Narratives of the week : November 22

CZ & Binance and the DOJ, OpenAI drama, Blur and Blast L2

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

$BTC and the market overall

$BTC currently stands at $36600 and $ETH at $2020, with ETHBTC stable at 0.055. Basically, $BTC is in a range between $35k and $38k, and it flip flops between the top and the bottom of the range. This is likely to continue for a bit, after 2 massive green weekly candles in October.

I think the most likely scenario is that we get the ETF in January and that $BTC price will be higher at this time. In any case, I don’t think we will go below $32k in the weeks to come (because people are too eager to buy dips and many people are still sidelined), which caps the downside a lot.

The main event of the week is of course what happened with Binance, CZ, and the DOJ. Here are the bullet points written by Art_xbt that manages the Bread & Butter TG channel and Twitter account :

• Binance to plead guilty to DOJ charges and pay fine total $4.3b

• Binance will make a complete exit out of the US as part of the settlement

• The exchanges systems and records will be monitored for 5 years

• CZ agrees to plead guilty and pay $50m fine

• CZ will step down as CEO but retain majority ownership of Binance

• Richard Teng will be the new Binance CEO

• CZ is out on a 175m bond and has to appear in the US court on February 23, 2024

So with CZ stepping down as Binance CEO, this is the end of an era. We can thank him for everything he has done for the space.

I think this conclusion to the Binance case is overall very good for the market, because this is extremely far from the worst possible scenario, and most of the uncertainty surrounding it disappeared. Bullish.

The alt L1s :

$SOL has finally topped this week, it reached $68, but is now back down to $65. $AVAX definitely acted as a catchup trade, and it reached a new 2023 top at $24, which means it’s up +150% from its recent bottom. $AVAX is also the home to a few crypto gaming projects, and gaming has been hot recently, so this could act as a positive catalyst ($SHRAP, $DOMI, $WEAPON are on Avalanche, for example). You can notice that the 2 recent tops on $AVAX have been happening very closely after the tops on $SOL, so there is definitely a rotation trade there to keep in mind.

Another very strong L1 this week has been $NEAR, which is up +15% in 7 days and is up almost 2x from its recent bottom.

I mentioned last week $MATIC as a potential top-performer after $SOL run, but it completely failed at it, and is down -20% in a week.

$KAS, the “DaG PoW L1” that is up 1000X in a year, has again been grinding to new ATH prices this week too. It is dangerous to fade these unstoppable runners.

AI coins and the OpenAI drama

It is very likely that you have followed the recent events at OpenAI : the CEO Sam Altman has been very unexpectedly fired by the board. Then another cofounder (Greg Bockman) quit his job to show his support to Altman, many employees wrote a letter threatening to quit if he was not reinstated, then Microsoft announced that they recruited Altman and Bockman and finally a few hours ago it was announced that Altman would come back as OpenAI CEO…

The coin that is acting as a direct “proxy” for OpenAI is $WLD, because it has been cofounded by Sam Altman. It dumped from $2.5 to $1.8 on the news that Altman was fired, but went back close to $2.4 when everyone realized that he would get out of this situation even stronger, whether as a Microsoft employee or as OpenAI CEO again.

What is funny is that this whole drama was also a very good catalyst for AI coins this week, which was the best-performing altcoin bucket :

• $TAO : +67% (in 7 days)

• $AKT : +66%

• $CTXC : +55%

• $RNDR : +43%

• $IMGNAI : +31%

• $FET : +27%

• $AGIX : +16%

• $OCEAN : +14%

AI is the only narrative that was very strong during the echo bubble and that still is very strong now with this ETF-driven pump. As much as I dislike this narrative (because it seems to be pure vaporware), I don’t want to fade it. My main AI bag is $RNDR, and I also have a very small bag of $TAO simply because the Bittensor cult is strong, even if I don’t have conviction in the coin or the project.

Blast and $BLUR

Pacman, the founder of Blur, announced this week the launch of a new “L2 with native yield”, Blast. The idea behind Blast is that all the ETH and stablecoins natively earn yield : staking yield for ETH and the Maker t-bill yield for stablecoins.

People can already start depositing funds on Blast to farm points (that will enable to get an airdrop), but they can’t withdraw it before February. $125M have already been bridged in one day… (this is $ETH that won’t be used to buy shitcoins until February !)

Pacman is planning to build NFT perp trading on Blast, so Blur and Blast are closely related projects. The announcement of the Blast launch happened on the exact same day of the Blur S2 airdrop, $BLUR dumped -30% vs BTC during the week before that day, and retraced all the move down in one day, because $BLUR is a way to get liquid exposure to this Blast narrative.

Here are two tweets/threads worth reading. DeFi Maestro wrote a long-form tweet about his thoughts on Blast. Taiki wrote a thread to explain why he was bullish on Blast and why it was in line with his RWA thesis.

$MKR performed well after the announcement of Blast launch, and this is easy to understand once you know that the “native yield” on stablecoins on Blast corresponds to the $sDAI yield.

I currently hold a $MKR perp long : I think $MKR is a low risk play, it probably can’t dump too much, but certainly cannot pump too much neither. As I am overall bullish on the market over 12 months, I think a $MKR perp long is a low risk play that you can put size on with perps with a lot of capital efficiency. I will revisit this thesis later.

Perp DEXes

Two perp DEXes had difficulties this week :

• DYDX has been “attacked” on its YFI market : the $YFI token pumped 3X in a week before dumping -40% very rapidly, which resulted in bad debt for the DYDX protocol, that used $9M from its insurance fund to cover the hole. DYDX also has a huge unlock on December 1.

• Woo : the main market maker on Woo, Kronos Research, has been hacked this week, which resulted in liquidity problems and wicks on some trading pairs. This only concerns Woo X which is the CEX part of Woo, not the DEX part, but the reputation concerns can be the same. As far as I know, Woo has been handling the situation correctly and they are in the process of compensating users that have been “unfairly” liquidated during the event.

$SNX, the token of the Synthetix protocol, has been showing a lot of strength recently. One of the main catalysts for the token is the launch of Infinex, a CEX that will use the underlying Synthetix protocol. $KWENTA can also act as beta play for $SNX, and is up more than 2X in a month. Here are a few bullet points for the bullish thesis :

Two of the other perp DEXes, $GMX and $GNS, did not have meaningful pumps during the last month. They had a great run during the echo bubble, but have been struggling since then. I still have a bag of both, and see them as low risk plays in terms of downside.

Solana ecosystem

As I mentioned earlier, $SOL topped at $68 this week, but a lot of Solana ecosystem coins have hade huge gains in the recent weeks.

The first one is obviously the main Solana memecoin $BONK, which managed to pull a new ATH (the first one was in January, and it dumped -95% after that), and which will be listed on Binance perps. Two other Solana memecoins are $MYRO (the name of the dog of one of the Solana cofounders), and $RBT (the frog coin of Solana ?).

Here is a list of other Solana coins (some might be shitcoins) that did particularly well : $SHDW, $NEON, $SCS, $NOS, $LIKE, $OTK, $CROWN, $GOFX.

Ordinals and BRC-20

I mentioned last week that Ordinals were hot again. The main ordinal coin, $ORDI, is up +750% from its recent bottom in October. With the BTC ETF coming, people have been looking for good BTC beta coins. $ORDI has been the best one, and in my opinion it was one of the few “not so complicated to find 10x coins”.

Another ordinal coin that 10x’d is $SATS. I can also mention $TRAC that is up 10x, and is considered as a “Chainlink of Bitcoin”. There is also $MUBI, a new coin that is a bridge from BRC-20 to ERC-20, and that currently stands below $20M market cap. This one could be a very good opportunity as an asymmetric (ie risky) bet.

What else happened in the altcoin market ?

• Gaming remained one of the strongest categories this week with the following coins : $IMX (+20% in 7 days), $ILV (+8%), $SUPER (+31%), $SFUND (+29%), $PRIME (+12%), $BEAM (+12%).

• SpaceX launched this week their Starship rocket for the second time, and this acted as a positive catalyst for $DOGE, which explains its outperformance before the launch, and its underperformance after the launch…

• The SEC seems to be going after Kraken too, one of the major US exchanges that tried to always operate properly and be as compliant as possible.

• $ETH underperformed again this week, which is something I don’t see as negative for the market, because flows have to be concentrated on $BTC to help the whole market pump. Naturally, ETH beta coins underperformed too ($ARB, $OP, $MATIC) except for $LDO, that performed on par with $BTC. $LDO seems to be the most direct beta coin to $ETH, and this was my main thesis for holding $LDO as a long-term bag. But now we need $ETH to perform well during the bull run…

• The “Chainlink of Solana”, an oracle project, Pyth Network, launched its $PYTH token this week. You can check if you are eligible to this airdrop here. The current market cap is $500M and the FDV is $3.5bn. Some people are hoping for it to act like $TIA, that consolidated after the post-launch dump, and then ripped to $7. I was very confident that $TIA would trade way higher than $3 at some point, so I bought $TIA comfortably at the time, but for $PYTH I am way less confident, I think $3.5bn FDV is already quite high. But it could pump short term because people would not want to miss a second post-airdrop pump like $TIA.

• Another Solana coin that will probably be launched and airdropped soon is $JUP, the token of the Jupiter aggregator.

• $ATOR which was one of the strongest coins during the whole 2023 year, has dumped -65% this week because the Tor privacy network blocked all of the $ATOR nodes. Let’s see how the $ATOR team will be able to manage this.

• FrenPet is a Tamagotchi-like crypto game that has been launched on Base and that got some attention this week. It went from less than a $1M market cap to close to $20M this week. I don’t have much opinion on the game, haven’t tested it and don’t hold $FRENPET token, but it looks like a good gamefi usecase.

• $GROK, the leading memecoin of the current run, had a slightly red week and stands at $50M market cap, down -70% from its ATH.

• Most of the other Ethereum memecoins are still struggling a lot. None of the winners of the “on-chain summer” have been performing well during this pump : $BITCOIN remains around its $100M market cap Schelling point, $UNIBOT is in the $40M-$60M MC range, and even $RLB dumped to $0.17 despite its huge revenue. I remain very bullish on $RLB and $BITCOIN.

Some good tweets / threads :

• On adjusting to Trending Conditions :

• Advice by Cobie :

• Watchlist for this cycle :

• Investment and thinking in probabilities :

• Useful mental trick for trading :

• 10 takeaways about narratives trading :

• Five narratives to keep an eye on :

• Sell off in uptrends :

• Will Bitcoin dump during a prolonged recession ?

• “Comparison is the thief of joy” :

• The Curious Case of Ethereum :

Thank you for reading this article,
Cheers,
Viktor.

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