Narratives of the week : May 22

+20% $ETH day after a surprising ETF news... will ETH holders be saved ?

May 22, 2024

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

When I wrote the previous edition of this weekly recap, $BTC was standing around $62.7k, and right now it is at $70k. Two main bullish events can explain this green performance. The first one was that CPI numbers were ‘in-line’, and that quickly pushed $BTC price from $62k to $66k.

Another piece of good news was that we learned that the state of Wisconsin is almost $100M worth of $IBIT shares, ie the BlackRock $BTC ETF.

The impulse move on May 15 when CPI numbers got out was a good signal to flip bullish, at least for the short-term, since $BTC had convincingly broken its downtrend market structure : indeed it was the first time since mid-April that $BTC formed a higher high instead of a lower high, and it also flipped all its 4h MAs (100 and 200 SMA and EMA). At this time, we also started having a meaningful Coinbase premium, which means that the price of $BTC on Coinbase spot was higher that the perps or even spot on other venues, and this is usually bullish since it signals that institutions are buying $BTC.

SEC 180° on ETH ETF and a +20% day for $ETH

The main event of the week happened on May 20. As you might know, tomorrow is the final deadline for the SEC to approve or reject VanEck $ETH ETF, and this means that the SEC has to make a decision that will impact all the applications (if they reject VanEck, they also reject all the other ETH ETFs, and if they approve, they approve them all at once too).

The odds of an $ETH ETF approval in May have been going down only since the approval of the $BTC ETF, going from more than 60% in January to less than 10% a few days ago. This downtrend was also visible in the ETHBTC ratio, that reached a new low at 0.045 on May 16. The accelerated dump from 0.047 to 0.045, as well as $LDO (arguably the most direct beta to ETH?) reaching almost $1.5 on the same day had a smell of final capitulation for ETH and ETH beta holders, and it turns out that it was true.

One very unexpected tweet by Eric Balchunas, one of the Bloomberg ETF experts, has completely shaken things up with regards to the $ETH ETFs, as he announced that he drastically revised the likelihood of approval after new information appeared :

$ETH immediately pumped +10% in 10 minutes, from $3140 to $3450, and then kept going up to close the day at $3660 with an impressive +20% daily candle. Right now, it is trading at $3740, while ETHBTC stands at 0.053.

Naturally, all the best performers of that move have been ETH beta coins :

$ENS : +62% in 7 days. This one seems to be the winner among ETH beta coins, mainly thanks to Vitalik’s support premium ?
$UNI : +40%. Surprisingly strong reaction on the news.
$LDO : +35%. The most direct ETH beta, and my main bet in that category.
$ARB : +26%. $ARB outperformed $OP, despite being in an overall downtrend against OP (they are the 2 major L2 tokens).
$PEPE : +25%. $PEPE is now clearly the leading memecoin behind DOGE and SHIB, and it’s considered as the best ETH beta among memecoins. It’s now almost at $6bn market cap, and a very reasonable target would be flipping $SHIB.
$PENDLE : +50%. Very strong pump from $4 to $6.5, and is now rather close to its ATH again.
$MOG : +73%. $MOG has been listed on Bybit. It is an $ETH memecoin that could be a good candidate to reach $1bn market cap.
In the realm of NFTs, Milady jumped from 4ETH to 5.6ETH floor price, while Remilio pumped from 1.4 ETH to 1.7 ETH. They are the two NFT collections that benefitted the most from this ETH ETF news, and I expect them to remain among the top performing NFTs.

Gaming and the $GALA hack

Gaming is another category that performed surprisingly well, even if it still seems under the radar as a narrative in the current environment. $BEAM is up +36 in 7 days, $PRIME is up +34%, $CHR is up +30%, and then $RON, $IMX, $YGG and $ENJ are all up between +25% and +30%.

With around $15bn total market cap, and $30bn total FDV, I think that Crypto Gaming as a whole is a category that is fairly undervalued and can experience a strong repricing at some point.

By the way, a new gaming token was launched this week, and it’s called Nyan Heroes, with $NYAN ticker. It’s been shilled by Andrew Kang and is valued around $300M FDV, which means it has some potential to go way higher in my opinion.

Another even that happened this week in crypto gaming is that $GALA has been hacked and the hacker has been able to mint 5bn $GALA tokens, which was worth around $200M. He managed to sell around $20M worth of tokens into ETH, but then was blacklisted by $GALA team. Yesterday he even gave back the $20M ETH and the remaining of the 5bn tokens, and the $GALA team plans to burn them via a contract upgrade. This whole story was kind of shady, and some people have suggested that it could have been an inside job or the result of an internal beef.

Memecoins and a bearish duck

Last week, I mentioned that Roaring Kitty was back on Twitter and it ignited a massive pump and short squeeze on $GME, that went from $17 to almost $80 (in pre-markets) but has now dumped back to $22. This also lead to a short-lived memecoin pump, mainly lead by $PEPE. Then DonAlt (a great crypto trader that has been here since at least 2017 and has more than 500K subscribers) started to heavily fud the whole memecoin sector, and started shorting some, especially $WIF but also $PEPE.

I don’t think it makes any sense to be bearish on memecoins unless you think that the whole market has topped. Memecoins will top when the market will top. As the leading memecoin on Solana, and now that ETH is stealing the show from Solana, $WIF indeed performed rather poorly in the last 10 days, but I think this coin is poised to go at the very least to $10. $POPCAT, another strong Solana memecoin is down this week too. But one Solana memecoin is up more than 2x this week, it is $PONKE. I wrote a tweet about it :

DonAlt closed his shorts after the news about the $ETH ETF.

A few of the Base and Ethereum based memecoins, have been very strong since the ETF news : $DEGEN, $BRETT, $NORMIE, $WOJAK, $ZYN, $DOGINME, $LADYS, $JOE, $KEYCAT, for example. Base szn round 2 if the $ETH ETF is approved ? It is poised to happen again at some point.

Fantom and the $S token launch with Sonic

The hot coin of the week before the ETF news was $FTM : the Fantom Foundation has announced that they were planning to launch a whole new L1 named Sonic Network, and that is supposed to have better performances than the new generation alt L1s. The other new information is that they are going to launch a new token with ticker $S, and that $FTM holders will be able to migrate 1:1 their $FTM to $S.

A rebranding is generally bullish, but it also comes with a plan to mint additional $S for ‘Airdrop program’ and ‘Sonic Growth Program’. This means dilution for the current FTM holders, and additional selling pressure, while the Fantom Foundation is supposed to have a ‘30-year runway’. It smells a bit like grift to me, and I generally don’t like when teams do this kind of things. In the same time, this energy might pump the token, and a lot of people are bullish on $FTM, so we’ll see what happens.

What else happened in the altcoin market ?

The Depository Trust and Clearing Corporation (DTCC), the world’s largest securities settlement system, completed a pilot project with $LINK and multiple major U.S. financial institutions, aiming to help accelerate the tokenization of funds, according to a report published on May 16 by DTCC. $LINK pumped +20% in a few hours after this news, but was almost flat after the ETH ETF news. Good hedge short ?
Nvidia is having its earnings day today, and AI coins have been slightly outperforming today, probably in anticipation of it.
$PYTH, the token of the Pyth Network oracle project, had a significant unlock of around $1bn worth of tokens this week. This lead to both a significant underperformance from $0.46 to $0.36 and then to a short squeeze of unlock shorters to $0.5. At $5bn FDV, I am not too interested in holding $PYTH, but it was a much more interesting short at $10bn FDV.
Two new noticeable coins have been launched this week : $NOT and $DRIFT. $DRIFT is the token of the perp Dex Drift on Solana. It dumped right after launch but is now slowly grinding higher. $NOT (NotCoin) is a coin on the TON Network, that is a kind of stupid community coin that one could farm by tapping on its screen or something like that. It has been heavily farmed by non cryptonatives, and launched at a surprisingly high market cap (higher than $1bn) and fully diluted. There’s a chance it trends to zero, but it might have an irrational behaviour too…
Rune, the founder of Maker, has posted a tweet that details the future of $DAI. MakerDao is going to issue 2 stablecoin : NewStableToken, the new version of $DAI that will be regulatory compliant and use RWA, and PureDai, a completely decentralized version of $DAI. I am bullish on $MKR overall, mostly because of the rebranding and token migration, and also because it is one the highest revenue generating app on all of crypto, with a relatively small market cap.

Thank you for reading this article,
Cheers,
Viktor.

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