The Hard Fork – Weekly Market Commentary


This Week’s Topics:

1) Total value deposited in DeFi hits new all-time high
2) Galaxy sees $1.4 bn in Q3 trading volume
3) Crypto network fees rise


Indices Round-up


TradeBlock Index Asset1 Price ($) 7d∆2
LTX Litecoin 67.27 8.87%
XRX XRP 0.27 6.44%
ZCX Zcash 63.23 4.23%
XBX XBT 16,245.22 2.78%
XMRX Monero 117.59 -0.49%
ECX Ethereum Classic 5.17 -0.70%
EOSX EOS 2.53 -0.81%
XLMX Stellar Lumens 0.08 -1.27%
ETX Ethereum 452.74 -1.30%
BCX Bitcoin cash 250.99 -8.37%
1. Underlying asset sorted in descending order by 7 day price movers.
2. 7 day price movers monitored from 11/09/2020 06:00 ET thru 11/16/2020 06:00 ET.


7 day price movers
Digital currencies posted mixed results on the week amidst a bifurcation in asset returns. Among our indexed currencies, litecoin traded up the most, gaining 8.87%. Conversely, bitcoin cash declined the most, losing 8.37%. Bitcoin crossed the $16,000 level this week for the first time since the late 2017 bull market. Despite the price run, bitcoin has seen little attention from mainstream media outlets indicating we are still in the early innings of the latest rally. In the figure below we diagram worldwide ‘bitcoin’ Google search interest over time.

Figure 1: Worldwide bitcoin Google search interest


In traditional markets, US equities ended the week nearly unchanged. In the bond market, yields were relatively unchanged on Friday heading into the close. The yield on 10-yr bonds was 0.89% while yields on 30-yr bonds hovered around 1.64%.

Total value deposited in DeFi hits new all-time high
Total notional value deposited across decentralized financial apps hit a new all-time high this past week at nearly $14 billion. While deposit growth stagnated in October and early November, an increase in DeFi activity has come back online in the past two weeks pushing deposits to new highs. In the figure below, we diagram total notional value deposited across DeFi apps over time.

Figure 2: TVL deposited in DeFi over time


DeFi tokens are rallying again after seeing large declines in market value in September and October. Over the past week, Uniswap’s UNI token gained more than 50% while Yearn Finance’s YFI gained more than 25%. DeFi tokens were red hot in the beginning of the summer as various assets saw gains over 300% in a matter of a few months. This parabolic price action appears to be returning some after cooling off the last two months.

In the past we have built financial models to analyze the underlying fundamentals of DeFi tokens. DeFi tokens are some of the first tokens to generate “cash flows” which can be paid out to token holders, generating what is akin to a dividend.

Galaxy sees $1.4 bn in Q3 trading volume
Michael Novogratz’ OTC trading firm posted strong results in Q3 2020. The firm saw more than $1.4 billion in trading volume come through its desk for the three month period. This was a more than 75% increase YoY. The result is not necessarily unexpected as exchanges also saw a considerable uptick in trading volume. LMAX digital, for instance, saw its best month ever in September with more than $10 billion in volume.

Net income also came in stronger than last year’s numbers. Galaxy generated $44 million in income in Q3 2020 vs a $68 million loss in Q3 2019. Q3 2019 saw considerable declines in assets held on the firm’s trading books, which were primarily blamed for the steep losses. Additionally, the firm acquired two companies–crypto lender DrawBridge and market maker Blue Fire Capital.

Crypto network fees rise
Crypto network fees have returned to healthy levels after declining on reduced activity. Uniswap network fees are back above $1,000,000 per day after declining to lower than $500,000 per day last month. Similarly, SushiSwap generated fees over $100,000 after also declining to lows as liquidity across its platform declined.

Notably, the ethereum based betting platform, Polymarket, joined the list of fee generating crypto platforms for the first time. Polymarket saw an uptick in fees after the US presidential election, which brought its presidential betting market to the mainstream. Lastly, Ethereum topped the list, generating nearly $2 million in daily fees. In the figure below, we diagram daily network generated fees across the leading platforms.

Figure 3: Daily crypto network fees



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