Adrian's DeFi Alpha #14: The Crash - Is the Bull Market over? | Bittensor (TAO) | Movement L2 | AAVE
Definitely no financial advice, just insights based on my own journey in DeFi.
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The key developments in Crypto.
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️ On today's Episode:
📈 Market Update
🐂 The Bull Thesis for Bittensor (TAO)
🤸 Movement - a new ETH L2
💎 The Premium Section with even more Alpha and all Portfolio, Airdrop & Farming Updates
Market Update
Highlighting the key developments in Crypto and their implications.
Weekly Crypto Bubbles
The global #crypto market cap today is $2.06T, a 8.63% change in the last 24h. Total trading volume in the last 24h is at $219.8B. #BTC dominance is at 53.22% and #ETH - 14.58%.
The Big Selloff
We've just witnessed one of the wildest 24 hours in the crypto space since the infamous Luna collapse, the FTX debacle, and the Covid crash. The crypto market was rocked by a perfect storm of the Yen carry trade unwinding, Jump Trading liquidating its positions, and a broader stock market crash.
The Yen carry trade involved borrowing Yen at low rates to invest in higher-yielding assets. Higher rates and a stronger Yen are forcing traders to sell assets to repay loans, causing a liquidation cascade.
This crash drove major cryptocurrencies down over 20% across the board. Bitcoin (BTC) found its bottom around $50k, Ethereum (ETH) at $2k, and Solana (SOL) at $110. The 7-day returns paint a bleak picture with BTC at -16%, ETH at -24%, and SOL at -23%.
Over the past two days, the market experienced over $1 billion in liquidations, but we’re starting to see some signs of recovery. The Japanese Nikkei has already bounced back from its losses, and stock futures are up 1% this evening. Interestingly, the ETH ETF even saw investors buying the dip, and the majors have rebounded by ~15%+ from their recent lows.
1️⃣ The Recent Market Crash:
Major Selloff: Bitcoin hit a low of $49,221, its lowest since February, and Ethereum dropped to $2k. Other top tokens, including SOL and TON, also faced significant declines, contributing to an overall ~18% drop in the crypto market.
Catalysts for the Crash: The Bank of Japan's unexpected 25 basis point interest rate hike, the highest since 2008, triggered a selloff in risk assets. This move, coupled with rumors of Jump Trading liquidating assets amid a CFTC investigation, added to the instability, shaking investor confidence.
Additional Market Pressure: Weak U.S. job numbers and geopolitical tensions further accelerated the selloff. Uncertainty surrounding the upcoming U.S. elections has also contributed to market anxiety, pushing the market further down.
2️⃣ Interest Rate Concerns and Recession Fears:
Interest Rate Cuts: Historically, interest rate cuts are positive for stocks, but the rising U.S. unemployment rate to 4.3% in July sparked fears of a recession.
3️⃣ Looking Ahead:
Further Stock Market Declines: With potential further stock market declines, the crypto market might follow suit. The possibility of interest rate cuts in September adds to the overall uncertainty and could be bearish short term if something “breaks” in the US economy.
Significant Transactions: Large stock sell-offs by Berkshire Hathaway and substantial Bitcoin and Ether transactions have intensified market pressure.
Despite these challenges, there are of course glimmers of hope. The Nikkei's recovery and the positive sentiment and even netto inflows around the ETH ETF indicate potential resilience in the market AND most of all …
DeFi Remains Strong
There’s a silver lining here, and it’s something that can only be truly tested in times like these:
The DeFi ecosystem stands remarkably resilient (for now). Prices are taking a hit, sure, but more importantly, there are no major stablecoin or LST (liquid staking token) depegs. This stability is extremely important, and let’s hope it continues because a DeFi blow-up is the last thing we need right now.
Moreover, DeFi protocols like AAVE are thriving under pressure and increased activity. In the last 24 hours alone, AAVE generated a solid $6 million in revenue. This highlights DeFi’s robustness and ability to perform even in turbulent market conditions. More on Aave in the premium section of this episode.
Crypto News
⭐️ Justin Sun denies rumors of his positions being liquidated; adds he rarely engages in leveraged trading strategies.
$ETH gas fee reached 710 gwei amid crazy crash price action.
Jupiter $JUP passes Supply Reduction Proposal; 3B $JUP (30% of supply) to be burnt over time.
→ I am staking $JUP and see it as a great beta play that could outperform Solana. Better tokenomics make me even more bullish on it.
Gasless transactions are now live on the TON blockchain with Tonkepper wallet following the launch of the W5 smart wallet standard.
→ Users will no longer be required to hold Toncoin to facilitate payments and can make transactions using USDT and Notcoin.
Alpha Section
Good projects and opportunities I discovered
Alpha 1: AI x Crypto - Bittensor (TAO)
Introduction
Since GPT-3.5 was published in March 2022, AI has dominated the news, driven by the success of LLMs like ChatGPT and image generators like Midjourney. While the initial hype has faded, the next narrative rotation is likely to reignite interest in AI-focused projects. Today, I want to introduce you to the cryptocurrency TAO from the Bittensor project.
Investment Thesis
Bittensor is solving a critical problem in AI: the centralization of machine learning by mega-corporations like Microsoft, Google and Meta. By using a decentralized network, Bittensor aims to accelerate AI development, increase efficiency, and democratize AI access. This Peer-to-Peer intelligence platform is an open-source protocol powering a scalable, globally-distributed, decentralized neural network.
Catalysts
AI and Blockchain Synergy: Bittensor combines the strengths of AI and blockchain, creating a fair, open, and transparent system for AI transactions.
Decentralized Network: Similar to Bitcoin’s decentralized nature, Bittensor’s network is maintained by nodes (miners) that mine machine knowledge from datasets.
Innovation and Adoption: Tools like Corcel Chat (AI chat assistant) and Image Studio (decentralized image generation) show practical applications and potential for widespread adoption.
Strong Team: Led by Jacob Steeves (Google) and Ala Shaabana (IBM), Bittensor has a solid team of AI developers, enhancing credibility and potential for success.
Risks and Hedging Strategies
Infancy Stage: Bittensor, like the whole AI x Crypto sector, is still in an early stage, which comes with inherent risks.
Hedging: Diversify your portfolio with established cryptocurrencies to mitigate risk.
Complex Architecture: The technical complexity may deter beginner users.
Market Volatility: AI altcoins are highly speculative and can be volatile.
Hedging: Set stop-loss orders for risk management.
Execution/Entry Strategy
The current buy levels offer a favorable risk/reward ratio. Consider gradually building a position to average the entry price.
Entry Points:
Current Price: Start to DCA (daily or weekly), if not already initiated.
$150 Level: Set buy orders at this level to accumulate more TAO.
Take-Profit (TP) and Stop-Loss (SL) Levels:
TP1: Consider taking partial profits at the next significant resistance level. For example, $350 could be a short-term target.
SL: Place a stop-loss slightly below $150 to protect against further downside. For instance, $140 could be a strategic stop-loss level.
Why TAO is going to to outperform ETH
TAO’s unique value proposition as a decentralized AI network positions it to capture significant value in the next AI-driven market cycle. The synergy between AI and blockchain is still in its infancy, and TAO stands at the center of this intersection. Given the projected growth in AI applications and Bittensor’s innovative approach, TAO has the potential to outperform ETH by a factor of 3-5 within the next market cycle.
Alpha 2: Movement Labs - Gamified Testnet Campaign
Introduction
Movement Labs is developing M2, an innovative Ethereum Layer 2 solution that integrates the Move Virtual Machine (MoveVM). The project aims to enhance Ethereum's capabilities by using the Move programming language, originally created by Facebook. M2 focuses on improving smart contract security and significantly increasing transaction throughput, with a theoretical capacity exceeding 145,000 transactions per second. This development represents a significant step forward in addressing Ethereum's scalability challenges while maintaining a high level of security.
Movement Labs just started their innovative gamified testnet campaign, "Building the Parthenon." It is designed to educate users about their ecosystem through interactive tasks. The campaign uses Galxe as the backbone, guiding users through dApps and wallets within the ecosystem.
The Campaign Structure
Movement Labs' testnet campaign is divided into several engaging components:
The Battle of Olympus (for Devs):
A hackathon for blockchain developers and teams, running until September 17th.
Developers can build in areas like DeFi, gaming, social tools, infrastructure, and NFTs.
Teams are ranked on a master leaderboard based on their progress.
Building the Parthenon (for Everyone):
An open, incentivized testnet program that starts now.
Participants can complete weekly guild quest lines on Movement’s Galxe.
Engage with partner ecosystem projects and join Movement guilds based on skills and interests.
Gmove Campaign:
Win trophies for saying “gmove” on X.
Centurions:
A program for committed participants, with more details to be announced soon.
How It Works
Connect and Complete Tasks:
Visit Movement Testnet and download all wallets
Connect your Galxe account with Movement Labs dApp.
Complete Movement’s Galxe tasks.
Choose and Track Quests:
Pick quests from the Movement Labs platform.
You can choose from these “Guilds” and don’t have to do them all:
Spartans: Network explorers who get testnet tokens and perform various activities.
Creators: Storytellers who create memes, art, and other content.
Explorers: Test features and provide feedback.
Scholars: Content creators who write threads and blogs.
Pathfinders: Social-based tasks.
Track your progress and resources collected.
→ You can find the whole process step-by-step with all links and updates in my Airdrop Guide on Notion
Investment Thesis
Movement Labs is not just another blockchain project; it’s an ecosystem with robust community support and innovative engagement strategies. The gamified testnet "Building the Parthenon" not only educates users but tries to build a strong community foundation.
Important Updates
What else you need to know in the fast-paced world of crypto
Token Unlocks
• Heroes of Mavia / 1.15M $MAVIA / ~$1.4M / AUG 06
• dYdX / 1.55M $DYDX / ~$1.7M / AUG 06
• Hashflow / 13.62M $HFT / ~$2M / AUG 07
• Immutable / 32.47M $IMX / ~$35.7M / AUG 09
• Ethena / 14.89M $ENA / ~$4.3M / AUG 11
• IOnet / 2.11M $IO / ~$3.6M / AUG 11
• Aptos / 11.31M $APT / ~$60.2M / AUG 12
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Adrian
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