Bitcoin Spot ETFs vs Gold Spot ETFs
Blackrock’s spot BTC ETF application to the SEC was timely, following the 13 charges that the SEC filed against Binance entities and CZ. Since 2017, all 28 spot BTC ETFs have been rejected by the SEC. Blackrock’s record of ETFs approved by the SEC is 575-1 – a success rate of 99.8%. Many have had a look at Blackrock’s success rate with ETFs, amongst other factors, and have postulated that there is a high chance that their BTC spot ETF application would be a success. It is important to also note that in August 2022, Blackrock announced their Bitcoin Private Trust, granting institutional clients exposure to spot BTC, before retail clients.
If Blackrock’s spot BTC ETF is approved (or any other spot BTC ETF), it would give the ‘man on the street’ the confidence and easy access to BTC exposure. Let’s take a look, when Gold spot ETFs were launched and how this impacted the price of Gold:
Chart 1: XAU / USD
From the launch of the Gold Spot ETF in 2003 (Orange) and SPDR Gold Shares in 2004 (Green), there has been a more than 500% increase in price over the course of ~8 years from 2003 to 2011. Following the huge run up from 2003 to 2011, it crashed by ~50%, and price was suppressed in sideways movement over ~7 years. Since the ~90% run up from 2018 to 2020, gold price has been choppy, and failed to break the 2k resistance level, over the past 3 years, making it a pretty mediocre investment in the recent years.
Just like BTC, gold is seen as a competitor to the dollar, especially ever since Nixon removed the dollar from the gold standard in 1971. Having full control of gold allows institutions to defend the dollar, especially if they have various vested interests in protecting the greenback.
The gold markets have also been subject to manipulation by bad actors in institutions over the years, after the gold ETFs and shares were released since 2003 and 2004.
In 2020, former Deutsche Bank traders were convicted for trying to manipulate gold and silver prices from 2008 to 2013. Last year, an MD and trader at JP Morgan’s precious metals desk were convicted of ‘fraud, attempted price manipulation, and spoofing in a multi-year (2008-2016) market manipulation scheme of precious metals (gold, silver, platinum and palladium) futures contracts that spanned over eight years and involved thousands of unlawful trading sequences.’
Following a BTC spot ETF, we wait to see if there would be similar price action in the asset, and similar moves by institutions in the future. In the meantime, here’s a list of BTC ETF deadlines:
Chart 2: BTC ETF Deadlines (Bloomberg)
NFT Pulsecheck: Enough ‘art’-eries to keep pumping?
Interrupted peace in the Garden
This past week, the peace in the Garden (the Azuki community) was stirred, following the launch of its new 20k-supply collection, Azuki Elementals. Initially, the launch and pre-sale of Elementals was met with strong enthusiasm – the ~10k Elementals available, were minted out completely at 2 ETH each by Azuki OG and Beanz (a spinoff collection) holders (granted early access). Through this sale, the Azuki team managed to raise a whopping ~38m. Despite the success of the sale, various existing Azuki and Beanz holders experienced issues, and missed out on purchasing their Elementals.
Upon receipt of their new Elementals, the art turned out to be indistinguishable from the OG Azukis, causing much uproar within the Garden. Since the reveal on June 28, OG Azuki holders began to leave the community and sold off their beloved NFTs, with prices falling from ~13-14 ETH to ~6 ETH (as of 4 Jul 2023). Elementals holders began selling off as well. Beanz took a plunge in price as well from over 1 ETH to ~0.44 ETH (as of 4 Jul 2023).
Chart 3: Price Floor % change (1M) – Azuki (Yellow) vs Azuki Elementals (Blue) vs BEANZ (Green)
At the same time, the reveal of Captainz, an NFT collection launched by Memeland, was met with mixed reactions. Some complained about the art, while others expressed concerns about the lack of differentiation between NFTs due to the lack of traits. Others have urged the community to be patient, and lauded the unique approach by Memeland, as there would be “trait packs”, where one can purchase a booster pack, to acquire random traits that can be affixed to their NFT. Although the reveal saw prices fall, we note that the price of Captainz was already falling before the reveal (Chart below). We believe this could be due to a general decline in NFT prices and/or spillover of negative sentiment from Elementals.
Chart 4: Price Floor % change (6M) – Captainz
Better days have come and gone
Indeed, the NFT space has seen better days. While some see the negative Elementals launch as the trigger for drop in price floors for other collections, we see it more as a catalyst for the continued fall in prices, given the already-declining prices of collections over the past year. Collections that had consolidated their price positions as blue-chips of the space since 2021, like CryptoPunks and Bored Apes may have lost the air of invincibility that they perhaps once had (Chart below).
Chart 5: Price Floor % change (1Y) – DeGods (Purple) vs CryptoPunks (Yellow) vs Azuki (Orange) vs BAYC (Turquoise) vs MAYC (Green)
[1] We see the decline in NFT prices as linked to the overall health of crypto. Using majors as a proxy for crypto markets, when comparing the market caps of NFTs, BTC and ETH, it appears that there is a positive correlation between the price action of NFTs and crypto. This indicates that the floundering NFT segment may not be idiosyncratic.
Chart 6: Global NFT Market Cap (USD) – 1Y (NFTGo)
Chart 7: BTC Market Cap (USD) – 1Y (CoinMarketCap)
Chart 8: ETH Market Cap (USD) – 1Y (CoinMarketCap)
Pudgies remain resilient
One particular ‘OG’ NFT collection that appears to be a late-bloomer, immune from this contagion that has hit the NFT space, is Pudgy Penguins. When compared to its iconic counterparts that have been on a downward trend, the flightless birds seem to have taken flight. (Chart below)
Chart 9: Price Floor % change (1Y) – Pudgy Penguins (Purple) vs DeGods (Pink) vs CryptoPunks (Yellow) vs Azuki (Orange) vs BAYC (Turquoise) vs MAYC (Green)
‘Sui’-ted for success?
On 27 June, Twitter user @DefiSquared posted his/her findings regarding Sui. In response to @Defisquared, the Sui Foundation clarified that they have been using rewards from the staked locked foundation tokens to make payments to a third party, allaying the technicality of them selling the tokens. (Link to Tweet)
These tokens were not supposed to be part of the circulating supply, but were introduced into circulation via selling on Binance; 2.5m tokens were sent to 3 different wallets, which were ultimately sold on the CEX. As such, information on circulating supply shared on token metrics sites such as CoinMarketCap and CoinGecko were actually inaccurate.
In our previous Web3 Watch, we posted an image of the token emission schedule of $SUI. To clarify, that version was in fact not the official token emission schedule, but one that was posted by Binance Launchpad. Given the new information of actual $SUI emissions, this makes the previous version inaccurate. Sui then released an official token emission schedule (chart below).
Chart 10: Token Emission Schedule for $SUI (by TokenUnlocks)
When comparing this new official emission schedule with the previous unofficial version, the huge unlock is now estimated to be around mid-2024, instead of in the year 2023. Hence, this should impact traders’ positions when they short $SUI token unlocks.
Did this negative news have an impact on $SUI? Looking at the price action, there was a negative reaction on the date that @Defisquared released his/her findings (-15.85% within 24h).
Chart 11: SUI / USD
It has been slightly over a week. Since then, $SUI had been crabbing for about a week, before falling lower to its $0.65 support level. Can $SUI recover from this? More importantly, can they regain the trust of its holders and the greater community?
July Token Unlocks: Worth a short?
An analyst on Twitter recently summarized the most significant token unlocks for the month of July, with the total potential unlocked value amounting to $149m:
Chart 12: Token Unlocks in July (Source: @apes_prologue on Twitter)
We had covered in a previous Web3 watch, that traders who placed shorts 2 days ahead of the recent $OP unlock on 31 May had returned a profit of ~17.03%. Closing the short on the date of the $OP unlock would have been the best approach, as the token climbed for ~5 days after. Hypothetically, would this same approach work for $OP in the days running up to 30 July? ($OP’s next unlock date)? Expectations have to be tampered, as profits from shorting may not be as high as only 3.74% of $OP’s market cap is being unlocked, in contrast to the previous unlock that increased its circulating supply by more than 100%.
From the image above, so far $DYDX is the only token that has unlocked. Applying a similar strategy of shorting the unlock 2 days before the token unlock date , and closing the position on the unlock date itself, would have earned traders a humble 7.72% profit. (Chart below)
Chart 13: DYDX / USD
We will continue to observe other token unlocks for July, and return with our observations in the next Web3 Watch.
[1] A Twitter user ran a correlation analysis between ETH and NFT markets, and found a positive correlation coefficient of 0.76. He/she also states that NFTs are relatively less volatile as compared to ETH price fluctuations.
