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In This Issue:
A Closer Look At Lido
Bitcoin Thoughts And Analysis
Is The S&P Bull Dead?
Will There Be A Solana ETF?
VanEck Vows To Donate Earnings To Ethereum Development
Treasuries Are On The Run
Ledger Teams Up With Sotheby's
The SEC Loses To Ripple - Again
A Closer Look At Lido
Lido-staked Ethereum (stETH) is a force to be reckoned with.
Following its highly anticipated 2020 launch prior to the Ethereum Merge, Lido has become the clear-cut leader in capturing free-floating ETH looking to gain exposure to staking. With its innovative approach to Ethereum staking and decentralized focus, Lido has seamlessly bridged the gap between liquidity and staking rewards, making it the #1 choice for investors seeking to maximize their ETH holdings while participating in the network's security.
That being said, like all races to the top in crypto, Lido was never the obvious winner, which is why I want to dig deeper into its struggles to discover how it emerged victorious.
Prior to the Ethereum Merge's completion, a vocal army of critics boldly predicted that the Merge would never materialize, staked ETH would remain locked indefinitely, and the staking market would wreak havoc on the broader crypto landscape. Despite receiving a warm embrace from the Ethereum community, Lido encountered harsh criticism and skepticism from those beyond its borders. However, as the likelihood of the Merge increased, speculations abounded that industry giants such as Coinbase and Binance would dominate the scene upon their entry. Once again, Lido demonstrated its resilience as THE undisputed contender in the arena.
Adding to the uncertainty surrounding Lido, Luna's collapse in May 2022 sent shockwaves through the DeFi market and cast doubts on the demand for illiquid assets like Lido. Almost overnight, there was an epic drawdown of over 80% in liquid ETH in Curve Finance's stETH:ETH pool, coupled with aggressive market selling by industry players like Celsius and 3AC. While it may not be immediately apparent, crypto historians will undoubtedly view 2022 as stETH's defining moment, showcasing its resilience in the face of adversity. Since then, the future has only grown brighter for stETH.
Now that the history is out of the way, let’s get to the fun stuff.
For those that don't know, Lido isn’t just an Ethereum platform, it’s the name of a family of open-source peer-to-system software tools deployed and functioning on the Ethereum, Solana, and Polygon blockchain networks that offers daily rewards for participants. A more complicated way to explain stETH is to view it as a zero-coupon bond for Ethereum. 1 Ethereum today is more than 1 Ethereum in 2024 because of staking rewards. It's more like an IOU backed by $ETH.
What’s important to know about stETH is that it’s typically traded on DeFi exchanges, meaning you’ll have to pay swap fees to obtain it. For example, if you go to purchase stETH with 10 Ethereum, at the end of the transaction, you will end up with about 9.92 stETH due to fees and 1 ETH ≠ 1 stETH. However, exercising a bit of patience, in roughly around 2.7 months you will see your 9.92 stETH grow to 10 stETH, with the remaining time translating into pure profit. The key takeaway here is that when considering stETH, factor in the timeline required to make the holding period profitable. Take into account fees associated with swapping to and from stETH, as well as the fluctuating conversion rates. To err on the side of caution, planning for a few months should suffice.
One of the aspects that truly appeals to me about stETH is the Lido Foundation's commitment to maintaining a live scorecard that tracks the protocol's progress towards its goals of decentralization, trustlessness, minimized governance, and alignment with the Ethereum community's ethos. While the technicalities behind Lido's mission may seem intricate, it's evident that the protocol is making a sincere effort to meet the high expectations of the Ethereum community. Furthermore, the inclusivity of open discussions and opportunities for anyone to contribute to the forum adds to its appeal.
I believe one of the key factors behind stETH's rapid early adoption was the prevailing lack of trust in centralized exchanges and CeFi when it came to implementing DeFi. While it's true that some pure DeFi protocols have faced setbacks, the collapses of Voyager, Celsius, FTX, and BlockFi have prompted crypto investors to seek more dependable DeFi options. Additionally, Lido's superior rewards compared to centralized staking alternatives are likely the primary reason investors continue to favor it. In the crypto market, investors often gravitate toward early-mover advantages, proven resilience, and strong returns, which all contribute to Lido and stETH's ongoing success. In essence, the simple reasons are the best reasons for Lido’s victory.
Also, before wrapping up, I want to share two final images (above and below) from Dune Analytics regarding Lido’s dominance. Coinbase is the closest entity to catching up to Lido, yet it is falling behind at a rapid pace. Another way of looking at the leaderboards is that Lido, the leader, is pulling ahead of the pack at the fastest rate. Crypto, like all markets, will have winners and losers. Coinbase is the #1 exchange, Tether is the #1 stablecoin, OpenSea is the #1 NFT marketplace, and Lido is the #1 staking provider. That’s just how it is.
Please be aware that this is NOT a paid sponsorship or a formal recommendation. This introduction solely represents a personal opinion intended for entertainment and educational purposes ONLY.
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Bitcoin Thoughts And Analysis
After being strongly rejected at the 200 and 100 MAs on the daily, Bitcoin appears to be attempting to find a bottom. Yesterday’s candle was a nice doji (or spinning top) with a long wick down and small body, and today’s is forming up the same for now. Price is dancing with local support at $27,500.
Not much to see here yet, I jus want to see price consolidate for another push without dropping any furhter.
Is The S&P Bull Dead?
Weak job growth data has led traders to scale back expectations for a U.S. interest rate hike this year, offering a breather for global bonds and causing the S&P 500 to recover somewhat from a four-month low. Ten-year Treasury yields fell below 4.8%, signaling decreased odds of an interest rate hike. The market now sees a less than 20% chance of a rate increase in November. Despite this, some investors are viewing the current dip in equities as a buying opportunity. The climate remains volatile, partly due to earlier better-than-expected job data and hawkish comments from the Federal Reserve, which had pushed 30-year yields to 5% for the first time since 2007.
Key events this week:
China has week-long holiday
US ISM services index, Wednesday
France industrial production, Thursday
BOE Deputy Governor Ben Broadbent, Riksbank First Deputy Governor Anna Breman participate at panel discussion, Thursday
US trade, initial jobless claims, Thursday
San Francisco Fed President Mary Daly speaks at the Economic Club of New York, Thursday
Germany factory orders, Friday
US unemployment rate, nonfarm payrolls, Friday
Some of the main moves in markets:
Stocks
The S&P 500 rose 0.2% as of 9:30 a.m. New York time
The Nasdaq 100 rose 0.3%
The Dow Jones Industrial Average rose 0.1%
The Stoxx Europe 600 rose 0.4%
The MSCI World index was little changed
Currencies
The Bloomberg Dollar Spot Index fell 0.2%
The euro rose 0.5% to $1.0516
The British pound rose 0.7% to $1.2164
The Japanese yen was little changed at 148.92 per dollar
Cryptocurrencies
Bitcoin rose 0.5% to $27,532.6
Ether fell 0.9% to $1,641.65
Bonds
The yield on 10-year Treasuries declined four basis points to 4.76%
Germany’s 10-year yield was little changed at 2.96%
Britain’s 10-year yield advanced three basis points to 4.63%
Commodities
West Texas Intermediate crude fell 2.3% to $87.14 a barrel
Gold futures were little changed
Will There Be A Solana ETF?
It’s basically a rainy day in terms of crypto news, so how about we consider a rather speculative topic? I anticipate, that in the future, the altcoin community might rally behind the possibility of a Solana futures ETF submission. Considering the lack of investor interest in the Ethereum futures ETF, there is no current incentive to issue a Solana-based futures ETF, but I think it could be possible if the right factors are met in the future. Solana would need to successfully survive the bear market, an Ethereum ETF would have to be approved first, and there would have to be proven Wall Street demand. Thankfully there hasn’t been any talk I have seen about this subject, because it is way ahead of us, but since not much is going on, I figured I would share my thoughts. A lot would need to go right for this to even be a possibility for Solana, or any other asset outside of Bitcoin or Ethereum.
VanEck Vows To Donate Earnings To Ethereum Development
The Ethereum futures ETF debut was disappointing by all measures, but one of the positive developments around the news was the announcement that VanEck will donate 10% of the ETF’s profit to the Protocol Guild, a collective of 152 Ethereum core developers and contributors for at least a decade. Protocol Guild in the past has received support from leading teams within the Ethereum ecosystem, including Uniswap, Arbitrum, Optimism, and Lido, but having ETF support is a brand-new opportunity. VanEck had the following to say about its decision, “If TradFi stands to gain from the efforts of Ethereum's core contributors, it makes sense that we also give back to their work. We urge other asset managers/ETF issuers to consider also giving back in the same way.”
Treasuries Are On The Run
I was going to open this segment with a pathetic dad joke about treasuries running, but I decided to bite my tongue.
Based on my assessment, it appears that the market is factoring in the Federal Reserve's commitment to maintaining elevated interest rates and potentially increasing them when necessary. The upward trend in bond yields is diverting investment capital away from the stock market, resulting in costly borrowing rates for both businesses and households. This, in turn, is placing additional pressure on corporate profitability.
Furthermore, inflation continues to exceed the Federal Reserve's 2% target, and there are indications that structural inflation may be significantly higher than what official reports suggest. In light of these complex and challenging economic conditions, my thesis is straightforward: If you find the current financial system to be confusing, corrupt, or broken, one alternative is to consider opting out and investing in Bitcoin.
Ledger Teams Up With Sotheby's
Ledger just landed a slam dunk partnership with Sotheby's and will now be offering free exclusive wallets to top digital art collectors and auction winners to safely store their NFTs. Auction winners will receive a limited edition, co-branded Ledger x Sotheby's Nano X wallet along with educational content to ensure the proper of their digital assets. Considering the simplicity of the partnership, I anticipate the return on investment will be huge in terms of promoting safe storage practices. After all, there's no one better equipped to safeguard assets than the cryptocurrency community itself, so props to Ledger for establishing key partnerships to set a safe standard.
The SEC Loses To Ripple - Again
District Judge Analisa Torres rejected the SEC's motion to appeal its case against Ripple, stating the agency failed to demonstrate substantial legal questions or grounds for differences of opinion. However, the judge set a trial date for April 2024 for unresolved issues, leaving the door open for a future SEC appeal. The judge had ruled in July that Ripple violated securities laws in direct sales to institutional investors but not in its programmatic sales to retail customers, casting uncertainty on the SEC's ability to regulate crypto. The SEC had planned to appeal this July ruling.
The views and opinions expressed here are solely my own and should in no way be interpreted as financial advice. Every investment and trading move involves risk. You should conduct your own research when making a decision. I am not a financial advisor. Nothing contained in this e-mail constitutes or shall be construed as an offering of financial instruments or as investment advice or recommendations of an investment strategy or whether or not to "Buy," "Sell," or "Hold" an investment.