What’s causing the pump this week?

July 26, 2022July 27, 2022 Stan

Anticipation for Ethereum’s Merge caused the markets to pump! And then Tesla sold 75% of its Bitcoin holdings yesterday.

Today We’ll be Covering:
• ETH Merge. There’s a date!
• TESLA. Why they sold. (But it’s not that bad)
• News Around DeFi. MakerDao shares their numbers. Lido expands to Layer 2s.

“The essence of investment management is the management of risks, not the management of returns.” – Benjamin Graham

📈 What’s Causing the Pump?

After months of endless bad news, it feels great to get some green.

Ethereum has gone up by 34% in a single week!

Bitcoin always led the rallies in the past. This time, Ethereum’s leading the recovery with Bitcoin following behind.

So what’s happening?

Ethereum developer, Tim Beiko, proposed that the merge could happen on September 19th.

(Don’t know what the Merge is? Catch up here)

The Merge has been delayed a few times before. So actually seeing a date has everyone excited. Keep in mind this isn’t guaranteed, but a suggestion.

Before you get too excited about Crypto prices pumping, the Stock market pumped too.

A few thoughts:

• Don’t fight the fed. Inflation’s running rampant, and interest rates are rising. You need more money coming into Crypto for it to go up in the long term. As much as I want it to, I don’t think the bull market’s back on.

• Be careful of action bias. It’s the feeling that doing something is better than doing nothing. The past few months have been so boring. So it’s tempting to feel the need to “do something.”

I think about it like poker. A lot of newbies fail because they feel the need to play every hand. Sometimes it’s better to wait for a good hand. In this case, I’m waiting for a more favorable macro environment.

• Keep it simple with a dollar cost average approach. I bought ETH in May, June, July, and I’m planning on buying it next month.

(Your favorite CEX should have an option for recurring buys)

I don’t waste brain power trying to figure out if the pump will sustain or if people will “dump” after the merge.

The next FOMC meeting is July 26-27. That’s where the Fed decides on interest rates, and the market will react accordingly.

📰 The Fast Five

mysten labs team — The team at Mysten Labs

1) Mysten Labs Seeks a $2 Billion Valuation. Mysten Labs, a crypto startup founded by former Meta execs reportedly seeks to raise $200M in a new funding round with a target valuation of $2 billion. The firm plans to build a new blockchain for web 3.0 apps and has previously raised $36M for its series A led by a16z.

What Do They Do?

Their main focus is on developing the Layer 1 Blockchain, Sui.

The team has reported that, as of March 19, “an unoptimized single-worker Sui authority running on an 8-core M1 Macbook Pro can execute and commit 120,000 token transfer transactions per second (TPS).

I recommend reading this profile to understand more about what they’re trying to build.

The Layer 1 space is crowded. But big backers, great tech, funding, and a strong team makes this worth keeping an eye on.

2) 3AC Borrowed $3.5 Billion From Creditors. The now-defunct crypto hedge fund 3AC owes 27 crypto companies approximately $3.5 billion according to a document published by 3AC’s liquidators.

Genesis, the brokerage subsidiary firm of Digital Currency Group, had lent 3AC the largest amount, $2.3 billion. The details of the loans came out of a 1,157-page legal document uploaded online on Monday by Teneo, the firm appointed last month to oversee 3AC’s liquidation.

Some of the craziest things include them buying a $50m yacht with borrowed funds, and the 3AC “owes” $65.7m to Kyle Davies wife.

3) Circle Eyes a Public Listing in Q4 2022. The stablecoin issuer behind USDC, Circle, eyes a public listing in Q4 2022. The firm also published its first monthly breakdown of USDC’s backing.

Circle has previously aimed to go public via a SPAC but delayed its plan amidst market conditions. CFO Jeremy Fox-Geen stated that the firm now aims to go public regardless of market conditions.

All eyes are on stablecoins since the implosion of Terra Luna rocked the entire crypto space. Circle going public would speed up the adoption and trust of stablecoins.

4) Disney Selects Polygon into its Accelerator Program. The accelerator program is a “training” program from Disney. Senior executives from Disney will train the six companies chosen. Which then leads to a demo day.

Polygon Matic’s price has gone up 67% in the past 7 days. Based on Ethereum’s pump and this Disney news. Disney’s one of the largest media companies in the world. People are hoping that this could lead to further partnerships down the line. Imagine Disney NFTs on the Polygon chain.

5) Tesla Sells 75% of its Bitcoin Holdings. Last year, Tesla made a $1.5 billion investment in Bitcoin. The company recently sold 75% of its Bitcoin holdings to add $936m in cash its balance sheets. Has Elon given up on Bitcoin? Not quite.

• Tesla is concerned about its cash balance because of COVID shutdowns in China. Selling Bitcoin puts them in better financial position

• They said this is not a verdict on Bitcoin, but rather a way to increase liquidity. They’re open to increasing Bitcoin holdings in the future.

I am bullish that TSLA’s selling didn’t affect BTC’s price that much. I remember in 2021, news like this could’ve caused a much larger crash than what we’ve seen in the past 24 hours.

By the way…

💻 What’s Happening in DeFi?

This is a new section focused on DeFi specific news. I realized that most of the news I’ve been sharing has been around Celsius, 3AC, and other macro events. I want to get back to my roots with DeFi coverage!

MakerDAO released its June Monthly Financial Report:

• Net Protocol Income is up (+33%) from May
• Down (-23%) from June 2021 (annually).
• Month-on-month income from interest decreased (-44%) 2.4M in June 2022.
• Month-on-month income from liquidations went up by (+11%) to 9.5M.

A few strategic key discussions include ways to increase the slope of its balance sheet, delegate compensation restructuring, and onboarding new collateral types.

Uniswap Rallies After Being Added to Robinhood: The mobile trading app has added UNI to its list of crypto offerings, making it the 13th token available for Robinhood’s users to trade. The price of UNI surged approximately 20% in the latest 24-hour period after Robinhood added the token.

Brave Browser Integrates Support for Solana DApps: With this integration, Solana dApps will have access to over 62 million active users on the Brave browser.

Lido Staked ETH Comes to L2: Liquid staking protocol Lido is bringing its staked Ether (stETH) product to the growing L2 ecosystem. Expanding to L2 means cheaper staking fees. They’re looking to support L2s such as Arbitrum and Optimism.

Solend introduces two types of fees: Solana’s largest lending protocol introduces two new types of fees: interest rate spread and liquidation insurance fees. The interest rate spread fee percentage ranges between 10% and 20% and the liquidation insurance fee will be set to 30% of the liquidation penalty.

Polygon deploys ZK Rollup Testnet: Polygon announced the launch of Polygon zkEVM, which is said to be the “first Ethereum-equivalent scaling solution that works seamlessly with all existing smart contracts, developer tools, and wallets, harnessing advanced cryptography called zero-knowledge proofs.”