šŸ³ Daily Recap: Market Mellows as BTC Climbs Back

Are value-accrual tokens like HYPE, SKY the meta in downswings?

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What happened today?

Since the massive plunge to start the week off, sentiment seems to have settled down with Bitcoin recovering above $83,000 at time of writing. According to CoinMarketCapā€™s Fear and Greed Index, however, the sentiment score is still at its lowest point in a year and a half ā€” last time it was this low, BTC was trading at $40,000.

24 Hour Crypto Heatmap, Source: CoinMarketCap

Despite the carnage in the market, weā€™re not seeing a slow down in high-profile launches: yesterday we saw Bubblemaps launch their official coin, today Bitcoin Layer 2 Hemi launched their mainnet, Move finally launched their mainnet, and Monad is still expected to be coming soon.* The point is, these teams clearly donā€™t think this down period is going to last and are still opting to launch in these conditions.

Trading Talk

Something to note when traders are this beat down is that catalysts that would have pumped prices only a few months ago no longer work. In the last 2 weeks, weā€™ve seen a sitting US Senator propose a bill for the Government to buy BTC, Trump held a meeting with industry leaders to discuss digital assets, and the SEC has dropped a number of cases that it has been pursuing for years. Any individual one of these should be a strong catalyst for buy pressure, but instead BTC has lost 15% in the last 2 weeks. The unfortunate reality is that a significant chunk of the valuation within crypto is due to speculative value, rather than hard value. You actually may be surprised how little the success of the average crypto business has to do with the price action of the underlying token, which leads to bubble-like price action when the broader macro environment becomes more uncertain.

HyperLiquid Performance Relative to BTC, SOL, ETH, Source: TreeNews

There are obvious outliers to this, however businesses that accrue value back to the token are few and far between. Perhaps the most successful of these has been MakerDAO (now rebranded to Sky), but recently HyperLiquid re-popularized the model, albeit in a more ā€œcrypto nativeā€ way. The team behind HyperLiquid has a perpetual TWAP running on the HYPE token drawing from platform revenues, and I believe from both a hard numbers standpoint as well as a holder/buyer psychology standpoint that it was a significant reason HYPE was able to outperform for so long. Especially in times like this where speculative valuations get eviscerated, itā€™s important to look for those tokens which accrue real value back to the people holding it.

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Will McKinnon is the Head of Content for Beluga and has spent every day for many years trading coins. For that reason there are too many to name, however his largest holdings by a significant margin are Ethereum and Bitcoin. NFA DYOR

*Disclaimer: Hemi is a paid partner of Beluga.