Weekly Market Commentary - DV Chain - April 8, 2024

April 8, 2024

Welcome back to DV Chain's Weekly Market Commentary! In this edition, we'll be focusing on recent market activity, latest airdrops, latest ETF flows, as well as additional upcoming catalysts / trade ideas. Let's dive right in:

Market Recap

  • ETF Flows continued to be positive last week

                                                          (Source: Farside Investors)

  • Retail volumes have been trending down slightly from early March peaks but still healthy and higher than January even with the ETF launch
  • Gold and BTC have maintained a positive correlation over the last 42 days, marking the longest such stretch of the past yearsome text
    • GC has made a new all time high 5 out of the last 6 trading days. BTC also seems well setup for a run higher
  • ETH caught a bid this AM after approaching the 6 month lows in ETH/BTC and .05 psychological levelsome text
    • ETH’s biggest catalyst is the Eigenlayer launch estimated to be sometime this month or next. It’s arguably the most anticipated innovation this cycle
    • The ETH ETF deadline is also late May, but at this point the market has largely priced in the expectation of rejection or delay. Polymarket odds are trading at 17% chance of approval
  • Ethena is now sitting at 2B in TVL and accounts for a significant portion of the global open interestsome text
    • They’re adding BTC basis positions now after originally only having ETH basis positions
  • Solana has been having congestion issues, lots of transactions not going through, as chain activity remains high with memecoins, new token launches and airdrop claimssome text
    • The good UI and cheap transactions is what won people over to solana, so it will be interesting to see if this narrative changes as the congestion continues
    • Jito seems to be the big beneficiary as the only reliable way to push transactions through are to hike up priority fees (validator bribes)
  • Wormhole (W) started trading last weeksome text
    • Opened up around $1.4, putting it at about 14B FDV and over 2B circulating, one of the richest new launches this year, but it quickly traded down to $1
    • SYN caught a bid on W launch day as the valuation became very attractive comparably
  • AAVE contemplates a fee switch proposalsome text
    • This has been a notable trend in Defi this cycle, starting with MKR and then UNI recently
    • It’s probably worth studying forgotten DeFi tokens that have large treasuries and revenues but currently have no value accrual
  • April is a big month for highly anticipated airdrops such as Tensor, Parcl, Kamino, Drift, and Eigenlayer

Upcoming Catalysts / Trade Ideas

  • TNSR airdrop, 4/8
  • BTC Halving, 4/20some text
    • Lots of excitement around new L2s – exciting in theory but we have yet to see any strong execution with good UI/UX
    • Bitcoin ordinal NFTs have rallied the last week as NFT owners speculate on launch of Runes (a UTXO based BRC-20 alternative) that will be dropped to many ordinal NFT holders
    • Depending heavily on the UX of trading runes, this is an area to watch for potential meme coin frenzies that we’ve seen lately on other chains
  • Doge Day, 4/20
  • SUI Conference, 4/10some text
    • Any outsize conference pumps may potentially be a good short setup, or can serve as a good hedge leg for longs
    • SUI has unlocks coming up this May/June, one of the largest cliff unlocks this year
  • STX Nakamoto Upgrade, 4/15some text
    • “first SEC-compliant blockchain”
    • we think it’s worth being early users/testers of the chain post upgrade, as there’s tremendous interest in defi on Bitcoin and Bitcoin L2s, as shown by Merlin chain’s 3Bn TVL amassed shortly after launch
    • the limiting factor at the moment is UI/UX, stacks (pre upgrade) and Ordinal ecosystem leaving a lot to be desired
  • STRK Unlock, 4/16some text
    • 64m tokens unlock, and will continue monthly thereafter
    • We think emissions in high FDV products will be very impactful in this market and that the sell pressure from monthly unlocks will be impactful
  • $PARCL announced 7-8% supply airdropped this monthsome text
    • AEVO pre market futures implies 1.8B FDV
  • Eigen Launch, widely expected to be this month
  • $LDOsome text
    • We think $LDO is poised to outperform as it should benefit from a re-staking narrative that’s heating up into the Eigenlayer airdrop
    • Having a whopping $30B in TVL, LDO is one of the biggest and fundamentally strong Defi Protocols that exists, and has a first mover advantage in the liquid staking spacesome text
      • With the imminent launch of re-staking, we believe attention and excitement will return this sector and LDO will be one of the main beneficiaries
      • The trend of DeFi protocols turning on Fee switches is also bullish for LDO


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