Boomerang 7/26/23

Kintsugi Research

0x0d36

July 26th, 2023

BTC boomerangs to range last seen in June 2022.

Bird’s Eye View

Tailwinds

8 BTC ETF applications backed by credible institutions head towards SEC final deadline Q1 2024

Arthur Hayes describes Bitcoin at the intersection of AI x robotics x macro megatrends

Institutional adoption considerably expands addressable market.

Many expected economy to be worse off than it is…

Headwinds

PacWest bank failure is a reminder we aren’t out of the woods yet.

While bank failures happen even during euphoric phases of the market cycle…

3 of the 7 largest bank failures in history happened this year, more to come?

Other Narratives

Crypto native securitization (RWAs)

Securitization is a $14 trillion US market

Tradfi embraces on chain assets

Defi embraces off chain assets

Web3 securitization ecosystem is robust

Centrifuge launches on chain ecosystem for structured credit

Crypto native stablecoin

From Dust on Crust by Arthur Hayes:

USD fiat stablecoins simply won’t be allowed to scale to the size needed to take crypto trillions of dollars higher in market cap (assuming you believe total crypto market cap is positively correlated to the total amount of USD stablecoins outstanding). It is just too risky to the US financial system to have all those dollars in the hands of organisations that must immediately liquidate their debt holdings to make good on their promises to their customers. And so, while the three majors (USDT, USDC, BUSD) might continue to exist, there is a ceiling on how large they can grow their deposit base in aggregate.

…

But this is not a reason for concern. We, the crypto faithful, have the tools and the organisations needed to support $1 trillion or more worth of NakaUSD outstanding. If this solution were embraced by traders and exchanges, it would lead to a large growth in Bitcoin derivatives open interest, which would in turn create deep liquidity. This would help both speculators and hedgers. It would become a positive flywheel that would not only benefit the member exchanges, but also DeFi users and anyone else who needs a USD token that can be moved 24/7 with a low fee.

1 NUSD = $1 of Bitcoin + Short 1 Bitcoin / USD Inverse Perpetual Swap

GPU cloud

Coreweave raises $421M series B

Together raises $20M for open source AI models

Together is using former crypto miners for GPUs and other hardware to build virtual server farms. It has leased thousands of GPUs to help power Together’s cloud service for AI developers.

Crypto miners seek new life in AI boom

Web3 Animation Studios

Atrium is a production studio for Web3 native IP

20eth trailer for Nouns DAO minted as NFT (proposal and result)
Nouns Movie (proposal | part 1)
On1 Force trailer
Neon Garden
NFTNow & CoinDesk articles

Macro Indicators

Cautious about euphoria in equity markets

Problems still looming in banking sector (bank failures and inflation linked debt)

EOY recession still a possibility.

Recession was priced in as of Q4 2022 but maybe not anymore?

On Chain Indicators

L2 TVL shows durable demand for fast and cheap transactions:

*$25B TVL on Ethereum

Bitcoiners embrace layers to expand utility of BTC network.

Short term holders driving price action since FTX collapse in Q4 2022

Bollinger Bands separated by 4.2%indicating historically low volatility

Declining stablecoin market cap evidence of risk on rotation and shift to RWA collateral

On June 21, MakerDAO purchased another $700 million worth of U.S. Treasuries to bring its total holdings to $1.2 billion. The protocol’s $2.3 billion worth of RWA collateral is now the protocol’s largest collateral type comprising 49% of Maker’s assets.