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December 29, 2021

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December 29, 2021

An Abrupt End to the Santa Rally

Oliver Grah
Dec 29, 2021
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December 29, 2021

www.elliotrades.xyz

Introduction

Is it tax-loss harvesting that caused the crypto market sell-off at the beginning of the last week of 2021? Or is it just whales playing with super-thin order books in a week where institutional investors are mostly absent? We can’t tell for sure, but one thing is clear: Last week’s price gains and the euphoria on Crypto Twitter have evaporated faster than they came.

Twitter avatar for @ledgerstatus
Ledger 🇺🇸 Prometheus of the Plebs @ledgerstatus
Grind up panic down
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3:16 AM ∙ Dec 28, 2021
359Likes5Retweets

Market Watch

  • After a few rather brutal weeks in the markets, the eagerly awaited Santa rally came after all last week. However, the fun didn’t last long, and Bitcoin’s short-term ascent got stopped precisely at the critical resistance level everyone was watching: $53k.

  • What does that mean for the markets? Well, most likely more of what we have seen in November and December: consolidation. Crypto prices showing this much weakness and panic at first sight of overhead resistance is certainly not a good sign in the short term… However, we should also not overinterpret today’s dump, given the low volume in this holiday week.

Twitter avatar for @rektcapital
Rekt Capital @rektcapital
#BTC is still just consolidating inside its two Bull Market EMAs The green 21-week EMA resistance And the blue 50-week EMA support Just like $BTC did in May 2021 #Crypto #Bitcoin
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Twitter avatar for @rektcapital
Rekt Capital @rektcapital
8. Today, #BTC is showing signs of forming a range in between these two EMAs once again In fact, $BTC recently confirmed the green 21-week EMA as resistance, rejecting there earlier this week Could we see BTC repeat May and experience multi-week consolidation between the EMAs? https://t.co/6bKeqiGYDI
1:59 PM ∙ Dec 29, 2021
96Likes13Retweets
  • A bit concerning is that crypto, while correlating strongly with equity markets, underperformed them massively in recent weeks. While only benefitting mildly on moves to the upside, any shakiness in stocks has led to an abrupt sell-off in the crypto markets.

  • On a more positive note, even though crypto has underperformed equity markets recently, the signs for a continued overall risk asset rally in January are mounting.

TradingView Chart
  • What do we need to change the current negative trend in crypto markets? Well, either crypto fundamentals improve strongly for price action to follow – however, we don’t have as many catalysts lined up right now. (“Maybe” the Merge in a couple of weeks?). From an on-chain and structural perspective, it’s indeed not a very bright outlook at the moment.

Twitter avatar for @santimentfeed
Santiment @santimentfeed
📊 There are several signs to watch as #Bitcoin has dropped back to $47.5k in 2021's final week. 👍 The good: Sentiment shows #bearishness, traders in pain, derivatives staying low 👎 The bad: Whales profit taking, circulation down Read our full insight! insights.santiment.net/read/bitcoin%3…
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5:48 AM ∙ Dec 29, 2021
75Likes15Retweets
Twitter avatar for @RaoulGMI
Raoul Pal @RaoulGMI
There is a lot going on in the digital asset space but also nothing going on and that is the problem... Let me give you some thoughts... 1/
3:49 PM ∙ Dec 28, 2021
8,415Likes2,059Retweets
Twitter avatar for @RaoulGMI
Raoul Pal @RaoulGMI
And active wallet addresses have not gone anywhere either...It seems that retail activity peaked at the beginning of 2021
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3:49 PM ∙ Dec 28, 2021
922Likes26Retweets
Twitter avatar for @RaoulGMI
Raoul Pal @RaoulGMI
If Metcalfe's Law applies then network growth is currently very slow, hence why price is sluggish. The same is true of ETH but there is a different factor at play here, hence the outperformance.
3:49 PM ∙ Dec 28, 2021
896Likes21Retweets
Twitter avatar for @RaoulGMI
Raoul Pal @RaoulGMI
All assets which are driven by network effects require the network to grow to rise in value. This is why you see explosive price action in projects that suddenly gain network effects as the market decides what has real traction and what hasn't.
3:49 PM ∙ Dec 28, 2021
881Likes46Retweets
Twitter avatar for @RaoulGMI
Raoul Pal @RaoulGMI
This is a good thing for those super focussed on the details of each part of the market but it tends towards a FOMO driven market where late-comers who haven't done their homework get topped and tailed as the market moves to the next thing.
3:49 PM ∙ Dec 28, 2021
823Likes27Retweets
Twitter avatar for @RaoulGMI
Raoul Pal @RaoulGMI
That churning is in fact a sign that the market is broadening out. It also makes it harder to generate alpha as investors now need much more knowledge to generate excess returns.
3:49 PM ∙ Dec 28, 2021
877Likes35Retweets
Twitter avatar for @RaoulGMI
Raoul Pal @RaoulGMI
The other key driver of digital asset prices is the Fed balance sheet. Digital Asset markets peaked when balance sheet expansion peaked in YoY rate of change terms.
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3:49 PM ∙ Dec 28, 2021
708Likes31Retweets
Twitter avatar for @RaoulGMI
Raoul Pal @RaoulGMI
But for the bigger market cap tokens to appreciate, they need new money. This is a market to HODL a broad mix of quality names on top of main core positions and don't try to chase returns unless you know what you are doing...
3:49 PM ∙ Dec 28, 2021
1,048Likes53Retweets
Twitter avatar for @RaoulGMI
Raoul Pal @RaoulGMI
New capital will flow in over time and a broader rally, when it arrives, will bring retail investors and a reflexive loop of institutional investors FOMO'ing in. That day will come. You just have to not over extend yourself, don't use leverage and sit tight. Play the long game.
3:49 PM ∙ Dec 28, 2021
2,281Likes158Retweets
Twitter avatar for @RaoulGMI
Raoul Pal @RaoulGMI
The best advice I got was from Paul Tudor Jones who once told me the best investors he knew are those whose investment time horizon matches their idea time horizon. If your model is based on Metlcalfe's Law for all DA's, then you need to be thinking in years, not weeks or months
3:49 PM ∙ Dec 28, 2021
3,755Likes405Retweets
  • Another possible driver to change the trend back in favor of the bulls could be a structural change in buying and selling activity. While it’s unlikely that retail investors will flood into crypto out of nowhere any time soon, institutional investors may start redeploying capital in January. That’s the biggest hopium we have right now.

Twitter avatar for @RaoulGMI
Raoul Pal @RaoulGMI
My view is that the key reason the market has seen less retail activity is that wages are rising slower than CPI. The cost of living has gone up dramatically and that has removed the marginal investor from crypto. They just can't afford the disposable income.
3:49 PM ∙ Dec 28, 2021
1,380Likes87Retweets
Twitter avatar for @RaoulGMI
Raoul Pal @RaoulGMI
I don't see stable economic growth and lower inflation for a while so we are going to have to rely on institutions and hedge funds to allocate meaningful capital. I think that is coming and Q1 should confirm that, indeed maybe January, but we have to wait and see...
3:49 PM ∙ Dec 28, 2021
1,251Likes63Retweets
Twitter avatar for @RaoulGMI
Raoul Pal @RaoulGMI
Additionally, I didn’t mention that institutional rebalancing, tax-related selling and hedgies squaring books has also added to year end weakness. This is more temporary, most likely. Anyway, hope you found it useful!
4:59 PM ∙ Dec 28, 2021
1,215Likes33Retweets
  • With macro conditions likely going to deteriorate and not improve over the course of 2022, it’s likely that January (maybe also February) is the month that determines if we can get another rally in this bull market cycle. Later in the year, the signs point to a storm with a choppy grind up in the best and further drawdowns in the worst case. (This refers to the general market, but of course, there can always be exceptions of fundamentally strong projects with fast-growing adoption.)

Twitter avatar for @gametheorizing
Jordi Alexander (💜,💜) @gametheorizing
Two Scenarios: a) Dip is just year-end selling. We get a massive BTC-led rally Jan1-15th that creates momentum, and we get on the merry-go-round for 1 more ride (75%) b) If no big uptrend in early Jan = cycle over. Macro only gets worse. 6 months+ of downward chop coming (25%)
1:57 PM ∙ Dec 29, 2021
163Likes18Retweets
  • Some fractal hopium is never wrong, though:

Twitter avatar for @TechDev_52
TechDev @TechDev_52
#BTC 3-Day Stil monitoring.
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1:41 PM ∙ Dec 29, 2021
1,609Likes334Retweets

It’s Airdrop Season Again

  • In 2020 Uniswap introduced an entirely new form of token distribution at scale: the retrospective airdrop. Soon after that, many existing and new DeFi protocols executed their own airdrops – some more, some less successful. Once it became harder and harder for projects to perform a “good airdrop,” the trend slowed down somewhat.

Twitter avatar for @DCLBlogger
Matty @DCLBlogger
Uniswap airdropped $1.6k now worth $10k. Rarible airdropped $1,000s Axie Infinity airdrop is yet to happen, prob will be $1,000s Superrare airdrops $1k-$100k+ Literally stick around and experiment/participate.
1:37 PM ∙ Aug 18, 2021
99Likes7Retweets
  • Recently, however, airdrops have made a comeback. Especially the ENS airdrop went to become one of the most successful token distributions ever.

Twitter avatar for @eliasimos
Ξlias Simos @eliasimos
65/ The ENS dropped a whole lot of responsibility on its user base sometime in November 2021. Soon thereafter registrations of .eth’s proceeded to more than double benchamarked on the previous 5 month average. Some bootstrapping that is.
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10:38 AM ∙ Dec 27, 2021
  • This week the crypto community was treated to two more airdrops: SOS and GAS (go claim them if you haven’t already).

Twitter avatar for @The_OpenDAO
OpenDAO🆘 @The_OpenDAO
Ok for everyone asking regards the eligibility: everyone that BOUGHT on OpenSea in Eth is eligible to claim $SOS token. Also: there is absolutely no rush - you can claim your $SOS until the 30th of June.
3:53 PM ∙ Dec 24, 2021
4,354Likes908Retweets
Twitter avatar for @T_BALLER6
TBALLER.eth @T_BALLER6
How much $SOS did the right click savers get today?
7:12 PM ∙ Dec 24, 2021
6,906Likes1,496Retweets
Twitter avatar for @danielgothits
danielgothits.eth @danielgothits
US government stimulus for the entire pandemic: $2400 $ENS + $SOS free airdrop: $20,000
5:05 AM ∙ Dec 25, 2021
3,541Likes468Retweets
Twitter avatar for @Zeneca_33
Zeneca_33 🍌 @Zeneca_33
There were a *lot* of people that use the Ethereum network that did not get an SOS airdrop, and felt the FOMO. This is not the case for the Gas Dao. Literally everyone active already has some; most will want "free money" I held a lot of my SOS, I'm selling most of my GAS. DYOR
6:34 AM ∙ Dec 29, 2021
312Likes22Retweets
  • However, it would be unfair towards ENS to throw SOS and GAS into the same category since both of them don’t have a working product (yet), and there are several red flags…

Twitter avatar for @fabdaRice
fabdaRice @fabdaRice
1/ Merry Christmas to everyone who were eligible to claim $SOS. Sharing a little bit of ⚠️caution⚠️ about the smart contract: It is true that $SOS is safe to claim, and safe to trade.. BUT if you're a hodler, you will want to know about some red flags 🚩🚩. Quick 🧵👇
Twitter avatar for @0xQuit
quit @0xQuit
7/ tl;dr? $sos is safe to claim and trade. There's nothing out of the ordinary buried in the contract. You can take a look at @OpenZeppelin standard contracts here: https://t.co/W1dD8uP4Tc *This is not an endorsement of $sos as a store of value, merely as a safe interaction.
5:00 AM ∙ Dec 25, 2021
1,403Likes506Retweets
Twitter avatar for @fabdaRice
fabdaRice @fabdaRice
2/ Some context: $SOS from @The_OpenDAO is a fresh new airdrop for all wallets having purchase NFTs on Opensea. Users can go on theopendao.com and claim $SOS and "eventually" swap this for $ETH on Uniswap.
theopendao.comSOS
5:00 AM ∙ Dec 25, 2021
130Likes5Retweets
Twitter avatar for @fabdaRice
fabdaRice @fabdaRice
3/ 🚩 Red Flag #1: 50% of all tokens are currently available in three EOA wallets with no vesting/lock periods. Meaning that the team can at any point rug the entire liquidity or is at risk of having a central point of failure being compromised. Current Marketcap of $100M.
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5:00 AM ∙ Dec 25, 2021
239Likes26Retweets
Twitter avatar for @fabdaRice
fabdaRice @fabdaRice
4/ 🚩 Red Flag #2: The `claim` function below is allowing the dev team to arbitrary grant any arbitrary amount of $SOS to any arbitrary wallets by simply generating "valid signatures". This is VERY SCARY as nobody can differentiate the valid claims from the invalid ones.
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5:00 AM ∙ Dec 25, 2021
391Likes72Retweets
Twitter avatar for @fabdaRice
fabdaRice @fabdaRice
5/ 🚩Red Flag #3: To support Red Flag #2, during a claim, the contract is checking that a wallet cannot claim more than `TOTAL_SUPPLY`. Why isn't the contract fact-checking that token claimed cannot be more than `AMOUNT_AIRDROP`??
5:00 AM ∙ Dec 25, 2021
201Likes6Retweets
Twitter avatar for @fabdaRice
fabdaRice @fabdaRice
6/ TLDR: - Dev can rug pull anytime with 50% of the total supply of unlocked $SOS - 50% of $SOS is at security risk in 3 EOAs - Dev can claim on an arbitrary number of $SOS, while being completely invisible to everyone. If you find this helpful, please share for visibility
5:00 AM ∙ Dec 25, 2021
489Likes92Retweets
Twitter avatar for @fabdaRice
fabdaRice @fabdaRice
Note: Not spreading FUD, but spreading awareness (I have claimed and still hodling my $SOS) Merry Christmas to everyone and as always.. stay safe.
5:17 AM ∙ Dec 25, 2021
523Likes15Retweets
Twitter avatar for @0xQuit
quit @0xQuit
Yes, $gas is safe to claim and trade. There's nothing sus in the contract, but I'd like to take a moment to make a plea that I'm sure will fall mostly on deaf ears: It is evident that $ens has started a trend - airdropping tokens to "reward" the community, but in actuality...👇
7:45 AM ∙ Dec 29, 2021
2,847Likes969Retweets
Twitter avatar for @0xQuit
quit @0xQuit
2/ An outsized benefit goes to the project creators, for little to no effort. GasDao (sorry, picking on y'all for this example) development started 15 hours ago. Very little (if any) of the code is unique, meaning that it may have taken as little as an hour or two to create.
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7:45 AM ∙ Dec 29, 2021
390Likes33Retweets
Twitter avatar for @0xQuit
quit @0xQuit
3/ The Gas Dao discord was created today as well, and doesn't even have notifications turned off by default (a must have for any public discord). Their website directs you to claim tokens, and promises to tell you why later:
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7:45 AM ∙ Dec 29, 2021
275Likes9Retweets
Twitter avatar for @0xQuit
quit @0xQuit
4/ Why does this matter if the tokens are free? Well, the more activity there is, the more uninformed users will see this as safe to purchase. Inevitably, when no product is released and no value is driven to the token, the value will evaporate.
7:45 AM ∙ Dec 29, 2021
299Likes9Retweets
  • While getting rewarded with free money for using crypto protocols is nice, it’s important to differentiate between the different airdrops. I’m not saying SOS and GAS are scams (even though we haven’t gotten many details about the two projects yet). But this new wave of airdrops of new projects opens the door for shady actors…

    Twitter avatar for @MJohnson_CJ
    Michael Johnson | tagline.eth @MJohnson_CJ
    The success of $SOS is going to open the flood gates to a new meta of airdropping random shit coins to the NFT community. Scams and shady devs will be plentiful
    4:45 AM ∙ Dec 25, 2021
    1,890Likes179Retweets
    Twitter avatar for @DCLBlogger
    Matty @DCLBlogger
    12/ 'Airdrops'. 99% are scams or attempts to get you to provide your keys. Especially on Telegram. In this case, an account attempting to be Uniswap and promising another Airdrop. Also has a ton of likes and appears 3rd on Twitter search. FAKE.
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    10:43 PM ∙ Sep 20, 2021
    130Likes12Retweets

Real Worlds Assets Coming to Aave

  • When you asked crypto people a few years ago about upcoming use cases, tokenizing real world assets was one of the most mentioned. However, due to a lot of friction and legal complexities inherent at the intersection of the digital and physical world, it has taken much longer for RWA tokenization to take hold.

  • While we have already seen isolated projects of real world asset tokenization, these were mostly executed in a permissioned manner (e.g., the tokenization of real estate or wine by a few companies). Bringing real world assets into the global world of DeFi would undoubtedly be a milestone for the crypto space – and that’s exactly what Aave is shooting for!

  • At this point, it’s hard to tell if this specific product by Aave will catch on in the short term. But there is no doubt that in a couple of years, real world assets will be a central part of DeFi, just as altcoins and stablecoins are today. The projects that can capitalize on this massive trend will likely experience tremendous growth.

Twitter avatar for @StaniKulechov
stani.eth (👻,🐻‍❄️,🦎.🦎) @StaniKulechov
Breaking: Now you can borrow against Real World Assets with @centrifuge on @AaveAave Protocol rwamarket.io 👻 decrypt.co/89418/yield-on…
decrypt.coAave’s Newest Market: Real World Assets - DecryptAave users can now earn yield by helping small businesses tap liquidity from the frothy crypto markets thanks to a new partnership with Centrifuge.
4:34 PM ∙ Dec 28, 2021
668Likes172Retweets

The RWA Market is a much-needed building block not only for protocols such as Aave, but across DeFi as a whole," said Stani Kulechov, found and CEO of Aave. "Knocking down barriers of entry and making DeFi accessible to all is part of the Aave Companies' vision, and we are excited to be fulfilling this through the collateralization of real-world assets, made possible by Centrifuge.

  • On top of Aave’s real world asset integration, there has been another announcement hot off the press which will excite L2 fans!

Twitter avatar for @StarkWareLtd
StarkWare @StarkWareLtd
Bringing @AaveAave to StarkNet!✨ Let’s use DeFi Pooling to enable all users to participate in #AAVE’s L1 financial strategies, while paying L2 costs. Let’s expand the reach of Aave to new users and new ecosystems. governance.aave.com/t/arc-deployin…
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2:01 PM ∙ Dec 29, 2021
186Likes49Retweets
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December 29, 2021

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