GlobalBlock Weekend CryptoInsight - 04/12

GB Weekend Market Commentary 04/12/2021

by Nick Heale

Welcome to the latest installment of the weekend CryptoInsight. It’s been a relatively benign period for Bitcoin since the last article a couple of weeks ago. Back then we saw the price at $57,900 and we see it today in a broadly similar range. This was a period where many expected the number one cryptocurrency to break out of its range to all time highs as forecasted by Plan B’s widely followed Stock-to-Flow model. This hasn’t quite materialised so far despite Plan B’s reaffirmation that his popular model is on track for a projected $100,000 target for Bitcoin before the end of 2021.

It’s true that news of the Covid variant, Omicron took the wind out of all risk assets recently and it will be interesting to see if the selloff over the Thanksgiving period will prove to be overdone once the severity of the variant is more understood. The Crypto Fear and Greed Index stands at a lowly 31 for “Fear” which gives some indication of the impact of the variant. Despite this crypto coin prices have generally held up well. All eyes will be on the severity of Omicron which will paint the market direction going forward and whether Plan B’s thesis can ultimately come true and most importantly whether all our holiday season parties can continue as planned!

In the last article, we talked about the metaverse which will continue to be a strong theme in cryptocurrencies into 2022. Whilst metaverse coins directly are perhaps showing some signs of fatigue after very significant gains following Facebook’s rebrand to “Meta”, the hype has not died down. Indeed, an ongoing metaverse theme is buying land. Since the island country of Barbados bought its land in Decentraland (MANA), it was reported this week that four projects sold a total of $106 million in virtual land with the hotly anticipated Sandbox (SAND) game taking the lead.

This leads us to NFTs as metaverse land qualifies as such so SAND dominated with in excess of $80 million in NFT sales. It’s not surprising the Greyscale recently said in a report that the metaverse (including NFTs) is over a $1 trillion annual revenue market opportunity.

Elsewhere in NFTs the flagship Bored Ape Yacht Club collection is reported to be eyeing a collaboration with Adidas which could bring NFT imaging to apparel and connect a new crop of owners to NFTs not to mention raising the profile of the Bored Ape Yacht Club even more.

In the world of DeFi we saw the fourth largest DeFi exploit on BadgerDao with reported losses of $120m. It will be interesting to see if any of these funds are recovered but it once again highlights the potential vulnerabilities of smart contracts. Despite this news the Total Value Locked in DeFi currently stands at $275.6bn according to DeFi Llama which is a 15x increase from only $17.8bn this time last year. This perhaps shows such a hack will do little to abate an industry which is evolving at a rapid pace.

Finally, with all this growth, arguably coins which can aid the stretched Ethereum network which is straining with high transaction fees whilst it attempts to cope with the huge expansion of the metaverse and DeFi could be the current darling of investor sentiment, Polygon (MATIC) for example showing some strong performance of late.

Have a good weekend All!