Narratives of the week : April 7

Chop szn, $ENA and $W launch, halving in 2 weeks

Welcome to this weekly recap, I am Viktor and you can find me here on Twitter and here on Telegram. Enjoy your reading !

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$BTC and the market overall

My last article was 10 days ago, and we were almost at the same price than today, ie $69.4k, except we had a dip back to $65k. Nothing major happened during these 10 days, and there were no prevalent narratives, most coins have been going down vs $BTC.

My opinion is that we are in chop territory, and there is no need to overtrade. I would not be surprised to see $BTC come back down to $60k, but with overall healthy ETF inflows and funding rates back to neutral, that is not necessarily my main scenario. Buy the dip if we get a large one, and be ready to see the price much higher if we flip the $71k-$72k zone again. Don’t die by a thousand cuts in between, and don’t get wiped out by leverage if there is a liquidation cascade. Read my March recap article to realize that each month, there are a lot of 10x+ pumps, and they are not necessarily very hard to catch.

The current situation of $ETH is much more concerning since ETHBTC is now again at its 0.049 lows and does no show signs of strength at all. I am an $ETH bull and it is my largest position, but let’s be honest, it has been painful to see $BTC outperform month over month. At least, from a sentiment point of view, we’re at the lows, and usually in this situation, we get a nice bounce on ETHBTC. Let’s also not forget that $ETH holders have been able to get yield on their positions, contrarily to $BTC, thanks to liquid staking, DeFi, or restaking. The current price of $ETH is right below $3400.

New coin launches and a bit of drama

One of the main events of the week has been the launch of $ENA, which is the token of Ethena, the protocol that runs a basis trade locked into the stablecoin $USDe. The token launch was a massive success, since $ENA doubled in price in a day, going from $0.6 to a local top of $1.3. Now $ENA trades at $1.22, which corresponds to an impressive FDV of $18bn. Around $20bn FDV has often been a ceiling for a few major tokens.

Ethena is already one of the most hated protocols, since many people think that it is too risky and will end badly. I think that in the worst case scenario, USDe will slightly depeg, and that’s all. There is no risk of death spiral like in Terra-Luna, comparing these 2 protocols does not make much sense. But of course, Ethena will be blocked from scaling at some point, because it is already 20% of the total $ETH OI on CEXes.

Ethena is also involved in the drama of the week between Aave and Maker / Ethena / Morpho. Maker is planning to issue $DAI loans (worth $600M to $1bn max) against $USDe collateral using the Morpho lending protocol. This is in stark contrast with $DAI’s historical slow and very conservative approach (but seems to work well for $MKR price, that reached a $4k local top), and it completely infuriated Marc Zeller who is a core member of the Aave ecosystem, so he posted on Aave forum a proposal to reduce DAI’s LTV (as collateral) at zero on Aave. Chaos Labs wrote their risk analysis and the conclusion is probably that the LTV will be reduced, but only by 12 percentage points.

Here is the scenario that Zeller is scared about, by the way :

The second major launch of the week has been $W, the token of Wormhole (cross-chain / bridge protocol). It initially had a pump from $1.2 to $1.6, but then has been going down only. Now it is around $1, which corresponds to $10bn FDV. Is it overvalued ? Yes for sure, like most coins, but in the same time, one could argue that Wormhole is an s-tier token and thus should be in the $15bn-20bn FDV range. For a fairly long time, $W was valued at $1.8 in pre-markets on Hyperliquid. Of course the volume was very low, but still, this tells me that we could see $W back to this valuation at some point, maybe rather soon if $W speedruns the $JUP lifecycle (initial dump, rounded bottom, and then significant pump).

Another launch happened on Solana this week : $ZEUS. Zeus is a protocol that aims to bridge $BTC into the Solana ecosystem in a safe and decentralized way. At only $700M FDV right now, this could reprice significantly higher. Read thiccy’s article about Zeus here.

BTCfi and the halving in 2 weeks :

The $BTC halving is in around 2 weeks (April 20), and people have started positioning into “BTC ecosystem coins”. One of the best performers has been $MUBI, a bridge between BTC and EVM ecosystem that was a top performer back in December 2023, and has been dumping and then consolidating for a lot of time. Other strong BTC-adjacent coins include $SOV, $COVAL, $CKB, but also on-chain coins like $TRAC, $BVM, $ORDS. I can see this trend go higher as people want to position for the halving.

$PUPS is a BRC-20 memecoin that completely took off 2 days ago when Ansem shilled it during a livestream. It pumped from $7 to $32 in one hour, and as it is also deployed on Solana, many apes were buying it a premium on Solana, and this premium reached almost 5x. Some ordinal projects have been pumping too, especially Bitcoin Puppets and RSIC Metaprotocol. By the way, I am hearing more and more chatter about Runes, which are an improved version of BRC-20. And $PUPS are migrating from BRC20 to Runes in a few weeks.

What else happened in the altcoin market ?

• A few Solana coins have had a good performance in the last days of March, especially $JUP that reached new highs at $1.8 (that is a $18bn FDV), and $JTO that pumped +68% in a week before retracing half.

• $BCH has been one of the strongest coins in the recent weeks. It had its halving a few days ago, and that was a significant catalyst which can explain the strength, but I have been surprised that people seem to not really have sold the news on $BCH. This is probably a heavily shorted coin, where the incentive to squeeze the short sellers is high.

• $PRIME is up +23% in 2 days, and now very close to its recent highs at $28. This coin is in the category of the very nice looking charts, consistently strong and without any severe and fearsome drawdown, it is a very comfortable hold. I never bought it as a long-term play, but I regret it a bit.

• $MNT is among the best performers in the top 100 over the last weeks. Most of the ETH beta coins, and especially major L2s like $ARB and $OP, have just been down only vs $BTC (and USD…) in the past 2 months, whereas $MNT, an under-discussed L2, is consistently outperforming $BTC. One of the main coins on Mantle, the $PUFF memecoin (that is speculated to evolve into a real project), is up +120% in a week too.

• $PENDLE is absolutely unstoppable. It is the only ETH beta coin that is really showing insane strength, with +140% gains vs $BTC in 20 days, ie +170% vs USD. Pendle TVL has been exploding in 2024, going from $200M to more than $4bn. The reason for this trend is that people are using Pendle a lot with their liquid restaked $ETH, and it has become the best ‘EigenLayer beta’.

• $TAO went through some FUD after Eric Wall posted a tweet explaining that is was a useless vapourware coin overvalued at $10bn FDV. $TAO dumped right after that, but then it bounced strongly. My opinion is that almost all the AI coins are mostly vapourware, but $TAO is far from being the worst one. It reached this impressively high valuation, but could still go higher. It has a cult, and that is very strong. $TAO also tends to move on its own, without really following the market trends.

• $BGB, the token of the Bitget exchange, is the best performer in 7 days with +24% gains. I don’t like to buy CEX coins, and I never used Bitget.

• $TON has been one of the top performers in March, and it does not show any sign of slowing down, its chart looks ready to break out to new highs. This coin is a mystery to me, because its mindshare is rather low compared to its very large market cap.

• $ALPH (Alephium) is another mysterious coin that is up 14x since November, with very low mindshare among CT. Alephium is a PoW L1 very similar to $KAS (Kaspa), and I think they have the same type of buyers, who are not necessarily very sophisticated, but are able to catch large upside anyway.

• Marc Zeller wrote that he would post a temp check to activate Aave “fee switch” next week.

• $DMT had a 3x pump in two days, once people realized that $DEGEN was launching its L3 while having a vertical price action. So as $DMT is one of the few L3 tokens with mindhsare, it reacted very strongly. $DEGEN has had a crazy month in March with 50x gains, and is now finally having some form of correction.

• $GHST, which is the main coin of the gamefi project Aavegotchi, is up +160% in two weeks.

• $BODEN is unstoppable, it is up +180% in a week and is now worth $500M in market cap. Around these market caps, the r/r ratio for memecoins starts getting less interesting, unless they are able to get in the “big league” of the >$1bn MC memecoins.

• $MAGA is up +50% in a day, and the reason is that Arkham found out that a GCR wallet contained more than $4M $MAGA tokens.

Thank you for reading this article,
Cheers,
Viktor.

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