Weekly Market Commentary — DV Chain — June 17, 2024

Welcome back to DV Chain’s Weekly Market Commentary! In this edition, we cover key market movements, including the #Fed’s decision to leave rates unchanged, and significant updates in the #DeFi sector. Additionally, we explore a few catalysts and trade ideas. Let’s dive in ⬇

Market Recap

• This past week, the Fed left rates unchanged as expected but we saw equities and bonds trading firmly higher after the meeting
• Crypto markets grinded lower, led by ETH giving back some gains from the gap move from the surprise ETF approval
• An update from Bloomberg ETF Analyst Eric Balchunas gave an updated estimate which was well received by the market

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• DeFi had a big week of mixed results, as CRV founder Michael “Mich” Egorov got liquidated on his money market position where he borrowed around $100mm in stables against $CRV token
• amidst the liquidations, CRV traded down to around $0.23, about half of where it was trading a week prior
• the CRV drama dragged down DeFi tokens but LDO and UNI traded well, posting ~10% gains on the week

• LDO formally announced the Lido Alliance, a network of DeFi projects aligned with StEth, most notably, Symbiotic, a re-staking platform backed by Paradigm that competes with EigenLayer
• Gnosis Dao approved a $30mm buyback of its token, $GNO pumped 20% as a result
• This bodes well for DeFi as a sector as it shows that a lot of DeFi governance tokens have value that can be unlocked with some activism
• Microstrategy issues $700mm in convertible notes, set to close today, likely goes right into buying more $BTC for the balance sheet
• David Hirsch — Chief, Crypto Asset and Cyber Unit in the Division of Enforcement at U.S. Securities and Exchange Commission leaves after 9 years
• ZK Sync ($ZK) trading goes live after years of anticipation
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Upcoming Catalysts / Trade Ideas
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• $ETH
• The market still seems to have low expectations of the ETH ETF
• With Derivatives lightly positioned, perps trading under spot, and much less overhang in ETHE as compared to GBTC, the launch of the ETH ETF has much less supply pressure as compared to the launch of the BTC ETF, and therefore has a lot of potential to surprise to the upside depending on flows
• $LDO
• DeFi as a sector is likely to benefit from the ETH ETF
• LDO fundamentally is a very strong project, clipping almost $200m in fees on an annualized basis to its treasury
• It has maintained majority of market share in the LST/LRT space, despite higher temporary yields in new competitor’s liquidity bootstrapping farms
• From an institutional standpoint, it is much stronger than competitors in terms of safety and network effects. The Lido Dao’s roadmap prioritizes institutional adoption, which we think is an astute plan, given the recent interest in crypto and tokenization from Wall Street
• The ongoing developments in US Policy stance is a potential spark for the revival of DeFi tokens
• $ASI Launch, 7/1
• Originally set for 5/24, and then 6/13 the merger was delayed again and now slated for 7/1
• $FET, $AGIX, and $OCEAN merge and get converted to $ASI
• As the 3 tokens all convert to $ASI, there is an arbitrage opportunity since $FET trades at a premium to $AGIX and $OCEAN

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