Market Analysis
Where's Altcoin Season?
Apparently it's bull season, but I'm not seeing any Lambos or Rolexes on my timeline.
I have to admit this has been one of the weirdest bull cycles I've been in. In a typical season, BTC and ETH pump first. Then altcoins start going insane with price action.
But the only narratives that have been performing well were AI, RWA, and memes in the past few months. And now things are quite boring. Some stats...
- The altcoin market cap fell from $1.46 trillion in March to $1.14 trillion.
- $SOL fell from ~$200 in March to ~$128. $AVAX fell from ~$60 to ~$25 during the same period.
So what's going on?
#1 The VCs are Taking the Gains
In previous cycles, everyone had fairer access to solid projects early on. Remember launchpads and ICOs?
But right now, all of the early projects seem to be raising funds privately. And retail doesn't have access to these markets.
Projects are entering the public markets only after they've proven themselves. This also means that a large chunk of returns has already been made.
VCs who have already made their 10x in private rounds will dump their tokens on the public markets as soon they unlock. This constitutes a constant pressure that is pushing prices down.
In this article, Cobie tracked the numbers of Ethereum, Solana, Optimism, and StarkNet numbers to demonstrate declining returns for projects whose returns are privatized.
You also have more and more "KOLs" who are getting access to these early rounds.
#2 This cycle was powered by the BTC ETF
This means that pumps in this cycle were primarily powered by institutions pumping money into the BTC ETF. This only pumps the price of BTC.
The altseason is partly powered by degens who rotate to other assets after making their returns from BTC. But in the case of ETFs, they won't rotate their gains to any other asset. It'll simply sit there.
To make things worse, even institutional inflow has slowed down.
In previous bull cycles, there were endogenous crypto innovations that acted as a catalyst for the bull market. In 2017, we had the ICO mania. In the last bull market, we had DeFi and NFTs. But in this cycle, we haven't had a similar innovation that's attracting retail.
#3 Many new tokens are high-FDV and low float
Low float means that the percentage of tokens circulating in the market is low compared to the total supply. Fully Diluted Valuation = Total Token Supply x Price.
And these are the real sh*tcoins.
- As locked tokens enter the market, they exert downward pressure on the price.
- As many people only use market cap for evaluation, this model gives the misleading impression that the token is undervalued.
- Low-float tokens are much easier to manipulate. The lower the float, the lower the money required to maintain tokens at certain prices.
- Frauds like SBF borrowed against these overvalued tokens. But in reality, the actual value of these tokens is often much lower than the borrowed amount.
- This creates two separate markets for the same project. A public market where the price is high and a locked tokens market where the price is comparatively low.
Part of the popularity of memecoins is due to these kinds of sh*tcoins. Since good tokens with fundamental value aren't accessible anymore, degens started pumping money into memecoins.
#4 Retail Never Came
Massive pumps in crypto are powered by retail people aping into coins.
But retail hasn't arrived yet. When $BTC was at $70k during 2021, we had 4M views per day on YouTube for crypto content. But $BTC at $70k in 2024 only attracts 800k views per day. We can see similar trends on X as well.
I've talked to a few of my IRL friends to get a temperature gauge. Basically, a lot of guys lost money on FTX and Terra Luna. Now they're more interested in trading stocks like NVIDIA since they feel it's so much safer. Can we blame them?
To attract new buyers, we probably need a crypto consumer app to become popular across mainstream society. Or we need a massive BTC god candle to attract greater media attention.
The crypto market in general has gotten much larger. According to Coingecko, in January 2020, the total market cap was around 200B USD. But right now, the total market cap is around $2.5T.
Think about it like this.
Compared to the previous cycle, there's probably 5x more tokens with 5x less users. The market is likely too fragmented to pump all your bags.
Something important to note is that this industry's still quite new. You can't copy and paste what worked in the past.
Do I think this cycle's cooked? Nah. I always say, adapt or die. Just sit and chill. Easy mode will come.
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Protocols
TON Network: The Emerging Ecosystem
Most alt L1s and L2s feel the same these days. They all promise to be cheaper and faster than Ethereum. But are there any Blockchains these days with MOATS?
There's an underdog network that's becoming the center of DeFi.
The Open Network (TON) is a Layer 1 blockchain associated with Telegram. This gives it access to more than 900M users on Telegram. It is also highly scalable and cheap to use.
We first mentioned TON in March as a potential hot alt Layer 1. And since then, it has kept growing and growing.
TON started a campaign called The Open League. It's a long-term incentive program for users and projects building on TON. They've already distributed $40M+ in Toncoin.
So if you're not familiar with TON, you're behind. The good news is we'll give you the 80/20 now and why you should pay attention.
Let's look at some numbers
The TVL for the platform has been rising exponentially.
Currently, it has about $1.036B in TVL. While that is great, the speed of growth is even more impressive. On January 1st, 2024, it had only $71.6M in TVL.
Other numbers have also been crazy since the beginning of the year:
- Daily active addresses went from 22.4k to 577.8k on June 14th. Right now, it is at 357k.
- Daily transactions went from 431.3k to 8.9M on May 17th. Right now, it is at 4.5M.
- The DEX trading volume went from $653.4k to $467.5M on June 14th. Right now, it is at $140M.
These metrics indicate a meteoric rise throughout 2024. Except for TVL, other metrics have since dipped a bit. But this seems to be the result of a broader dull in the market, rather than a loss of interest in TON. I think we are going to witness these numbers rise again soon.
The price of Toncoin ($TON) also has been pumping a lot:
TON has managed to build a diverse ecosystem. Interestingly, the leading protocols on TON for each category are projects native to TON. The multi-chain leaders like Uniswap aren't the leaders on TON.
Let's look at some of the top projects on TON.
Obviously, these aren't financial advice.
#1 DeDust. It is the leading DEX of the ecosystem by TVL. On March 1st, it only had ~$8.15M in TVL. Now, it has grown to a massive $335.71M. It grew 15% during the latest season of the Open League.
StoneFi is a close-competitor to DeDust. It is the second-largest DEX on TON with a TVL of $275.3M. And they are planning to go cross-chain.
#2 Catizen AI. TON has been home to several games. You can find a long list here.
Citizen AI is a game that I wanted to highlight. It is a mini-game platform. Every game should lead you through an airdrop adventure.
They launched on March 19th. Within 10 weeks, they were able to:
- 400k paying users
- Get >10 million downloads
- >2 million daily active users
- Total revenue of over 11M USDT.
They also have an ambitious roadmap. So, this project is definitely on my radar.
#3 Tonstakers. It is the leading Liquid Staking Project on TON. You can deposit TON. In return, you'll get $tsTON, the yield-bearing LST.
They won the liquid staking segment during the Open League's pilot season. As of now, it offers 3.17% in APY. Its TVL has grown from $32.26M on Jan 1st to ~$300M on June 15th.
Bemo Finance ranks second with a TVL of $81.61M. And Stakee holds the third spot with $23.15M.
#4 Resistance Dog. There's also an emerging memecoin scene on TON. $FISH, $RECA, $TINU are some of them.
For ecosystem-specific memecoins, I generally go with the leading memecoin of the ecosystem. In this cycle, aping into alpha plays has been better than choosing beta plays.
Resistance Dog ($REDO) is the alpha play for the TON memecoin narrative.
#5 Storm Trade. It is the first decentralized derivatives trading platform on TON. Compared to others, this is a slightly riskier play. It only has a market cap of $21.14 million.
But, I do think it has potential.
- It is available both in Telegram and as a Web App.
- It's on a growth trajectory. It grew from ~$1M on April 10th to the current ~$21M.
- Good roadmap with features like 1-click trading, Gaseless trading, and Copytrading.
- They are building SocialFi incentive mechanics like squad trading tournaments.
If you want a comprehensive list of applications on TON, visit Ton.app. They have listed over 870 apps from across their ecosystem. If you dive into those projects, you'll definitely find some gems.
🚀 DeFi Catalysts
Fantom Foundation has committed up to 200,000,000 FTM to accelerate partner migration for the Sonic Network.
Ethereum Name Service released the details of the upcoming v2. It has five-phase implementation phases that turn ENS into an L2.
EtherFi is discussing the purchase of ETHFI with up to 50% of protocol revenue. It'll be used to build the treasury and seed a liquidity pool on Curve.
Index Coop launched Fortunafi's RWA index token presale. It'll give holders diversified exposure to the RWA sector.
Maverick Protocol launched V2 on launched V2 on Ethereum, Arbitrum, Base, BnB Chain, and zkSync. It's expected to offer cheaper swaps.
Drift Protocol launched $DRIFT staking. Stakers will get double the voting power, fees from DRIFT/USDC market, and any future utilities.
Marinade introduced v2. The Solana-based LSD will support native staking, Protected Staking Rewards (PSR), and Stake Auction Marketplace (SAM).
Jupiter Finance's founder shared details of the J4J plans from the protocol. It includes a 30% reduction in total $JUP supply.
Sturdy Finance will introduce $veSTRDY. The $STRDY stakers will receive staking yields, emissions voting, and up to 2.5x yield boosts on lending.
🪂 Airdrop Alpha
Summer Finance has launched its points program, $RAYS. You can earn points by using it. They've already taken a snapshot for early users.
ZKX Protocol launched the $ZKX token. They are planning on doing a second round of the airdrop. 4 million $ZKX is allocated for that.
Kinetics launched the Airdrop Eligibility Checker for $KAI. It is a perp dex on Kava and Base.
Particle, a leveraged trading protocol, is launching its native token, $PTC. If you're claiming your airdrop on ByBit, you need to register before June 27th.
Zeta Markets released the $ZEX eligibility checker. The snapshot for the airdrop was taken on June 7th. Claiming will start after TGE.
📰 Industry News
Aave has voted to support Lido Alliance and deploy an Aave v3 instance focused on the Lido ecosystem.
3iQ, a Canadian asset manager, has filed a prospectus to launch a Solana ETP on the Toronto Stock Exchange (TSX).
Binance was fined ~$2.2 million (18.82 crore INR) for providing services to Indian clients without following the nation's AML rules.
🚀 New Launches
Superposition Public Testnet will launch today. It is an L3 chain built on top of Arbitrum One. And they claim that users will get paid for using it.
Tally, introduced The Tally Protocol. It'll allow DAO token holders to mint tLSTs which will make it easy to earn rewards while maintaining voting power and unlocking additional yield opportunities elsewhere.
dTRINITY will launch on the Fraxtal network in Q3 2024. It'll be a stablecoin liquidity protocol with low borrowing costs and sustainable yields.
🐦⬛ X Hits
- Why do some narratives outperform?
- Miners could be the cause of the recent price action.
- Macro data from The Kobeissi Letter.
- LDO and MKR holding against the midcap drawdown.
- A bit of Technical Analysis opium for us all.
😂 Meme
Until next time,
Edgy "was expecting to go from ramen to riches, but is still eating ramen"
Today's email was written by Edgy and Yayya.
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.
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