It’s not just me who thinks this market is bizarre.
Selling on the equity side is logical, for a number of reasons, ranging from the disappointing US consumer confidence to the overhanging tariffs. Crypto is another matter.
We can all agree on the fact that memecoins play a major role in this negative trend. I hesitate to label all of the most recent token launches — i.e. MELANIA, TRUMP and LIBRA — memecoins, but I do think they all contributed to the larger exhaustion. They were supposed to be smaller, fun parts of crypto but their dominance within the narrative clearly has caused burnout.
CME traders are pulling back, and showing caution. The perp traders have been more active. They’ve added some BTC to their long positions. However, it is important to note that long positions are currently being punished.
“CME traders remain defensive. Open interest remains flat while premiums have stayed in deep single digit territory and the February contract currently trades below spot. Annualized March futures premiums are subdued at 5.7%, with the daily next month premium declining to lows not seen since the early July Mt. Gox driven market downturn,” K33 wrote.
Buying the dip wasn’t a good idea for perp traders.
“Perps have traded at discounts to spot for several weeks, but this discount narrowed amidst the open interest spike [since Monday]. Further, funding rates on Binance reached neutral terrain as leverage climbed, pointing toward traders entering longs with leverage. This behavior was quickly punished in the market, with long liquidations amplifying the move lower.”
Matt Hougan, Bitwise’s Matt Hougan pointed out that it’s not all bad news.
Everyone I have spoken with is very positive about the environment once you get rid of crime.
This is not to suggest we don’t take caution, but some companies are worth keeping an eye on. Aave’s growth was highlighted by K33 in an independent report released this morning.
“A constructive regulatory regime gives DeFi a new lease on life. Leading platforms such as Aave are now free to pursue innovative avenues that may have previously carried more questionable risk, such as revenue-sharing tokenomics,” Written by K33 analysts.
DeFi would also benefit from greater regulatory transparency (which is something we have yet to see). Institutional players, for example, could integrate various DeFi products into portfolios — especially if spot ETH ETFs add staking.
It is rare that I express an opinion but this shift from the memecoin narrative to a more realistic one, while painful at times, was necessary. There are pockets of opportunities within the current market if̶ ̶y̶o̶u̶ ̶f̶o̶l̶l̶o̶w̶ ̶y̶o̶u̶r̶ ̶h̶e̶a̶r̶t̶.
It’s not true, but I do personally agree with the idea that crypto projects are in high demand. It’s also not restricted to RWAs and stablecoins.
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