Overview
- Insane L2 growth in bear market
- Can BTC hold support this time around?
- 142k BTC to be dumped on the market!
- Upcoming black swan event?
Insane L2 growth in bear market.
Good Morning Banter Fam,
One sector of crypto that maintains my focus is the emerging Layer-2s (L2s) ecosystems. L2s allow for the use of ETH with lower gas fees and have been one of the fastest-growing sectors despite the overall market conditions.
The overall sector, primarily dominated by Arbitrum (52%), Optimism (19%), and dYdX (14.9%), grew by 11% in the previous month when measured in ETH and now contains 3.1m ETH worth of value (~$3.8b).
Source: L2Beat.com
What came as a surprise was the high percentage of TVL increases in individual protocols on the L2s for the month. For example, in the Arbitrum ecosystem, many major protocols have grown 100 – 1000 percentage points over the previous 30 days. Notably, Uniswap (UNI) on Arbitrum had a percentage inflow of 10,000%, although it accounts for only US$52m. Nonetheless, it shows an increased interest in transacting on L2s, likely to save on gas fees. Additionally, bridge protocols are one of the primary beneficiaries of migration into L2s to include Multichain (+657%), Stargate (272%), and Synapse (+638%).
Source: DeFILlama.com
Although still minuscule compared to their mother chain, Ethereum (ETH), there is no doubt an increase of interest and activity in the early stages of L2s that offer the security of the Ethereum network, lower gas fees, and increased transaction speeds.
Market update 🌍
BTC/USD
Bitcoin broke the upward trend it had developed over the week over the weekend on the 4H charts and looks to test its previous support near 20k. The best-case scenario is for BTC to continue making lower highs and solidify the uptrend that began on June 18 (Green line). A couple of major economic events this week could significantly impact the direction of BTC and crypto in general. On Monday, at 11 am EST, the 3-year inflation expectations are released, and Wednesday, the Core CPI is released at 830am EST.
High-resolution chart
NDAQ/USD
Another chart I’m closely examining is the Nasdaq (NDAQ) ETF. BTC and NDAQ have been closely correlated in the past few months, and NDAQ is about to test a significant down-trend that began in Jan 2022 (Red) on the daily charts. A break in this trend can help confirm a slight rotation of the market participants into risk assets, ultimately aiding BTC and crypto alike.
High-resolution chart
| US markets close | Gain |
| S&P 500 | Sunday Market Closed |
| Nasdaq | |
| Dow | |
| VIX |
Notable Gainers (7d):
| Protocol (Coin) | Price ($) | Gain (%) |
| Quant (QNT) | 79.39 | +42 |
| Aave (AAVE) | 76.18 | +32 |
| Uniswap (UNI) | 6.30 | +28 |
| THORChain (RUNE) | 2.28 | +25 |
| Internet Computer (ICP) | 6.38 | +21.5 |
| DeFiChain (DFI) | 1.01 | +20 |
| Avalanche (AVAX) | 19.11 | +17 |
| Polygon (MATIC) | 0.57 | +16.5 |
| Arweave (AR) | 11.82 | +16 |
| Solana (SOL) | 36.78 | +10 |
| Convex Finance (CVX) | 5.88 | +48 |
| Curve DAO (CRV) | 0.95 | +23 |
| GMX (GMX) | 25.29 | +56 |
| Synapse (SYN) | 0.88 | +48 |
| dYdX (DYDX) | 2.03 | +41 |
| Bitcoin Fear and Greed Index | 24 Extreme Fear |
| “Crypto” Google Trends 90d | 20 |
| “Bitcoin” Google Trends 90d | 39 |
Newswatch 📰
Bitcoin black swan event? The Mt. Gox exchange is looking to repay its creditors beginning in August, which could see 142k bitcoin hitting the market. The litigation took seven years and could threaten the bitcoin price as many of these investors may be eager to exit their positions.
Chinese banks face liquidity issues. Thousands of people have taken to the streets in China to protest, as four of the country’s banks are facing liquidity issues, and have subsequently frozen citizens’ accounts. The banks affected include Henan bank, People’s bank of China, China Central Bank, and Bank of China.
Celsius Hires new lawyers. The embattled crypto lending platform Celsius has added legal counsel from Kirkland & Ellis LLP as part of its restructuring focus. Notably, the law firm represents Voyager, a recently declared bankrupt crypto exchange.
CoinFLEX enters arbitration. CoinFLEX has entered arbitration vs. Roger Ver in a Hong Kong court to attempt recovery of $US84m in losses to combat its liquidity crisis. Roger Ver denies he owes anything to the firm.
Justin Sun on Sri Lanka. TRON founder Justin Sun seems to have some ideas on how to help Sri Lanka, after it recently declared bankruptcy. At the same time, Sun has announced he is ready to spend $5bn on acquisitions as crypto firms struggle.
Omni Hack. A hacker has exploited a reentrancy vulnerability and drained $1.5 million worth of ETH from NFT lender Omni.
OKX and Manchester City. In other news, crypto exchange OKX has just announced it is kicking off a sponsorship deal with Premier League champions Manchester City.
News tidbits:
- Vauld exchange loses keys, and halts crypto withdrawals.
At the protocol level ⛓
Migration on to Polygon. After the collapse of the Terra ecosystem, over 50 projects have migrated to Polygon as their new home.
Protocol level tidbits:
- Total ETH deposited in the Ethereum 2.0 contract has now surpassed 13m.
- Bitcoin adds its sixth Core developer.
- Aztec Network: A guide to privacy on-chain.
- Bancor Update
NFT & metaverse update 🐵
- The 2nd NFT drop from the Guxxi x Superrare Collab is live.
- Johnny Depp donates $US800k from NFT associated with Amber Heard.
Banter’s take
Will 142,000 BTC entering the market in August create a black swan event?
It would not be very likely if I had to make an educated guess. The nature of black swan events is that nobody sees them coming. However, a surprise event could have an impactful repercussion on the market. Additionally, bitcoin has a daily trading volume of around $40 billion, $3 billion more is not likely to make much of a major difference. And who knows, maybe most of Mt. Gox creditors may want to hold on to their BTC. Just another headline, if you ask me.
Gabri
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Disclaimer
Good Morning crypto (issued by Crypto Banter) is a newsletter for entertainment purposes only.
All opinions expressed by the publisher, writers, and chartists should not be construed as financial advice, and do not necessarily reflect the views of Crypto Banter. The publisher, writers, and chartists may hold positions in the tokens and assets discussed. Readers are encouraged to do their own research.
