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1w ago on

🔍The calm before the storm

valuable weekly insights GM friends. Here’s what I’ll cover today: 🔍 The calm before the storm 📊 Crypto chart of the week 🗞️ The latest DeFi news 🔍 The calm before the storm BTC’s volatility has been pretty low recently, but I expect that to change soon. We got a small pump yesterday after the Fed announced it was keeping interest rates unchanged, but the move mostly retraced afterward. As much as I’d love to see crypto decouple from macro news and hit new highs, I think the current macro environment explains the recent underperformance. On the macro side, several not-so-great things happened recently: AI companies are starting to face difficulties borrowing money as debt markets begin to shut off funding , which potentially puts them at risk of bankruptcy US inflation remains high, making future FED rate hikes likely The US-Iran war looks increasingly likely to resume. I think the last point isn't discussed enough and is a main reason why markets have been in a risk-off environment lately. According to Polymarket, there’s only a 29% chance that the US doesn’t attack Iran again by December 31. The US and Iran still seem far from reaching a peace deal after months of negotiations, and Trump has increasingly hinted that he’s considering another military operation against Iran. There are only two reasons why I think the ceasefire has lasted this long: The US midterm elections are coming up on November 3. Trump likely doesn’t want to restart the war before the elections, as doing so would hurt his party’s chances at a good election result Israel’s political situation remains uncertain after the recent parliamentary elections , and it’s not yet clear whether Benjamin Netanyahu will remain prime minister. This matters because the US is unlikely to attack Iran without Israel’s help, and Benjamin Netanyahu has been one of the biggest proponents of the war So what’s next? The US midterm elections are just five days away, and I expect to get more clarity after that on whether the current ceasefire will hold. Meanwhile, Polymarket gives Netanyahu roughly a 45% chance of remaining Israel's prime minister. If he stays in office, I think the chances of the US and Israel resuming their strikes against Iran increase significantly. In that scenario, BTC revisiting $75,000-$77,000 seems entirely possible. I don’t expect a crash as severe as the one we saw in Q1 when the war first started, but a renewed escalation could still trigger another sell-off. The only good news is that this would probably also mark the BTC local bottom, since I can’t think of anything that could cause more market fear than a restarting war. Obviously, I hope the war doesn’t restart. Putting financial markets aside, another war escalation would mean more innocent people losing their lives. But Trump’s recent comments + Polymarket implying a 71% chance that the US-Iran ceasefire ends before Dec. 31 + the US recently evacuating family members of US diplomats from Middle Eastern countries make me think that the US attacking Iran again is a likely outcome. How am I positioning myself in the market I rotated a part of my altcoin exposure into BTC. My reasoning is simple: if the US vs. Iran conflict escalates, I expect BTC to outperform most altcoins on the way down. Given my view that BTC’s downside from here is limited and its local bottom is no more than 5-10% away, I don't think selling BTC here makes sense from a risk/reward perspective, so I am holding my BTC bag. On a longer timeframe, I'm also very bullish on revenue-generating altcoins. I think many of them will be trading significantly higher a year from now. But in the short term, the sad reality is that the market could remain choppy unless 1) the US finds a way to make a deal with Iran and 2) inflation cools down. There are two Polymarket markets I will monitor closely in the next days: Prime Minister of Israel after the next election? - Netanyahu has a 46% chance atm of remaining the Israeli prime minister. If his chances shrink and he is replaced by someone else, the odds of the war resuming will drop quite a bit in my view, as Trump publicly said he wants to fight Iran alongside him US-Iran ceasefire continues through Dec. 31? - There’s only a 29% chance that the ceasefire won’t be broken by that date. If the odds of the ceasefire continuing significantly rise and the war no longer restarts as expected after the midterms, then I am planning to re-add my altcoin exposure and will become more bullish I think prediction market odds are a valuable tool for understanding what's likely to happen next on the geopolitical/macro side without spending all day reading the news, so that’s why I’m keeping an eye on them. To sum up my view: If the US-Iran war restarts, I expect another major market dip, primarily affecting stocks and altcoins, with a limited impact on BTC. If a peace deal is signed or the ceasefire simply continues after the midterms, I expect an explosive rally, as this isn't priced in. Either way, this low volatility environment will likely be over soon. Chart of the week The weekly DeFi revenue has grown from $80 million to over $300 million Crypto meme of the week 😂 The latest developments in DeFi Trade[XYZ] and NYSE announced plans to bring Hyperliquid perps to the US Chainlink launched CustodySync , a solution that enables institutions to borrow from DeFi against assets held in custody INFINIT reopened deposits for APEX MS Vault , a trading vault that has generated 35% APY since launch Uniswap launched Aggregator Hooks , turning Uniswap V4 into a DEX aggregator Ethena launched Earn +, a 12% APY DeFi vault for its neobank users Stanley Druckenmiller , a very famous American investor, invested in Trade[XYZ] Predict fun introduced its token and announced an airdrop Jupiter introduced Jupiter Bridge - a new bridge aggregator Extended announced the launch of its own token XTEN in November Kamino enabled borrowing against Backpack tokenized stocks on Solana Pumpfun launched perps powered by Hyperliquid USDai introduced a token buyback program Osmosis ended OSMO token inflation That’s all for this week! Until next time, The DeFi Investor Subscribe now Want to sponsor this newsletter? Please send me a DM on Twitter (X) . I have a sponsorship deck that I can send you.

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3w ago on

Crypto Watchlist for the week ahead: $AERO - Aerodrome will launch Aero, its new multichain DEX, on Oct. 21 $LIT - Lighter's Q3 investor update call is scheduled for Oct. 21 + Lighter will launch options trading soon $SOL - Solana's Alpenglow network upgrade will go live on Oct. 21 kinetiq:native - Kinetiq will launch Elysium, the first Hyperliquid L2, this month $OSMO - Osmosis's proposal to end OSMO inflation is expected to go live on Oct. 20 $STRK - Starknet's proposal to transition from an L2 to an independent L1 is live for voting until Oct. 22 solana:JUPyiwrYJFskUPiHa7hkeR8VUtAeFoSYbKedZNsDvCN - 50M JUP will be given as staking rewards to JUP stakers next week $ZK - zkSync will make a big announcement on Oct. 21 I hope you found this helpful🫡

NeutralJUPJupiterJupiterBTCBitcoinBitcoinCAKEThe Cheesecake FactoryThe Cheesecake FactoryWTICLWTI Crude OilWTI Crude OilHYPEHyperliquidHyperliquidLINKChainlinkChainlinkSOLSolanaSolanaSTXStacksStacksVVisaVisaXPLPlasmaPlasma

3w ago on

🔍Why did crypto crash?

valuable weekly insights CrunchDAO is a decentralized collective intelligence network of thousands of top engineers competing to solve real-world problems. Check it out here! GM friends. Here’s what I’ll cover today: 🔍 Why did crypto crash? 📊 Crypto chart of the week 🗞️ The latest DeFi news 🔍 Why did crypto crash? The market has been pretty choppy over the past 1-2 weeks. I think most of this weakness comes down to the current macro situation, although a few unfortunate events have also happened within crypto. For example, Ledger , one of the most popular hardware wallet producers, recently discovered that devices sold by certain authorized resellers in Asia contained unauthorized hardware implants. Some of these resellers are believed to have added the implants themselves. Those implants then allowed attackers to see the seed phrases of people who bought them and steal their funds. While the exact amount lost is not confirmed, it’s estimated that a whopping ~$90M was stolen. This incident really sucks because the affected people did everything right in theory: They bought a hardware wallet to self-custody their assets more safely, yet their wallets were still drained. I guess the only lesson here is to buy hardware wallets only from official websites and avoid third-party resellers. But this security breach is certainly a big setback for the entire industry. Moving on to macro, several macro-related developments have also contributed to the recent market weakness in my opinion: US CPI inflation data came in at 3.7% , above expectations - This triggered a correction across all major financial markets, including crypto Many investors panicked because CPI data coming in above expectations makes it more likely that the Fed will raise interest rates again. Another rate hike would make borrowing more expensive and risk-on assets less attractive. The South Korean stock market experienced a major crash - This matters because a lot of South Koreans have significant exposure to crypto, and this stock market crash could have prompted some of them to sell some of their crypto The Russia-Ukraine energy ceasefire failed to hold - Trump’s announcement of an energy ceasefire initially raised hopes of lower oil prices and lower inflation, which would have been bullish for markets. But within hours, the ceasefire broke, ultimately pushing oil prices higher instead of lower. None of these events is catastrophic on its own, but together they’ve created a pretty unfavorable environment for risk assets over the past few days. And I suspect that’s why the market crashed. The good news is that, according to Polymarket, there’s still a 67% probability that the Fed will leave interest rates unchanged in October (instead of hiking them). If the Fed doesn’t hike rates, as many investors now expect, this could provide some relief for crypto and financial markets in general. And I think this is the most likely scenario at this moment. But we still have ~2 weeks to wait for the next FED interest rate decision. In collaboration with CrunchDAO World’s largest decentralized AI competition platform Most forecasting models are developed by siloed teams. CrunchDAO is taking a different approach: It turns machine learning into an open competition, bringing thousands of independent researchers together to build models that address real-world problems. Institutions provide datasets and define the problem, while contributors build models, submit their solutions, and compete for rewards based on the quality of their work. Here’s how it works: CrunchDAO attracted 11,000+ ML engineers and 1,200+ PhDs across more than 100 countries to its platform Businesses can leverage CrunchDAO’s extensive network to develop better models by launching a competition on CrunchDAO Once a competition is launched, over 12,000 data scientists compete to solve certain problems and prove their expertise At the end, the businesses receive the winning models and pay exclusively for the performance delivered Crunch’s goal is to make AI development more open, efficient, and globally inclusive. Top institutions like the Broad Institute of MIT & Harvard and ADIA Lab have already used Crunch and achieved great results. Check out CrunchDAO here! Chart of the week Jupiter Lend became the largest money market on Solana Crypto meme of the week 😂 The latest developments in DeFi Papertrade , a 1000x leverage app built on Hyperliquid, went live Chainlink launched a solution that enables DeFi apps to accept 1-click deposits from any blockchain INFINIT announced it will open deposits for APEX MS2 , an institutional-grade trading vault, on Oct. 28 Bybit and Mantle introduced mStocks , an upcoming tokenized equities product backed 1:1 by real stock shares Stacks revealed its plans for the next 3 years , which include launching self-custodial Bitcoin lending and compliant BTC privacy Derive team proposed expanding Derive into US regulated markets Solana network became 2x faster Starknet launched Shadow Accounts for private DeFi interactions Aave launched incentives for its new tokenized stocks market Base launched an Earn & Borrow product for stablecoin yield Pancakeswap proposed cutting CAKE token emissions by 69% Pyth allocated 100% of its DAO revenue to buybacks Plasma partnered with Visa to launch multi-currency stablecoin cards That’s all for this week! Until next time, The DeFi Investor Subscribe now Want to sponsor this newsletter? Please send me a DM on Twitter (X) . I have a sponsorship deck that I can send you.