Macro Headwinds

Chart of the Day

The equities markets and the crypto market are a sea of red today. After plunging by more than 7% overnight, BTC's gains over the weekend that briefly put it above the $50k level were completely eradicated, and the number one cryptocurrency by market cap is now trading just around the $47k level. Yesterday's dip constitutes BTC's largest daily percentage drop since the flash crash of Dec. 4, 2021, and may see BTC revisit the swing low at the $42k level. BTC isn't the only one contributing to this sea of red. Despite its reputation for being able to withstand macro headwinds much better than BTC can, ETH also fell sharply overnight by around 5% (even 10% at some point), and is currently trading at the $3,700 level. Other altcoins — including those that have been consistently performing really well throughout this year like SOL and AVAX — were not spared. At the time of writing, SOL was down by more than 7% whilst AVAX was down by around 10%.

This pullback in both the equities and crypto markets is largely down to investor sentiments surrounding the upcoming Federal Open Market Committee (FOMC) meeting on Wednesday, where the Fed will likely be announcing if they are going to be ending their easy-money policies earlier than expected. However, not all is doom and gloom in the crypto market. In spite of ETH's price correction, many retail investors are still actively amassing ETH in small amounts. As can be observed from the chart, the number of ETH addresses holding less than or equal to 0.01 ETH has been steadily and consistently increasing through all the recent price dips, even hitting an all-time high level on Dec. 4, 2021, the day that ETH's price fell to the $3,500 level.

A similar trend can be observed in the number of ETH addresses with balances of at least 0.1 ETH, with a record high number of such addresses being clocked in at 6.37 million just 2 days ago on Dec. 12, 2021. Therefore, it does seem like the retail masses do still have a lot of conviction in ETH despite the recent price dips. However, the bigger (possibly institutional) players may not share the same sentiment. In looking at the number of addresses holding equal to or more than 10k ETH, there has been a consistent drop since mid-October. Moreover, there has also been a sharp increment in ETH fund outflows from digital asset investment funds in the recent week. Just last week, ETH fund outflows totalled $17m. Therefore, as positive as it is that the retail masses are still accumulating ETH in confidence through these price dips, the bigger players definitely seem more wary and unsure. 

Talk of the Town

Bored Ape Yacht Club (BAYC)'s rise in the NFT space has been meteoric. Developed only around eight months ago, BAYC is now one of the most well-known NFT projects out there. Celebrities and star athletes alike have all been eagerly jumping onto the hype train, and this doesn't seem to be stopping anytime soon. Today, Yuga Labs (the creator of BAYC) announced that they will be working with renowned game software company cum venture capital, Animoca Brands, to create a blockchain-based play-to-earn game that will see BAYC's famous apes play starring roles in. The game is due for launch in Q2 2022, and will definitely be one to watch out for!