the largest corporate HODLer of Bitcoin. During a SALT conference, Cathie Wood mentioned that she believes ‘the price [of Bitcoin] will be tenfold of where it is today (…) if companies continue to diversify their cash into something like Bitcoin, and if institutional investors start allocating 5% of their funds in Bitcoin’. Regarding the Wells notice sent by the regulator to Coinbase last week, Cathie Wood also supported that the largest institutional exchange probably ‘doesn’t mind’ given that its stock price hardly moved on the announcement. Indeed, the COIN stock price did not suddenly correct. Still, it did underperform the Bitcoin price as it is down -9% this month against -2% for the Bitcoin price.
The Bitcoin market dominance is only slightly up this week as the native tokens of the DeFi sector are showing double digit returns: SushiSwap (+31.64%), AAVE (+18.10%), Polkadot (+16.5%) and Uniswap (+12.90%) are among the top performers of the top one hundred market capitalisations. The SEC Chair Gary Gensler criticised the sector last month calling it the ‘Wild West’, and hinting for more oversight by the US regulator. The Wall Street Journal reported on September 3rd that Uniswap could already be under investigation. Regardless, the total DeFi market cap performance is still at +67% since the end of July, against +37% for the total crypto market cap. The latter bounced back above the $2.2 trillion level two days ago, but it still needs to gain momentum to reach its all-time-high at $2.57 trillion.
Solana (SOL) underperformed significantly this week, losing more than 20% after experiencing an outage three days ago. The incident lasted for hours. Users were locked out of their account, and initial estimates for the time to fix the problem were around 24 to 48 hours. The issue was triggered by a high transaction load and an ‘excessive memory consumption’ as tweeted by the Solana project: ‘Solana Mainnet Beta encountered a large increase in transaction load which peaked at 400,000 TPS. These transactions flooded the transaction processing queue, and lack of prioritisation of network-critical messaging caused the network to start forking’
Solana was built to handle 50,000 transactions per second. For comparison, ETH2.0 is expected to handle up to 10,000 transactions per second. The 400,000 TPS figure is obviously far above these levels, and far above the typical range observed that is between 1700 and 5000 transactions per second. The SOL/USD price hasn’t recovered since, and losses are now increasing. The price is 36% below its all time high.
Meanwhile, cryptocurrency adoption is still growing: new players are entering the sector, accepting the major cryptocurrencies as payment. AMC’s movie theatres in the US will start accepting Ethereum, Litecoin and Bitcoin Cash for payment after they announced in August that they would start accepting Bitcoin by year-end. The UK Post Office app now lets its customers buy vouchers that can be redeemed for cryptocurrencies. Cuba’s legalisation of cryptocurrency exchanges also became official this week.
Fundamentals are still strong as the ‘BTC All Exchanges Netflow’ is mostly negative since the end of August: Bitcoins are mostly leaving exchanges to be held or staked. Close to 10k BTCs (net) have been locked in DeFi projects since the end of August according to DeFi pulse and the futures implied rate curve is back to a non-inverted ‘normal’ shape, signaling the end of last week’s turbulence.