Overview
- “Floaters” by Arthur Hayes summary.
- Google Trends shows a spike in retail interest.
- The SEC commissioner who’s all about a spot BTC ETF.
- Stop trying to guess the bottom.
Dear Banter Fam,
Take a big breath of relief. Finally, the weekend’s almost here.
Since it’s Friday, we won’t bore you with economic data. So instead, we’ll summarize the latest masterpiece by Arthur Hayes in hopes you can derive some alpha from Mr. Pepe mega-brain himself. If you don’t already know who Arthur Hayes is, he is an ex-banker, entrepreneur, crypto advocate, and co-founder of the BitMEX exchange. His financial sector experience and crypto preference help put a unique lens on the crypto sector. Basically, the man really knows his sh*t.
Summary of “Floaters” by Arthur Hayes
In the latest release by a house-arrested Arthur Hayes (don’t feel bad, I heard it’s a lovely mansion), he manages to compare the downturn in some over-leveraged crypto companies to the “floaters’ (dead bodies) his row team encountered during practice in the Schuylkill River, Pennsylvania. From there, he explains why their business model failed and lists a few of his favorite assets for the next bull run.
‘During the fire sale of the dead, pristine assets with solid fundamentals suddenly become inexpensive.”
-Arthur Hayes “Floaters”
Source: arthurhayes.medium
Below I present the summary (or notes) of the article and some of my favorite quotes. The article’s namesake sections organize the outline. If you’d like to read the entire article, you can find it here.
Intro
- Compares dead crypto businesses to dead-body “floaters” of the Schuylkill River, who are currently spewing out their resources.
- “For those intrepid living capital markets explorers who possess the resources to harvest the fruits of the dead, the capital markets zombie apocalypse is welcomed. During the fire sale of the dead, pristine assets with solid fundamentals suddenly become inexpensive.”
- Hayes cautions, “beware, not all assets are created equal.”
- “The time is upon faithful to sow the seeds for the next bull harvest.”
- Projects that embody the Haye’s opinion of pristine characteristics:
- Are down 75% – 99% from 2021 all-time-highs.
- Protocols that have actual users that use real capital to utilize the service
- Are the first projects defining how key DeFi services should be offered
Duration mismatch
- Hayes compares the current crypto crisis to every financial crisis of the past that began with short term borrowing on one end and locked-up liquidity on the other. It’s a very similar modal that an unnamed lender service is using: borrowing money from retail for high rates and locking up funds for long term yield farming strategies.
- These firms must “puke” up resources to pay those who want their capital back when the market is crashing. This action further exacerbated a falling crypto market.
A Short Primer on Hedge Fund Maths
- Hayes noticed when Terra collapsed; many DeFi projects were down big. He suspects the firms holding Terra were also holding many of those projects.
- July 4 is a perfect setup for another mega crypto dump, with markets being closed on Monday for a holiday in the US because no “fiat can be deployed until Tuesday.”
- Hayes predicts most altcoins have a lot of room to fall. Predicts brutal markets ahead.
Caution
- Beware: Hayes owns Bitcoin, Ether, and every coin he mentions.
- Hayes says return to basics by finding projects with actual users, real capital, and valuable services.
- DeFi projects that don’t embody these characteristics will trend closer to zero. There’s only one or two in each sector that has these characteristics.
- Hayes uses the P/E ratio to pick his favorite projects.
All projects Hayes mentions have the characteristics of decreased P/E ratio and sustained users. Charts and metrics are available in the article.
Projects favored by Hayes.
- Sushiswap (SUSHI)
- GMX (GMX)
- Ethereum Naming Service (ENS)
- Looks (LOOK) NFT marketplace
Market update 🌍
BTC/USD
Bitcoin (BTC) struggled today after two flat days of trading. BTC slipped -9.95% for the day and inches closer to the 20k lows hit two days ago. Volume appears to be diminishing to lower-liquidity levels of last week. BTC completed the US session at US$20,382.
High-resolution chart
Google Trends “Bitcoin”
Interestingly, the “bitcoin” search in the 90-day Google Trends chart jumped to 100 yesterday after months of low searches. The spike looks very reminiscent of one that occurred on May 12, 2021, near BTC lows in the summer of 2021. Whether it’s just noise or retail investors are taking an interest in low prices remains to be seen.
Source: Google Trends
Stablecoin Dominance
Stablecoin dominance (USDC.D) continues to rise rapidly. The market continues to bypass BTC as a crypto safe haven and enter stablecoins USDT and USDC. As a result, Stablecoins USDT and USDC dominance have experienced the most significant monthly gains on record, up +44.20% for June.
High-resolution chart
| US markets close | Gain |
| S&P 500 | -3.25% |
| Nasdaq | -0.91% |
| Dow | -3.47% |
| VIX | +11.25% |
Notable Losers:
| Protocol (Coin) | Price ($) | Gain (%) |
| Ethereum (ETH) | 1060.00 | -13.5 |
| Binance (BNB) | 209.17 | -28 |
| Cardano (ADA) | 0.47 | -11 |
| XRP (XRP) | 0.30 | -9.5 |
| Solana (SOL) | 29.88 | -13 |
| Polkadot (DOT) | 7.05 | -15 |
| Dogecoin (DOGE) | 0.05 | -10 |
| Tron (TRON) | 0.05 | -27 |
| Avalanche (AVAX) | 15.67 | -14 |
| Bitcoin Fear and Greed Index | 9 Extreme Fear |
| “Crypto” Google Trends 90d | 28 |
| “Bitcoin” Google Trends 90d | 93 |
Newswatch 📰
Split in SEC’s opinion on regulating spot -BTC ETF. The Securities and Exchange Commission’s (SEC) commissioner Hester Peirce spoke at a conference Tuesday titled “Regulating the New Crypto Ecosystem” and bluntly criticized the current (SEC) policy regarding cryptocurrency. She noted the SEC’s “refusal to engage” and claims the regulatory body is setting bitcoin to a higher standard than other products.
Tron’s USDD unwind continues. The Tron DAO Reserve announced its withdrawal of 3 billion TRX tokens from various exchanges to combat USDD’s dollar depeg, which currently sits under the $1 mark. The DAO has withdrawn 5.5b of TRX’s tokens in the past two days, which equates to nearly 6% of all supply.
Musk to be sued for selling Dogecoin. The Telsa and Space-X CEO is being sued for $258 billion over pyramid scheme allegations of Dogecoin (DOGE). The filer, Keith Johnson, wants $258b in damages for losses incurred from trading the cryptocurrency. The lawsuit noted, ” It’s simply a fraud whereby ‘greater fools’ are deceived into buying the coin at a higher price.” Dogecoin (DOGE) is down 92% since Elon Musk starred in Saturday Night Live in May 2021.
News Tidbits:
- A majority of millionaires polled for Capgemini’s World Wealth Report have invested in digital assets.
- Huobi permanently shuts down in Thailand after license revocation.
At the protocol level ⛓
Protocol level tidbits:
- Inverse Finance exploited for $1.26m
- Vulnerability discovered in older versions of MetaMask and Phantom web extension wallets.
- Launch of ERC-4626 standard. Tokenized vaults.
- Aura (AURA) goes live. Airdrop claims are now available.
- Forta Network’s FORT token goes live and is available for airdrop claim.
- Proposal to whitelist Liquity Protocol (LOTY) on Curve (CRV).
- Developments in Frax (FRAX).
- Rocket Pool (RPL) explainer.
Banter’s take
Stop trying to guess the bottom.
Arthur Hayes remains one of my favorite reads when it comes to crypto articles. The pieces are imaginative and offer a bounty of information from one of the OGs of crypto.
There’s one thing I’d like to point out, though. In the article, Hayes released on June 1 titled “Shut it Down!” He predicted a bottom for Bitcoin and Ethereum at a $25,000 BTC and a $1,700 ETH. Although he did own up to his mistake, it proves one major thing: even the experts get it wrong!
So, just like Hayes tried to predict the bottom, don’t make the mistake of trying to predict it yourself. Instead, if you’re committed to participating in this volatile sector, Take a different approach: buy in smaller increments over a longer period of time.
Do it with conviction and hodl for dear life. There’s still a bumpy road ahead.
Enjoy your weekend, and see you Monday!
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.
