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Is the Bull Run Over?
Eric talks investment strategy on Real Vision
The Phenom Crypto Letter
GM,
Kind of feels like we are in no mans land right now. BTC dropped below 60K and its all doom and gloom on twitter. Remember a few months ago when BTC went above 50k and everyone was dancing in the streets? How quickly we forget. I don’t know about you but I’m ready for more “to the moon” vibes. Don’t worry. The Bull Run ISN’T over!
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Here’s what we’ve got this week:
The Market Correction
CZ Goes to Jail
EigenLayer announces token airdrop and some people aren’t happy
Market Rundown
With bitcoin aggressively breaking the $60k support this week we have solidified a real market correction. A number of indicators are all trending downward including:
Sentiment: Solidly back in the Neutral zone
Sector Market Cap: Down over 20% from the winter peak
BTC Dominance: Inching up. As we enter Alt season we will see this start to fall
Overall Volume: Total volume is back below $100B per day
Corrections are normal and healthy, particularly on a sector as volatile as crypto but they can be a punch in the stomach of you haven’t experienced them before. If you look back historically there are many 20% dumps during a bull market, particularly as exuberance gets high and the use of leverage skyrockets. We believe we are still in the middle innings of the bull market and view these as opportunities as entry points to projects we have a strong bull thesis for. A sale on tokens if you will.
There are a number of factors that are influencing the weakness in the market right now. Two primary factors we are looking at are:
Macro Data: Jobs data, inflation prints and interest rates are spooking the market. A few indicators are trending towards stagflation and the FED has turned hawkish and has indicated they aren’t planning to lower rates.
Liquidations: This week saw a lot of liquidations leading to cascading negative price action.
Our outlook going forward is to expect a bit more pain and uncertainty before we really take off. There is a decent probability of a month or two of consolidation before we see aggressive positive price action. The lack of catalysts for BTC and the “Higher for Longer” outlook on interest rates from the FED should keep things tempered a bit. Inevitably though liquidity will continue to shift into the crypto markets.
Top Movers:
(-) Pendle ($Pendle) -24% Pendle tanks on disappointing Eigenlayer airdrop allocation.
(-)Stacks($STX) -22% Stacks is down on shifting attention to newer, shinier BTC beta plays like Runes
(+) Helium ($HNT) +54% HNT the decentralized phone network exploded this week on positive news of subscriber growth and integrations with AT&T
(+) Optimism ($OP) +15% OP, one of the biggest Eth L2s, saw solid gains this week spurred by the VC firm A16Z announcing they purchased $90M worth of $OP tokens this week.
Ex-Binance CEO Changpeng Zhao Sentenced to Four Months for Money Laundering Violations
Changpeng Zhao, widely recognized as CZ, the former CEO of Binance, has been handed a four-month prison sentence for breaching U.S. money laundering regulations. Once deemed an invincible figure in the cryptocurrency realm, CZ now confronts significant repercussions for his actions.
Back in November, CZ entered a guilty plea for his failure to uphold a robust Anti-Money Laundering (AML) system at Binance. Although the prosecutors sought a three-year incarceration, Judge Richard Jones opted for a more forgiving four-month term.
In a surprising turn, Judge Jones also rebutted the prosecution's stance, noting the absence of concrete evidence that CZ was directly informed of specific unlawful dealings within Binance. This revelation certainly adds a dramatic twist to the proceedings!
While CZ's defense team advocated for probation, highlighting his affluence as a liability in prison, the prosecution argued that such a lenient sentence might set a dangerous precedent, potentially emboldening others to flout the law on a large scale.
In a reflective moment, CZ expressed remorse over his actions and admitted his considerable time to ponder over his errors. He acknowledged his part in Binance's inadequacies concerning the implementation of a proper AML protocol.
As the legal chapter closes for CZ, the spotlight shifts to the future of Binance under the stewardship of Richard Teng, the new CEO and former head of regional markets. Meanwhile, CZ has pivoted to a new venture, Giggle Academy, focusing on educating the youth about cryptocurrency and blockchain—a noteworthy attempt at redemption.
In comparison, while some may draw parallels with Sam Bankman-Fried, who received a 25-year sentence, the focus here remains distinctly on CZ's narrative and the unfolding consequences of his past decisions at Binance.
Reading Corner
Overwhelmed by all the newsletters you could be reading? Don’t worry, We’ve got you. We’ve narrowed down a few we think are worth checking out.
BlockBuzz™️
Quick Hitters from the week
VanEck's Bitcoin Holdings Report: Estimates that ETFs, nations, and companies collectively hold about $175 billion in bitcoin.
Federal Scrutiny on Jack Dorsey's Block: Investigated for potentially non-compliant crypto services, as reported by NBC News.
Tether's Record-Breaking Quarterly Profit: Achieves its highest ever net profit in a quarter, boosted by interest from US Treasury holdings and gains in bitcoin and gold.
BlackRock Boosts Tokenization Efforts: Leads a $47 million investment in Securitize, a blockchain firm, deepening its commitment to digital asset tokenization.
Binance Founder Sentenced: Changpeng Zhao receives a 4-month prison term.
Spot Bitcoin ETF Withdrawals Persist: April sees $344 million net outflows, continuing the trend of reversed investment flows.
Coinbase Integrates Lightning Network: Launches support in partnership with Lightspark to enhance transaction efficiency.
Crypto Stocks Take a Hit: MicroStrategy shares drop 17%, with significant declines also seen in Coinbase, Marathon, and Riot.
The Twitterverse
A collection of the most interesting stuff on Crypto Twitter this week
The WOO reminding us whats at stake in the long game
On track for $1m per BTC as "fair value" by 2035.
That's if we take the user growth curve as a guide for valuation. Remember I said fair value and not peak value in bull market hype.
- In the early days price was slow to catch up to user count, BTC didn't even have a price… twitter.com/i/web/status/1…
— Willy Woo (@woonomic)
9:14 AM • May 2, 2024
This tracks w/ the sell pressure we’ve seen the last couple weeks.
Inspecting the #Bitcoin Accumulation Trend Score by Wallet Cohort, we see a distinct uptick in net outflows across all cohorts throughout April, suggesting a consistent sell-side pressure across the board.
— glassnode (@glassnode)
2:43 PM • May 2, 2024
We believe that we are still in the early phases of this bull market
That whole rally was just the preliminary pump.
Let the PvE games begin.
— pixel (@spacepixel)
8:20 PM • Jan 8, 2024
WAGMI
For the Crypto Culture
Can confirm
Everyone who bought last summer
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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.
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