Have your "normal" friends been asking about Crypto yet? I'm getting text messages from people asking why BTC broke its all-time highs. Some are even asking me for token recommendations. Here's a piece of advice I learned the hard way: never give token recommendations to your friends. • If they lose money, it's your fault for recommending it to them. • If they make money, they won't take profits. And then they'll be pissed off at you if it goes down by 95%. Zero upside. I usually just say buy 50% BTC and 50% ETH, and wait ten years.
Here's what we got today:
BTCfi. An overview and some opportunities with the King.
MVRV - Z Score. Are we near the top yet? See what this indicator says.
Around the Web. MakerDAO is discussing "launch season" of their Endgame plan, Vaga introduced a futures market for points, and more.
Today's email is brought to you by nftperp — perpetual futures DEX for NFTs.
Here's your Edge 🗡️!
Chart of the week
BTCfi: The Untapped Frontier
Source: DefiLlama
The above chart tracks the Total Value Locked (TVL) on the Bitcoin network.
It shows a hockey stick-like pattern: the TVL was only around ~300 million in February 2024. And now, it has crossed over ~3 billion in TVL.
BTC's TVL has been like a background character in a crypto movie. We hadn't noticed it was even there. But suddenly, BTC's TVL and activity are growing massively.
Why is this happening? There has been a wave of technical innovations in the Bitcoin ecosystem. New BTC L2s, Ordinals, BRC-20s, Atomicals, etc. Collectively, this sector is called BTCfi.
The pumpamentals of BTCfi are great:
DeFi projects on Bitcoin can tap into BTC's $1.5 trillion MC.
For normies, crypto equals Bitcoin. So, BTC projects have a premium over projects on other chains.
Bitcoin actually has a massive community. If actually useful projects get deployed on BTC, this massive community will flock to them.
Now, let's look at the different sectors of the BTCfi revolution:
Bitcoin L2s
While BTC has had its own L2s, like the Lightning Network, L2s have become hot again due to ETH rollups. And now, BTC L2s with smart contract capacities are also gaining traction.
Stacks: This layer 2 was launched in 2021. It's a well-known project in the BTCfi sector and can be seen as an Alpha Play within the BTCfi narrative.
Rootstock: This is an EVM-compatible sidechain launched in 2018, which is more than a century ago in crypto time. Therefore, it has a fairly big ecosystem and community. This is another alpha play.
Let's look at a newer one:
Merlin chain: This is an EVM-compatible zk-rollup play. It recently launched its mainnet and is running a massive airdrop campaign during which 20% of $MERL will be distributed.
Many more are worth looking into: the Bison Network, Chainway, Kasar Labs, and more. To be honest, I don't know how many of these projects will become vibrant L2 ecosystems like Arbitrum.
However, this doesn't really matter. They are "selling" the BTCfi dream. And people will keep buying into them until the bull run ends.
Don't limit yourself to the BTC L2s I mentioned. There are many different L2s. If you want a list of all the BTC L2s, here's a good one from Benobi.
But please be aware of scams. Many BTC L2s are just barely masked multi-sigs.
Ordinals
Ordinals are the NFT collections of the Bitcoin network. We have explained the technical side of ordinals before. You can read about it here and here.
NodeMonkes is the first 10k collection inscribed on Bitcoin. It has become the leading Ordinal on BTC. Remember BAYC & Punks of the NFT 2021 mania? NodeMonkes might be similar on BTC during the coming NFT mania.
But I'm not an NFT guy. So, don't take me too seriously.
If you are interested in Ordinals, here's a list of all Ordinal Collections that have their assets sub one million inscriptions. It also provides other information, such as the project website, the number of holders, etc.
You can use it to find gems on your own.
BRC-20s
BRC-20 is trying to be the ERC-20 of Bitcoin. ERC-20 is the token standard used to create most crypto tokens.
However, technically, they are not very close to each other. ERC-20 is a fully-fledged token standard. BRC-20 can only mimic certain aspects of that.
Most of these BRC-20s are like memecoins. Most aren't associated with any DeFi projects.
If you want the alpha play, go with $ORDI. Beta plays are a bit too degen for me to share publicly.
But you can find beta plays on your own. On Coingecko, if we exclude the top eight projects in this category, all BRC-20 projects are below 20 million in MC. That's a good range to find potential 10x.
The Upcoming Opportunity
The Runes Protocol will be a new BTC protocol like Ordinals and BRC-20. It'll go live at the first Bitcoin halving block, so sometime in April.
Casey, who created the Ordinals theory, is creating the Runes. So, he has some star power. And when it launches, it is likely to attract a ton of attention.
The halving itself will bring a lot of attention to BTC, so there will probably be plenty of opportunities at that time.
If you want to capitalize on them, start experimenting around with the BTCfi ecosystem.
Get a wallet: e.g., Xverse, Unisat, and OKX Web3 wallet
Try out some BTC dApps. Ordiswap is the Uniswap for BRC-20s. Liquidium is the lending market for Ordinals.
I recommend focusing on 2-3 narratives this cycle. BTCFi is certainly worth considering. Also, none of the protocols are recommendations to buy.
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It's hard to tell which phase of the market we're in. On the one hand, we've broken past Bitcoin's all-time high. On the other hand, retail seems to have barely arrived. We don't know how much the ETFs and institutional flows will impact this cycle. So it could go up even more. No one knows when the top will be - anyone who says they do is probably trying to sell you something, lol. So we have to rely on "indicators" to help us guess. There are a lot of indicators out there people use such as "Fear and Greed" or "Coinbase's App Ranking"
Source: coinstats.app
We want to introduce one to you today that you should keep in your bag of tricks. It's called the MVRV-Z Score.
What's the MVRV Z-score?
MVRV Z-Score bitcoin chart is useful for predicting Bitcoin price at the extremes of market conditions.
This metric combines 3 fundamental elements:
Bitcoin's market capitalization - The total market value of all circulating Bitcoins.
Realized market cap - This metric differs from market cap by considering each Bitcoin's latest transaction price. It offers a "fairer" valuation of Bitcoin based on the prices at which it last changed hands.
Fluctuations in price - This is gauged by the standard deviation of Bitcoin's market cap and signifies the level of price swings over a particular timeframe.
Combining all three can offer insights into whether the market is overbought or oversold.
How to Read This Chart
Historically, an elevated Z-Score (when it breaches the 'red zone') indicates an overcooked market. This often signals upcoming downturns.
A depressed Z-Score (indicator dipping into the 'green zone') typically signals a market undervaluation, marking an opportune moment for buying. The post-2018 market scenario, where the score plummeted, exemplifies this strategic buying zone.
Values from 7 to 9 are very high, and curiously, we are not even halfway there. You can find the chart here.
Conclusions
Integrating the MVRV Z-Score into your crypto investment strategy offers you a deeper insight into market trends and valuations. While no single metric can provide a foolproof forecast, the MVRV Z-Score serves as a grounded, data-driven gauge for identifying potential market peaks and troughs.
Remember: Indicators are simply tools to assist you and are not meant to interfere with or replace your fundamentals.
🚀 DeFi Catalysts
GnosisDAO announced the vision for Gnosis 3.0. They are building a collective of aligned projects connected by the $GNO token.
Y2K Finance introduced their v3, Tsunami. It aims to address many of the architectural improvements sought overall from V1 and V2.
MakerDAO started the "Launch season" of their Endgame plan. This plan is looking to change MakerDAO from top to bottom.
Dogwifhat, a Solana-based memecoin, launched an initiative to raise $650k to advertise on Sphere, the Las Vegas arena, for one week.
Uniswap introduced the Uniswap Hook Incubator. It is an 8-week program to help devs build Hooks, a key feature of their v4. It can create a lot of innovations for Uniswap.
Aevo, a derivatives L2 on Ethereum, has launched its token $AEVO. Those who are eligible can claim their airdrop now.
Vaga Protocol introduced the first-ever futures market for "points". Vaga enables the permissionless creation of any derivatives market.
Whales Market started its first incentives distribution. Those who have used Whales throughout January will receive xWHALES in their wallets as rebates.
Friend.tech v2 will go live after April 20th. If v2 has some novel features, it can bring Friend.tech back into the spotlight.
Binance Launchpad will list $ETHFI token from Etherfi, a restaking protocol, on March 18th. You can farm it by staking BNB or FDUSD.
🧠 Twitter Alpha
Crypto PVP Theory - Don't fade these market conditions.
Patient Capital Management plans for their BTC ETF allocation
❤️ Edgy Likes
I sent out a survey a few months ago. A few of you mentioned you like some of my IRL recommendations. So, I thought I'd share some cool things once in a while:
Whoop Band [Device] - The older I get, the more I realize that getting good sleep is the most powerful leverage point. Good sleep = energy + better decisions. I bought the whoop band a few months ago to help measure my sleep, and it rocks (This has way more data than the Oura ring). The downside is that it's $30 a month, but I think health is one of the best areas to invest in.
JOMO [iPhone app] - My phone screen time has been pretty bad in the past few months. I was clocking in at 4ish hours per day. I installed this app and have reduced my screentime to 2 hours per day. Think of it like the iPhone screentime app on steroids. It identifies some of my most distracting apps, and blocks them at certain times / set limits.
Sakura Pens - I prefer handwriting to typing during my strategic thinking time. Pen and paper don't have distractions. These pens are soooo smooth.
That's it. None are referral links or any sort - genuinely things that I love.
😂 Meme
Until next time,
Edgy p.s. Are you feeling underprepared for the bull run? The good news is I believe we're still a while away from this cycle's TOP. This means plenty of gains remain, especially with the BTC halving and the potential ETH ETF. However, you gotta lock in. If you want to give yourself an edge, consider signing up for Double Your DeFi. It's our five-week, live online training. It's our structured learning program designed to save you time, and to tell you what really works. We're at ~50% capacity so far. The cohort starts on April 1st, so reserve your spot before it's gone. Sign up Double Your DeFi
DISCLAIMER: I'm NOT a financial advisor. This content is for education and information purposes only. Crypto and DeFi are risky and speculative. Please do your research before investing. A Few Ways I Can Help You Win:
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