ARP's Crypto Digest

ARP’s Crypto Digest

General Digital Asset Market View:

Bitcoin ETFs saw a week of varied and significant flows, reflecting dynamic market sentiment. Fidelity led with strong inflows, hitting $131M midweek. ARK also had a notable inflow of $133M, its fourth-highest ever. GBTC faced a net negative week, starting with a -$51M outflow but partially recovering with a $27M, and $5M inflow later, marking their fourth inflow so far. Blackrock had a slow start with several days of zero inflows but ended the week strong with a $94M inflow. Overall, Fidelity and ARK saw impressive gains, GBTC had a mixed performance with some recovery, and Blackrock finished on a positive note.

More Crypto:

The graph above illustrates a significant trend, highlighting that the market capitalization (MC) to fully diluted valuation (FDV) ratio of newly launched tokens is at its lowest point in the past three years. This low MC/FDV ratio indicates that a substantial portion of these tokens’ total supply is locked and yet to be released into circulation. 

As a result, maintaining current price levels will require a considerable influx of demand-side liquidity to absorb the future increase in supply. The market will need approximately $80 billion in additional demand-side liquidity to sustain the prices of these tokens over the next few years, posing a considerable challenge given the current market conditions. This trend highlights the importance of closely monitoring token unlock schedules and understanding the potential market impacts of future token releases.

The analysis of new token listings on Binance over the past six months shown above reveals that over 80% of these tokens have depreciated in value since their listing date. Exceptions include a few tokens such as $MEME, $ORDI, $JUP, $JTO, and $WIF, which have managed to maintain or increase their value due to unique factors like being meme coins or benefiting from specific market momentum.

Most of the new listings are backed by Tier-1 venture capital firms and launch with high valuations, with an average fully diluted valuation (FDV) of over $4.2 billion and some reaching as high as $11 billion. These projects often lack real users or a strong community, leading to significant losses for investors. An equal investment in each new Binance listing over the past six months would result in an overall portfolio decline of over 18%.

There is a public criticism of the current trend of using high FDV launches as exit liquidity for insiders, which undermines retail investors who lack access to early investment opportunities. This practice is viewed as unsustainable and damaging to the credibility of the industry.

What Happened This Week:

• Roaring Kitty, of Gamestop fame, is back on the timeline after 3 years. His return has driven Memecoin’s rise.

• Floki proposed to burn 15,246,000,000 FLOKI tokens.

• Blast has updated it’s airdrop timeline to June 26. Blur Season 3 will end on June 26 as well.

• Saga announced that the Vault Two snapshot will be taken within the next 30 days.

• Robinhood launches Solana staking in Europe.

• Tether has announced collaboration with TON Foundation and Oobit to develop a seamless crypto-payment solution.

What to Look Out For:

• Coinbase Future will list for $ONDO, $PYTH, and $ZETA perpetual futures on May 23.

• Celo DAO has proposed launching the Kenyan Shilling stablecoin ($cKES). Voting ends on May 21.

• The Alliance for Artificial Super Intelligence (ASI) is scheduled to launch on May 24.

• Chiliz Chain to launch Tokenomics 2.0 and upgrade for Ethereum compatibility with Dragon8 Hard Fork.

• Ethereum Spot ETF: SEC decision due this week, and a rejection is expected.

What we enjoyed reading and listening to:

• A rogue validator on Flashbot seems to be exploiting MEV bots. Over 25m USD already stolen — Link

• The Role of ETFs in Diversifying Portfolios | Markets Daily — Link

• Erik Voorhees’ New Venture: Why AI Should Be Private and Uncensorable — Link

• Summary of Google IO event — Link

ARP Digital is regulated by the Central Bank of Bahrain as a Category 3 Crypto Asset Service Provider. All communications and services are directed at Professional Clients only, persons other than Professional Clients, such as Retail Clients, are NOT the intended recipients of our communications or services. ARP Digital does not provide investment advice, and nothing herein shall be considered, construed as, or deemed to be, investment advice. Furthermore, nothing herein is intended to be, or shall constitute, an offer or invitation to buy securities or any form of financial instrument or investment product by ARP Digital or any of its related parties or persons.