🐳 Weekly Edition: New Tokens Make Traders Millions While Billions Liquidated on BTC, ETH

Looking back on a week where billions of positions were liquidated from the market while Bitcoin still trades at $110k and ETH over $4k is stark to say the least, but that’s what happens when people use leverage. It’s difficult to peg the price action to one thing in particular, however my gut says yesterday’s announcement that the SEC had reached out to 200 Digital Asset Treasury (DAT) funds regarding insider trading concerns probably had something to do with it. You may ask, how could yesterday’s news have influenced price action at the beginning of the week? Well, it seems like we had insiders insider trading the news of the SEC investigating DATs for insider trading… really a classic crypto moment.

To be honest, the fact we already have 200 of these companies was surprising to me as only a handful have gained recognition — while I disagree with claims that the recent run up on the crypto market was entirely due to treasury companies indiscriminately buying, it certainly had a major impact. We still lack clarity on the basis of these allegations, but I think most crypto people wouldn’t be surprised to hear there was insider trading done be several of these vehicles.

Despite massive liquidations across most of the market, two recent token launches have dominated mindshare and the charts: Aster (ASTER) and Plasma (XPL). We first mentioned Aster in the Beluga Brief when it launched on September 17th where it traded at about $0.40; today, it trades over $2 with a high of $2.40. Aster’s team has been building their product for years and thus for discerning eyes it could have been caught even earlier, however Plasma is a different case entirely.

XPL is the native token for the chain, which is dedicated to facilitating the proliferation of stablecoins on the blockchain. XPL has risen almost 50% since its launch yesterday, which while significant is obviously nowhere near the monster run Aster has put on. What is more significant are the returns from the community rounds and deposits, the highest of which saw early investors in the Echo round hit a 300x. The point is, we’ve had two major liquidity events for crypto recently even in light of “depressing” action on the majors. I’m not sure what the conclusion necessarily should be for a trader watching these events happen, but what I am sure of is that newly launched coins are no longer a death sentence for traders.

Not much has changed in the Beluga portfolio recently, with our balance at $143k and ETH still making up over 40% of our composition. Granted, Arbitrum is still down significantly from our entry, however seeing it perform so much better than Optimism recently is something to take note of. They’re both Ethereum Layer 2’s and prior to this year were largely seen as equal competitors. If anything, people gave Optimism the edge due to the “superchain” thesis that all L2’s would eventually run on OP’s stack. Today the landscape is quite different, as Arbitrum has seen major tailwinds through Hyperliquid using it as a deposit chain. This is likely a transitory effect as Hyperliquid will eventually look to expand beyond the constraints of just ARB for deposits, but nonetheless it’s been a reason for people to talk about it.

I think given this movement it’s likely time to cut OP soon, but as I think ETH will once again reach a new ATH, I’ll probably wait until then to do so. Holding a down position for so long has a major opportunity cost and we have to be cognizant of that, however the thesis for ARB and OP was to hold until ETH reached new highs and my trading style is to stick to my theses until proven incorrect. With all that said, keep an eye on the Beluga wallet for some changes in the next several weeks. Also by the way, CRV is still crushing it.

Bold strategy Cotton, let’s see how it plays out for them

Check out Beluga’s new article on SuperWorld, pioneers of “RWL”.