Status Network - taking cognizance of this market void, has embarked on a mission to lure privacy enthusiasts by offering a comprehensive suite of services, including private browsing, messaging, and a platform for storing crypto.

In a bid to offer top-notch privacy and security, Status, much like WhatsApp, has end-to-end encryption in its private messaging services.

But the question remains, is it worth installing on your device as a messenger and, perhaps, ditching your cryptocurrency wallet?

Let's dive in.

The True Currency: Information

What's more valuable than money, gold, or oil?

Well, the answer might surprise you.

In today's digital age, information reigns supreme, and it's the most coveted asset in the world.

Companies no longer rely on speculation or intuition to understand their customers - they rely on data. And let's face it, understanding your customers means you can sell them what they want, and selling what they want means big bucks.

In the pursuit of data, corporations like Google and Facebook have become behemoths, profiting from analyzing and selling user data.

But at what cost?

Privacy

Privacy, a fundamental human right, has become increasingly crucial in the digital era. With the advent of social media, the internet, and advanced technology, our personal information is continuously vulnerable to exposure, leaks, or misuse.

The issue of privacy has been pushed to the forefront of public discourse over the past decade thanks to whistleblowers like Julian Assange and Edward Snowden.

Julian Assange, the editor-in-chief of WikiLeaks, once wrote, "The internet, our greatest tool of emancipation, has been transformed into the most dangerous facilitator of totalitarianism we have ever seen... Left to its own trajectory, global civilization will be a post-modern surveillance dystopia, from which escape for all but the most skilled individuals will be impossible. In fact, we may already be there," in his book Cypherpunks: Freedom and the Future of the Internet.

It's a sobering thought. Our online activity is constantly under monitoring, and our private information is vulnerable to being compromised without our knowledge or consent.

Julian Assange's book Cypherpunks may have seemed like a futuristic dystopian novel in the not-so-distant past. But in late 2012, when he released it, few people had any idea just how relevant and prescient it would turn out to be.

Fast forward a few years, and the world was rocked by revelations about the global surveillance programs of the NSA, including PRISM and Boundless Informant.

The public also learned that tech giants like Google, Facebook, and Microsoft were sharing their users' data, despite assurances of privacy.

Then came Edward Snowden, who blew the lid off the whole thing and confirmed what Assange had been warning about- a "surveillance dystopia" was already here.

It used to be that only conspiracy theorists wearing tin-foil hats worried about mass surveillance by governments, but now it is a harsh reality. Citizens of democratic nations assumed that their elected leaders would respect their fundamental right to privacy.

Unfortunately, Snowden's revelations showed a different reality - a reality that was much scarier than anyone could have imagined.

Governments with blatant disregard for their citizens' rights engage in privacy violations.

The world has become a giant panopticon, and we're all under constant surveillance.

From the US to the UK, from India to North Korea, governments are snooping on their citizens without any oversight.

The Snowden saga was just the tip of the iceberg, revealing what many suspected but never dared to utter out loud: our fundamental right to privacy has been eroded by the very people who are supposed to protect it.

State surveillance programs have reached new heights of ambition, with governments and corporations working hand in hand to obtain the latest and most remarkable technologies for data collection. The data they collect is for one purpose: control.

Whether it's monitoring our online activity or tracking our physical movements, the aim is to keep tabs on us, to know everything about us, and to use that knowledge to manipulate us.

Eric Hughes, in his "A Cypherpunk's Manifesto," wrote:

"Privacy is necessary for an open society in the electronic age. Privacy is not secrecy. A private matter is something one doesn't want the whole world to know, but a secret matter is something one doesn't want anybody to know. Privacy is the power to selectively reveal oneself to the world."

Do you have curtains on your windows? It's not because you're doing anything illegal or immoral, is it? No, it's simply because you want to control who sees into your private space. That's the essence of privacy, and it's just as crucial in the digital age.

The Cypherpunks movement, which Hughes was part of, was pivotal in shaping the internet as we know it today. They championed privacy-focused projects like the Electronic Frontier Foundation, the Tor Project, and PGP encryption software.

With the rise of blockchain and cryptocurrencies, we're seeing new ways to safeguard our digital privacy. But there are still concerns, and that's where the Cypherpunks come in. They're tirelessly working to ensure that our data remains under our control and that we have the power to selectively reveal ourselves to the world.

In fact, projects like Status are a direct result of the Cypherpunk movement.

Let's not forget another crucial issue: Data leaks.

Data Leaks

How much of your personal information do you willingly share on social media? Your name, age, job title, and maybe even a profile picture? While some people may be more guarded than others, most of us accept that our public profile pages are just that, public.

But what if a cyber-criminal got their hands on all that information and put it up for sale to the highest bidder?

That's exactly what happened when a hacker known as Tom Liner compiled a database of 700 million LinkedIn users worldwide and put it up for sale at $5,000.

And it's not the only one - In 2019, a breach exposed Facebook, compromising 533 million accounts. Recently, Twitter experienced a breach, compromising information for over 235 million users. (Not to mention the 3 billion Yahoo account breach!)

Source: Ignyte

Google, Quora, Weibo.. You name it. Hackers have breached these industry-leading titans at least once!

It's a chilling reminder that in the digital age, our personal information is more vulnerable than ever before.

Social media is like a house of cards; with every data breach, a gust of wind blows, threatening to bring the entire structure down.

The problem is, people tend to view data breaches as isolated incidents, failing to see the bigger picture. But the truth is, each breach adds to a mounting pile of stolen data, creating a ticking time bomb that could have far-reaching consequences for individuals and society as a whole.

That's why it's crucial to migrate to a secure Web 3 ecosystem like Status. A place where your personal information is protected, and you can communicate and transact without fear of your data falling into the wrong hands.

It's time to take control of our online security and protect ourselves from the ever-looming threat of data breaches. After all, prevention is always better than cure.

But first things first.

How does a social network work?

Let's talk about the dark side of social media ownership. In the world of social media, the power dynamics are crystal clear. The ones who own the network hold all the cards.

They lure users in with the promise of connection and community, but their ultimate goal is to extract value from them. And they'll use whatever means to keep users engaged and their profits soaring. Algorithms, manipulation tactics, and targeted advertising are all fair game.

But do they really have the user's best interest at heart? Not necessarily.

Their focus is on making money, and they do this by showing users targeted ads. They argue that this benefits the user by presenting them with products they want.

But what happens when the owner decides to manipulate the user's behavior? What if they start swaying public opinion or making users feel insecure to sell more products?

It isn't just speculation. Facebook has published studies that prove they can influence what users think and feel through subtle changes in content ranking.

It means your insecurities are exploitable to make you buy more beauty products, for example. It's all about extracting as much value from the user as possible.

The Advertiser, or Data Broker, is the one who enables this extraction of value. They buy your data and target you with ads based on your behavior. It is how the platform stays afloat.

But what about the users?

They're just along for the ride, hoping the owners and advertisers behave ethically. But the truth is, they have little control over the information they consume or how the network operates. It's a lopsided power dynamic that leaves users feeling powerless and vulnerable.

That's why shifting towards Web 3 ecosystems like Status is so essential. It's time to take back control and put the user's interests first. We can't let these big corporations continue to exploit us for profit. It's time for a change.

Blockchain Social: Web2 to Web3

Status is a revolutionary Web3-based ecosystem that addresses the inadequacies of Web2 community platforms. While centralized Web2 platforms prioritize profit over privacy and sell users' data to advertisers, Status Network differs.

As a decentralized ecosystem, Status is not vulnerable to a single point of failure, nor can authoritarian governments control data with censorship powers.

Supported by a distributed node network and with privacy as a core feature of Web3 development, Status ensures security and transparency.

For Status, privacy is "the power to selectively reveal oneself to the world." Users have complete control over their data, choosing whether or not to share it. This scenario puts the power back in the hands of the users rather than the community application provider.

With Status, privacy and security are not just buzzwords but foundational principles that drive the development of the Status Network token (SNT) and the entire platform.

What Problems Does Status Solve?

The project aims to achieve multiple objectives, including promoting blockchain adoption, securing user communication, and offering a one-stop shop for it. Here's how Status is changing the game for the industry and its users:

Promoting blockchain adoption

Status is a mobile and desktop browser and a platform that simplifies access to Ethereum's decentralized applications. Doing so contributes to the adoption of dApps and blockchain tech.

Since dApps don't require users' private information and are community-run, they're becoming more appealing to those prioritizing their privacy. Status makes accessing these apps a breeze, promoting blockchain adoption in the process.

Easy access to dApps on multiple devices

Status can be accessed on desktops, laptops, mobiles, tablets, and other devices, allowing users to access their favorite dApps from any location with just one click or tap.

Securing user data and communication

In addition, Status enables users to send encrypted messages that won't be intercepted or recorded by the dApps they use. Since all most all dApps are open-source, anyone can inspect their code to ensure that it's legitimate and secure.

Integrated messenger

Status doesn't just offer a browser and a platform for decentralized applications. It also integrates a messaging system that prioritizes privacy and security. The project empowers users to message, browse, and transact on their terms within a comprehensive "super-app" designed for private communication.

Pseudo-anonymous account creation

Unlike other apps that require users to provide personal information, such as phone numbers or email addresses, Status does not ask for such details when creating an account. Users can choose to reveal only the information they want to share with other users or the Status project.

Status Principles: A Moral Compass for a Decentralized Platform

Status works on a set of principles that serve as a framework for decentralized decision-making, communication, and critical thinking.

These principles guide the project's actions and serve as a moral compass, distinguishing it from other digital asset projects.

Here are the principles:

• Liberty: Status believes in the sovereignty of individuals and advocates for social, political, and economic freedom that resists coercion.

• Censorship Resistance: Status enables the free flow of information without surveillance, adhering to the crypto-economic design principle of censorship resistance.

• Security: Status employs state-of-the-art technology and researches new methods to guarantee robust security features.

• Privacy: Privacy is crucial in communication and transactions, and Status protects it as a pseudo-anonymous platform that offers total anonymity.

• Transparency: Status is open about its organization's information, including any shortcomings, especially while making short-term tradeoffs for long-term goals.

• Openness: The software is a public good, available under a free and open-source license to share, modify, and benefit from. Status embraces permissionless participation.

• Decentralization: Status maximizes the number of physical computers that comprise the network and individuals who have control over the system, minimizing centralization.

• Inclusivity: Status promotes fair and widespread access to its software, emphasizing ease of use, social inclusivity, permissionless participation, interoperability, and investment in educational efforts.

• Continuance: Status creates software incentivized to exist and improve without the stewardship of a single entity or current team members.

• Resourcefulness: Status is relentlessly resourceful, striving to fight bureaucracy and inefficiencies within the organization and solve problems effectively at lower economic costs regarding capital, time, and resources.

Status: a General Overview

Status.im, launched in 2020, is a collaborative effort involving developers worldwide. Moreover, the official base of Status is in Switzerland due to its favorable privacy laws.

To enable encrypted P2P communications, the app uses a custom fork of the Ethereum P2P protocol Waku, which is less resource-intensive and better suited to mobile devices.

We can primarily break the offering of Status into three functions:

• dApp curation and navigation

• Secure Messaging

• Digital asset management

The Status app's source code is available on GitHub, making it open-source and allowing third-party experts to verify it.

Moreover, by paying for three third-party audits, the company has taken proactive measures to ensure its software is secure and reliable.

The first was conducted by Deja vu Security in Seattle before the beta release in 2018, followed by Sigma Prime for the Ethereum Name Service (ENS) registrar developed by Status, and the third by Trail of Bits before the production v1 release.

The audits uncovered issues that the platform promptly patched.

Additionally, Status has a private campaign on HackerOne for bug bounties, demonstrating its commitment to identifying and fixing any issues that may arise.

Undeniably, Status is committed to open-sourcing everything and engaging with professional auditors to ensure its users the highest possible level of security.

Who Created Status?

The inception of the Status project dates back to 2016, when Carl Bennetts and Jarrad Hope introduced it to the world at DevCon2, an annual Ethereum conference for developers.

https://player.vimeo.com/video/186241386?h=799e4202f7

They presented Status as a private and secure messaging platform and Web 3.0 browser that would serve as a gateway to Ethereum dapps. A year later, on June 20, 2017, they officially launched the project to the market.

Today, Status is exactly what Bennetts and Hope envisioned it to be. No, the project has evolved beyond its founders' initial vision!

While they still play active roles in its development and management, teams of people distributed across the globe primarily lead the project.

Clearly, Status remains true to its core principles of privacy, security, and decentralization.

Status: Taking Decentralization To The Next Level

Picture this: You're messaging a friend, but instead of relying on a central server, your messages are being passed from one device to another in a completely decentralized way. That's what Status is all about - a messaging platform that's not just private, but also resilient to government snooping and server failures.

But that's not all. Status takes decentralization to the next level with its unique governance model. The project operates as a decentralized autonomous organization (DAO), meaning no centralized authority governs the project's development.

Instead, the community of Status Network members has complete control. This community-led governance is made possible through the Status Network Token (SNT), a native ERC-20 token.

SNT token holders can propose and vote on new features, changes, and updates to the platform. This system ensures that the platform's development is truly driven by the needs and desires of its users.

Plus, even if the company were to disappear, the service could theoretically still continue being used - that's the power of true decentralization!

Passive income from Status?

Status is not only a free app, but it also rewards its users for being active members of its community. By deploying a Status node at no cost, you become a stakeholder and can earn SNT tokens.

But what does deploying a node entail? It means you provide part of the infrastructure that makes the service possible.

By doing so, you are helping to ensure that the network remains resilient even if the Status-hosted cluster goes down. And as a reward for your contribution, you are paid for storing encrypted messages and forwarding them to their intended recipients once the network is back online.

Interestingly, running a Status Node does not require any special mining gear or equipment, as the low resource-intensive activities are manageable on mobile devices and low-end laptops. It drastically reduces the barrier to entry.

But that's not all. Status also allows users to create and trade originally designed stickers within the app. It provides another way to generate income and for SNT tokens to circulate throughout the community.

So not only can you enjoy the benefits of a completely decentralized messaging app for free, but you can also earn tokens and engage in creating unique content.

It's a win-win for everyone involved.

Spam Filtering by Design

When it comes to user security and trust, Status doesn't mess around. One of its most innovative features is the Tribute-to-Talk process, a powerful anti-spam mechanism.

You see, in traditional messaging, spammers can easily take advantage of the fact that sending messages is free. They can contact countless people and try to scam or deceive them with no cost or consequence.

Do I even need to mention the spammers and bots in Web3?

With Status, users can demand payment in the form of SNT tokens before they even receive a message from someone outside their network.

This Tribute-to-Talk process turns the tables on spammers by requiring them to pay to get their message across, making it less profitable for them to spam the network.

So, how does this work exactly?

Well, this anti-spam mechanism requires you to deposit SNT tokens as collateral to message an out-of-network user with whom you haven't yet communicated. If the user validates your message, Status will return the collateral. If the message recipient does not respond, the recipient can take back the tokens.

By implementing such measures, Status is working hard to ensure that users can communicate safely and securely without worrying about spam or other unwanted messages.

ENS User Name

Status takes a unique approach to user identification by automatically assigning each user a SECP256k1 public key.

But for those who prefer a more recognizable username, Status also offers the option to reserve a username using the Ethereum Name Service (ENS) with a social recovery mechanism.

For instance, if you want to secure a name like "fred.stateofus.ETH" that points to your personal Ethereum account, you can do so by paying a nominal fee of 10 SNT.

Status locks the paid SNT into a registry contract for a year, and at the end of the term, you can either release the name to get your tokens back or keep them locked for safekeeping.

This feature offers users the best of both worlds, providing anonymity for those who want it while allowing others to create a more recognizable digital identity.

Teller Network

The Teller Network is a decentralized application (dapp) developed by the community. It allows individuals to convert their cash into digital assets in a peer-to-peer, fiat-to-crypto "Teller Network."

Moreover, to become a seller in the network, you must have SNT tokens. It is a crucial part of the Status ecosystem. Interestingly, the dapp is developed and will go live soon.

Built-in Wallet and Browser

Status not only provides a secure messaging platform but also comes with a built-in wallet that puts users in control of their funds. With just a few clicks, you can securely store and manage your crypto assets without relying on any third-party custodian.

And the best part? You can access the wallet and chat with friends in one app!

Additionally, the integrated Web3 DApp browser lets you explore the vast world of decentralized applications and DeFi platforms, so you can put your crypto to work in the growing ecosystem of blockchain-based services.

For those who want even greater security and protection, Status offers the Keycard. This compact and durable cold storage hardware device allows you to store your SNT tokens and other digital assets offline safely. Plus, with the added two-factor authentication requirement, you can rest assured that your accounts are safe and secure.

It's worth noting that Keycard uses an open-source API for seamless integration with other wallets and dApps.Talk about interoperability!

How Secure Are Messages on Status?

Signing up for a Status account generates a secret code to encrypt your messages, which your device stores.

But that's not all. When you add your handler as a contact, you exchange public keys that allow you to communicate with them securely over the network.

It's like having your own secret handshake that only you and your handler know.

Status uses a special type of encryption asymmetric encryption to ensure your messages remain under lock and key.

The platform uses Perfect Forward Secrecy (PFS) to ensure that your messages are secure, no matter what. This fancy term means that the security of your messages is future-proofed.

Even if someone gets hold of your public key, they won't be able to read any of your messages, now or in the future.

Status has taken this encryption method one step further by using X3DH and Double Ratchet specifications developed by Open Whisper Systems, which made Signal. The platform has adapted these specifications to suit its own decentralized messaging system, making it even more secure.

Conclusion

The Status Messenger is an exciting and innovative service that offers many benefits to its users. Its potential to create a completely private messaging ecosystem impervious to government intervention is truly groundbreaking.

The combination of peer-to-peer messaging and robust end-to-end encryption is a winning formula, and integrating an Ethereum wallet is a really cool addition. The SNT token is a brilliant innovation as well.

Not only does it provide benefits such as spam deterrence, but it also incentivizes users to choose this messenger over others.

Clearly, the security and privacy fundamentals used on the platform are sound. Seeing how the wider community responds to the platform as it gains momentum will be fascinating. With all these amazing features, Status is definitely a messenger to keep an eye on!

TLDR

→ The Emergence of Blockchain Gaming            → Challenges in GameFi            → Solutions and Way Forward            → What Changed in 2022?            → New Narratives

The Emergence of Blockchain Gaming

Gaming is a multi-billion dollar industry. In 2021 alone, Steam had around 10300 new games. That means nearly 28 games are added to Steam daily!

Since there are a lot of choices available for gamers, they hop from one game to another. So only a handful of games emerge winners in a year, and they constitute the lion's share of the gaming market. For example, one of the most played games in 2021, Genshin Impact, has generated over 3.5 billion in less than two years.

But will Genshin Impact be the same trending game in 2025? Unlikely. Games do not stay on the top for more than three years (Of course, Minecraft is an exception). Ultimately, a game loses traction, and players leave it for a new one. However, in the process, they lose quantifiable gaming memories.

But what are these gaming memories? We all know gaming is about fun, recreation, and team spirit. But when a gamer stops playing a game, what happens to the characters they configured and the items they collected? Usually, game studios control it, and gamers have no say over their collectibles (even for items they bought!). That means the tangible nostalgic value is often lost in the transition.

So what is the solution? Blockchain gaming is evolving to offer this transferability of collectibles. NFTs become the containers of nostalgic, intangible value for games. But apart from the nostalgic value, does the collectible command any monetary value? Yes! You will be surprised to know that some Baseball cards are sold for more than a million dollars.

So adoption of blockchain is a necessity for the evolution of the gaming market. But what is the reality of gaming standards in web3? In the early stages, blockchain games were mainly card games. Card games require minimal graphics and are the least complicated. A shortage of talented developers and designers with blockchain knowledge was the primary reason for the proliferation of card games.

The Axie Saga

Axie Infinity is a prime example in the card games category. Axie also was a beacon for gamefi and play-to-earn wave. Post-covid, the unemployment crisis was rampant in Asia. Sky Mavis, the parent company of Axie Infinity, realized the opportunity and kickstarted the Axie wave. In April 2021, the game gained 30,000 users, and in August 2021, the number rose to a million!

https://twitter.com/AxieInfinity/status/1593903144224067585

The main reason behind this exponential growth was the play-to-earn mechanics. Gamers in South East Asia, especially Phillippines, realized that they could potentially earn more by playing the game rather than going to regular work. The average monthly income in Phillippines is around $300, while Axie helped them to earn $800-$1000, three times the average income!

At its prime stage, 1 $AXS token traded for more than $100, and it made its All-Time High at $164 in November 2021. At the time, Axie Infinity occupied a market cap of $16.7 billion! It was a bubble waiting to be popped. Today, $AXS is trading at $11 with a $1.1 billion market cap. The interest in Axie was subdued with the falling token prices, but gamers get to keep their Axies.

IGOs and 100X ROI

In the later stage, more dynamic games were launched through various Initial Game Offerings (IGO). It was a phase of IGOs and launchpads, which launched with high valuations. Blockchain as an earning vehicle was a strong concept that fueled various walk-to-earn to sleep-to-earn projects. Games, NFTs, and the Metaverse became synonymous, and high-quality games entered the crypto space. Gaming projects powered by Unreal Engine were an instant success, even without the game. One of the first Unreal games, Star Atlas, performed 750X from its launch price! 

Quality Overkill

The bullish momentum for high-quality games set a new precedent - graphic-intensive metaverses. Netvrk, Wilder World, and many other projects received so much attention, and their tokens replicated the hype. The stage was set for Gaming Studios and Ecosystems. Studios like Vulcan Forged and Verasity performed well amongst other contenders. All of a sudden, gaming was a hot topic among web3 communities. 

Many realized the value of investing in a gaming ecosystem that can launch new games. The risk-reward ratio in investing in a single game was not appealing. Needless to say, gaming studios were the final blow on an unsustainable GameFi bubble. 

The tokenomics models were also undergoing a significant change. In the initial days, projects launched with a dual token economy, emulating Axie's $AXS and $SLP. By default, one acted as a governance token, and the other was an in-game currency. The dual token model created unnecessary confusion among actual gamers. Most of them just wanted to play & earn and did not give much thought to the ideals of decentralized governance.

Current Bottlenecks

Play To Earn

The play-to-earn concept has lured a lot of gamers into the space. Although the games were not fun to play, earning was a big incentive, especially in a lockdown-affected economy. It helped GameFi to flourish with VC investments, and Gaming IDOs performed 10x-50x on launch. However, most projects were just promises of amazing games to be launched in 2022. The promises were not respected, and most games died before the second half of 2022. 

That points us to the biggest problem of all. Who will ensure the authenticity and responsibility of gaming projects? Game Aggregators and Game Studios should be the way forward. There should be multiple verification mechanisms in place.

1. The game plan and initial gameplay videos should be made public before any public fundraising attempts.

2. Game Aggregators shall verify the credibility of the team and the project.

3. Upon verification of an Aggregator, the project shall partner with a gaming studio, accept it as an advisor and provide a detailed roadmap and milestones. 

4. If the team does not prefer to partner with a studio, they shall join a custodian platform to ensure the timely release of IGO or ICO funds upon meeting milestones. This way, the team will have an inherent incentive to continue development and deliver the game. 

5. Gaming Launchpads and IGO platforms shall hold the IGO funds in a multisig smart contract. When the project wants to claim the funds, a governance call shall be made. The launchpad, the IGO investors, an independent auditor (Certik, hacken), and the game team shall vote.

Also, the influx of gamers is mainly because of financial incentives. This presents a multidimensional problem.

When a game stops being play-to-earn, the gamers will leave, and they will liquidate coins and NFTs. It will cause a price fall for the token and the eventual demise of the game. 

Incentives - Reality

When the game continues its incentives, they will have to mint more tokens and conduct various airdrop campaigns. It will cause inflationary effects and devaluation of the token. When the number of gamers goes up, and the reward value goes down, there is hardly any financial incentive to play the game. 

So what is the solution? Build exciting games that can compete with the web2 gaming industry. Web3 games have a lot of advantages, but without good games, the advantages would seem too much hassle for gamers. 

In short, gamefi has to ensure the sustainability and quality of games and in-game ecosystems. That itself is not easy to achieve. So, projects should look back at their fundamentals and users for gradual, tangible changes. Eventually, they need to generate revenue by transforming play-to-earn to a freemium model. 

Way Forward

But that appears to be a long-term fix, and what can be done to stop the outflow of gamers?

Building an efficient community around the game is the key here. The community should be organic, personalized, and active. Although Discord offers the comfort of categorizing, it appears to be overkill. Reddit is a robust platform, but quickly losing prominence. On a separate note, there is a need for decentralized social networks in the crypto space. 

Another problem is the high entry barrier for gamefi. There are psychological, technical, and financial barriers that intensify each other. What are the psychological barriers, and how to help gamers overcome them?

1. The notion that web3 gaming costs a lot of money. One of their friends claims that he paid $40 for a transaction! 

2. No communities to hang out with and no actual events because everything happens on the blockchain.

Entry Barriers

Game launchpads have to take up the initiative of minimizing psychological barriers. There needs an absolute clarity on the web3 narrative before pushing for it. That means educating gamers about the web3 opportunities is crucial. 

The technical entry barriers are wallets, gas fees, and NFTs. Guides, videos, and awareness can help to melt down the wall. The technical barrier is the primary psychological barrier, as most people are resistant to change. Gamers are no different, but they love a change when the change is attractive enough.

Guilds - A Gaming Romanticism

But why is the entry barrier high? We all thought the Guilds were working on it. right? Guilds and DAOs tried, and apparently, they failed at the first attempt. The most commendable initiative remains the Axie Guild, where people lend their axies to gamers and offered scholarships to play. The response was phenomenal, yet, it was just a patch to the leaking roof. Simply, DAOs and Guilds were not as effective as they first seemed. 

Not all games could replicate the Axie saga, and most ended up as money grabbers. As a result, crypto traders started to view Gamefi tokens as super speculative, overvalued assets. And the rest went to dust! 

For example, one of the most exciting games, Killbox, launched its KBOX token in 2021-November, with a Fully Diluted Valuation of $1.8 billion. Fast forward a year, and the valuation shrunk to $690K! 

https://www.coingecko.com/en/coins/the-killbox-game

But the most crucial question remains. Why couldn't Guilds meet objectives?

Membership in a DAO or Guild is complex to manage. The onchain criteria, such as history, were too cumbersome for gamers. A simple solution of Google Forms + Client Repository + Discord was overlooked in pursuit of decentralization. Also, Guilds lacked the initiative to onboard crypto newbies. Guides on setting up wallets, interacting with dApps, and gas fees were absent too. When a simple google search couldn't yield the right results, inherent flaws in the decentralized approach became more evident. Decentralization is the future, yet that future is a gradual journey than a single leap. Optimized content and community mods are the keys to tackling the technical barrier. Consequentially, Guilds and their tokens collapsed.

Need For Change

But this isn't the end; on the contrary, just the beginning. Games and DAOs shall offer testnet accessibility for newcomers. There should be detailed guidelines to ensure retention. And well-qualified community mods to solve some natural doubts. People still struggle to add BNB Smart Chain to Metamask. Games should remember they are catering to gamers, not tech geeks. 

Of course, the gaming experience was not the only one to blame for the lack of interest in blockchain games. Poor token design and token utilities overshadow the actual gaming experience. Token distribution should be innovative rather than repeating the same old 20% team + 40% treasury + 40% ecosystem - type distribution.

Another problem to solve is the illiquidity of NFTs. Most gaming NFTs are now illiquid, be they on Ethereum, Solana, or BNB. There is no proper mechanism to ensure exit liquidity. Gamers should feel comfortable buying and selling game NFTs without any worries. 

The new narrative in GameFi

Compared to 2021, gaming is receiving relatively higher funding in 2022. In August 2022 alone, gamefi received $750 million, which is impressive (this is a bear market). According to dappradar, more than 840K unique wallets played blockchain games. The number remains high compared to 2021 levels.

Interestingly, video game studios are giving up on the play-to-earn trend. The incentive shall be sweet memories or NFTs rather than ever-dumping tokens. Although gamefi is at its weakest in 2022, it still turns the heads of gaming giants. Bandai Namco and SEGA are two video game giants eyeing to move to blockchain gaming. Bandai Namco has developed beloved titles such as Tekken and Pac-Man. On the other hand, Sega is behind Sonic the Hedgehog. Yes, big players enter Gamefi with even bigger dreams, and our expectations grow with them. 

Not to forget that A16Z has a $600 Million gaming fund, which shows the gamefi sector is still hot even in a bear market. We all agree that 2021 has seen a lot of short-term investments, which signaled a bubble. But the involvement of institutional investors in a bear market shows long-term engagement. Let's play the long-term games now!

Many lost their savings in the crash. FTX alone lost 2 Billion dollars that belonged to its customers!

The FTX Drama

Amid the FTX crisis, the market underwent a dramatic shift. Bitcoin hit a two-year low, and the total market capitalization of cryptocurrencies dropped as low as $786 billion.

The fall of the FTX empire has left a gigantic void in Crypto Market. The gap is so large that the drop in liquidity over the past week is more significant than in any previous market drawdown.

Many lost their savings in the crash. FTX alone lost 2 Billion dollars that belonged to its customers!

Users also lost money in the crypto slump that followed. The market witnessed the largest long-liquidation event since the Luna crash on Nov 10. Over 196 million dollars got liquidated in the event! Pessimism took over the market, and short traders leveraged the opportunity. Subsequently, the funding rate went negative. And Bitcoin reached the highest negative funding rate in 2022! 

But What is Funding Rate?

Funding rates are periodic payments between traders to make the perpetual futures contract price close to the spot price. Even though the funding rate impacts the price of a coin, its influence differs in various market conditions.

So correlating high funding rates with inevitable price drops is a wrong interpretation. But as a market sentiment tool, the Funding Rate is quite handy.

When the market is bullish, and long traders dominate the short traders, the Funding Rate goes above 0. So a positive funding rate implies that many traders are bullish.

Short traders become dominant when the market is bearish, and the funding rates turn negative. That makes it a fantastic buying opportunity. 

In July 2016, the funding rate peaked (negative) and that signaled a cycle reset. Prices rallied after that point from $500 to $18k. 

In March 2020, the funding rate peaked again, and after the reset, the market flew high. Now, the funding rate is again turning negative, and that indicates DCA opportunities.

Always remember, a high negative funding rate does not indicate a market bottom, but the near bottom territories. If someone keeps waiting for the prices to fall, the person will keep on waiting. Patience pays off only when you are patient enough to act.

SBF Drama Continues

Several regulators have opened investigations into the collapse amidst all the rumors about SBF's whereabouts and FTX filing for Chapter 11 bankruptcy. The California Department of Financial Protection and Innovation (DFPI) declared that it is already investigating FTX. FTX will also face US Justice Department Probe along with SEC, DOJ, and many other state and federal investigations.

The whole FTX situation is sketchy at best. There are reports that FTX executives had known the exchange was using customer funds. FTX also got hacked on Nov 12, for an amount exceeding $600M. 

Bankman-Fried has not only cheated his customers but his employees as well. According to reports, he sold FTX equity to employees at a 50% discount in spring.

There was also drama in the Bahamas with FTX and SCB. The Securities Commission of the Bahamas (SCB) froze FTX's assets in the Bahamas late Thursday. The exchange had already halted withdrawals a few days before.

Last week, FTX announced that at the request of the regulators, it had permitted users with addresses in the Bahamas to withdraw funds. Then, SCB published a statement on Twitter Saturday suggesting that the news was inaccurate.

Several users outside the Bahamas tried to withdraw funds with the help of local users.

The Bahamas-based users sold the foreign users high-valued NFTs, presumably with the understanding that they would be permitted to retain a portion of the locked-up cash.

The positive outlook of the FTX chaos is that the overall market size remained above the 2020 level. But the negative aspect is that the market depth of many cryptos fell significantly.

According to Kaiko, the market depth for bitcoin (BTC) on Kraken has decreased by 57%, Bitstamp's by 32%, Binance's by 25%, and Coinbase's by 18%.

The market depth of coins that have ties with FTX plunged even more deeply. Across all order books, SOL's overall market depth has decreased by 50%, from 1 million SOL to under 500,000 SOL.

The liquidity will remain relatively dry until the market begins to pick up and market confidence gets restored. While crypto tried to rebound from the FTX bankruptcy, the US stocks fell after the biggest weekly gain since June.

These were the US indexes as the market began on Monday,

• S&P 500: 3,978.29, down 0.37%

• Dow Jones Industrial Average: 33,736.81, down 0.03% (11.05 points)

• Nasdaq Composite: 11,227.48, down 0.85%

Are Investors Losing Confidence in CEXs?

The FTX collapse has heightened distrust for CEXs, and many investors have moved their assets to decentralized wallets.

On-chain data for Exchange Reserves and Exchange Netflow reveal that users moved more than 80,000 BTC out of CEX wallets within a day.

Currently, centralized exchange reserves are approximately 2.089 million Bitcoin and 19.999 million Ether, the lowest amount since November 2018.

Exchange outflows typically indicate that BTC is HODLed for the long term, which is bullish. This instance, though, seems to be the outcome of waning trust in centralized crypto exchanges.

That said, the move to hold BTC in an individual cryptocurrency wallet without selling it on the exchange is remarkable.

Following the outflow, popular custodial wallet tokens had an impressive rally.

The average ROI was above 22% last week for different non-custodial wallet tokens, including Trust wallet tokens, Atomic wallet coins, Block wallet tokens, math wallet tokens, etc.

The Atomic wallet has rallied to a closing of 54%, while Block Wallet has already increased by 97% in just 24 hours. And Trust wallet token (TWT) is up 110% this week.

Gate Concerns

Following strange on-chain behavior between itself and Gate, a rival exchange, some are now concerned that CryptoCom may be experiencing liquidity issues.

The CEX accidentally gave $400 million worth of ETH to the Gate on Oct 21 this year.

There are also concerns regarding the token reserves of crypto com. Almost 20% of the CEX's token allocation is in the dog-inspired meme token, SHIB.

Elections and FTX?

Without SBF and FTX donations, political funding for cryptocurrencies is at risk of ceasing. SBF was one of the biggest political donors in the US.

FTX and SBF donated more than $70M to political campaigns in the 2021 US election cycle. SBF himself spent close to $40M.

And without its greatest supporter, the landscape of pro-crypto candidates in the US will soon shift. The downfall of SBF's crypto business empire will be detrimental to the crypto funding scene.

Onchain Metrics

Miners' Position Index or MPI hits a warning again. MPI is the ratio of total miner outflow to the 1-year MA of total miner outflow.

Higher values of MPI indicate miners are sending unusually high amounts of coins. It suggests possible sell-offs, and the price would subsequently drop. It is the fourth time MPI has hit a warning in 2022.

Bitcoin addresses holding at least 1 BTC reached an all-time high. There are currently 921,578 wallets with more than 1 BTC.

The whole FTX fiasco has given the regulators the necessary ammunition to come done on the industry hard. The hammer of regulators is mere inches away!

The community is now worried for the titans - FTX and Alameda. The concerns that FTX and Alameda may go under because of liquidity issues and insolvency are alarming. 

The Alameda Situation

Alameda Research is in alarming straits, and the platform has undertaken a few risky moves. There are fears of insolvency as most of its assets are illiquid. Even worse is that the lion's share of the assets is in FTT.

Alameda research (as of June 30) has $14.6 billion in assets and $8 billion in liabilities. The assets included:

• $3.66B of unlocked FTT tokens

• $3.37B of "crypto held"

• $2.16B of FTT collaterals

The assets also include considerable amounts of SOL (SBF was an early investor in Solana):

• $292M of unlocked SOL

• $863M of locked SOL

• $41M of SOL collateral

It means around $250 million worth of Solana can end up in the market, intensifying the sell pressure.

Other tokens include MAPS, OXY, FIDA, and SRM from the Bankman Fried co-founded Serum decentralized exchange).

Over $7.4 billion in loans make up most of Alameda's liabilities, which total around $8 billion. $292 million of it is locked FTT. Alameda also has a $2 billion "investment in equity securities" and $134 million in cash and equivalents.

The $2 billion in equity securities might be equity in FTX and likely some of the crypto firms that Alameda has invested. It could be the go-to liquidity when the situation goes out of control.

The illiquid asset held by FTX and Alameda warrants the concern of whether the company's foundation is sound. It is hard to sell illiquid assets due to the lack of speculators and buyers. It could potentially lead to insolvency if not handled correctly.

Besides the illiquid assets that raise eyebrows, the company holds most of these assets in altcoins. These illiquid altcoins are even more risky and volatile.

How is FTX related to Alameda?

FTX, an exchange, and Alameda Research, a trading company, are the two primary components of cryptocurrency tycoon Sam Bankman Fried's empire. Both companies are titans in their respective fields.

Alameda rests on a foundation that is not an independent asset like a fiat or a detached crypto but rather a coin its sister company created.

Clearly, Alameda Research has immense exposure to FTX, and it financially benefits from the fees at FTX (These fees go into buying and burning FTT tokens).

The FTT token on Alameda's balance sheet is nearly one-third of the company's total assets and 88% of its net equity. The bulk of the net equity in Alameda is just FTT, which is centralized, and printed out of thin air.

1. The biggest asset is $3.66 billion of unlocked FTT.

2. The third-largest is a $2.16 billion pile of FTT collateral.

3. $292 million of its $8 billion of liabilities is also FTT.

4. Some portion of $2 billion in equity securities may be its ownership in FTX.

The total reported Alameda assets amount to $5.82B of FTT. And according to CoinGecko, FTT's current market cap is $2.9B, which is only half of what Alameda owns. The company has more than 180% of the total circulating supply of the token. Absurd right?

CZ - SBF Beef

Binance used to hold a minority stake in FTX. And the exchange received $2.1 billion in FTT and Binance USD when it exited the investment last year.

CZ, the CEO of Binance, announced its total exit from its FTT holdings. CZ confirmed a transfer of nearly $584 Million worth of FTT tokens to Binance as part of the liquidation process. It is equivalent to 17% of the circulating supply of FTT.

https://twitter.com/cz_binance/status/1589329217874931712?s=20&t=YroA2L-X1VshD2VIjwbpEA

The sale could impact the loans backed by the FTT token. But CZ revealed that he would liquidate FTT gradually to lessen the impact on the market.

Moreover, he emphasizes that this is not an attempt to harm FTX. CZ clarified that the action is only post-exit risk management, citing the LUNA token experience.

Alameda CEO Caroline Ellison shot back at CZ by tweeting the hedge fund could buy all $584M FTT at $22 each. Sam Bankman-Fried insists that he respects what CZ has given to the crypto sphere. He believes industry leaders should focus on building blockchain rather than going to war.

https://twitter.com/carolinecapital/status/1589287457975304193?s=20&t=ZvdusDGVmD2A7me4_-OURg

The two cryptocurrency goliaths, FTX and Binance, have the whole cryptocurrency community on edge. However, CZ and SBF are attempting to downplay the issue.

However, the FTX token has not been left unfazed. It came under additional pressure after CZ tweeted the selloff.

Amid the back-and-forth Twitter exchange, speculation regarding the FTT token caused extreme price volatility.

The Market is Collapsing!

It is clear that once the $22 mark of FTT breaks down, there is nothing SBF can do to prevent a total catastrophe. 

FTX had to sell most of its SOL and ETH holdings to create a buy wall for FTT. It reminds us of Do Kwon selling everything to save his brainchild - UST. If not for the history that repeats itself, SBF is sacrificing SRM and SOL to help FTT. 

The interesting question is, what should you not buy at this point?

1. Stay away from centralized exchange tokens. Yes, BNB can be an exception because of BNB Smart Chain. Centralized exchanges tend to mint tokens out of the blue, collateralize it, borrow against it, and over-leverage, resulting in a big collapse.

2. Derivatives kill the product. Adding too many derivatives caused a lot of trouble for Luna. At some point, people staked UST, borrowed aUST, minted pLUNA, borrowed against and minted some other UST, and so on. It creates systemic risks that are unavoidable. Essentially, when the coin has too many derivatives, rethink investment. 

3. Tokenomics matter. In the bull market, we saw a lot of projects launching with extreme pump-nomics. That means a low initial circulating supply (10% of the total) with heavy vesting over a year. Since the cliff and vesting rounds are almost ready for many projects, we will see a further bloodbath. 

4. Projects with a market cap above 100 million and an FDV of 500 million shall be considered risky. Check whether the project has a working product and whether people are using the product. Also, find out whether the startup behind the project is making revenue. If NO is the answer, then there is no point in holding the token.

Let's take the example of Syscoin (https://www.coingecko.com/en/coins/syscoin). It is an old Bitcoin fork and currently has little to no relevance. It has a market cap of 100 million and is making no revenue to sustain the valuation. It makes you realize that the number of overleveraged hands and overvalued projects are surprisingly high. Treat each project as a startup and ask these questions to your HODL bag. 

The concept of liquidity is also crucial. When the project does not have enough trading volume, it is easy to manipulate the prices. The bets on such low-volume projects shall be risk-managed. Shrink your investments in favor of long-term holds. 

Conclusion

Let’s not forget that the macro doesn't look good. We appreciate the recent pump, thanks to the upcoming mid-term elections in the US and positive news from web2 companies. But CPI data is due on the 10th, and that could kickstart another leg of the bear market. 

So, invest wisely, and invest with a purpose.

US CPI numbers are out. Although the forecast was 8.1% YoY, the actual numbers printed 8.2% YoY. It tells us that the perceived inflation figures are not matching the actual inflation. We know that government data is often inadequate and under-representative. So the actual inflation figures might be even scarier. 

The core inflation data is also high. The forecast was around 6.5%, while the actual numbers came out to be 6.6%. Inflation is not slowing down, which is good news for investors.

But inflation increases living expenses and decreases investor confidence, right? The short answer is not necessarily. 

The US is facing a recession now. 93% of the CEOs believe we will have an extended global recession. Most of the tech startups, especially web3 startups, are failing. Crypto companies, be it exchanges, research organizations, or VC firms, are downsizing. In short, the management world believes crypto is finished. 

This is the picture the VCs and powerful media firms want us to believe. They bombard naive investors with technical words like recession, monetary policy shift, and more. Traders draw random lines on bitcoin charts, and somebody notices a peculiar structure and predicts bitcoin to go below $10k. On top of that, tech pessimists, come again to predict doom and gloom.

So how can someone stay sane amidst all this negative news? Simple. Don't listen to them, but watch what they do and follow the smart money. 

Major banks all over the world are becoming crypto-friendly day by day. Nations adopt the bitcoin standard as their legal tender. And we, the crypto natives, have reached a stage where we need to rethink crypto. Most of us treat crypto as a speculative, risk-on asset. Well, crypto is still a speculative asset, but the inherent technology isn't. Blockchain technology is robust and futuristic. The rich are building a new world around the internet, and crypto is the internet money. 

In light of this info, try to see defi as the new banking system and the metaverse as the new economy. Select defi protocols that generate a net profit in the bear market, and invest in the token. Select Layer-1 chains where developers are still building innovative projects and invest in them. 

Also, find what you are passionate about in the space. Put your money into your passion. If you are working in the infrastructure sector, choose infra projects. If you are in the medical field, choose blockchains that offer the most privacy. If you are working in a supermarket, invest in the exchange coins. This is how you survive and emerge strong in a bear market. Follow this strategy, and you will find the way. 

Safety First

Before we tread to some on-chain discussions, let's learn how to be safe in crypto. 

Crypto hackers stole almost 3 billion dollars in 2022. In October alone (the month is not over yet), around $718 million has been stolen. Although you might have taken the necessary steps to be safe, let's do a checklist in case we have missed something.

On Mobile

1. Avoid keeping a significant amount of crypto in mobile wallets. Malware can steal your seed phrase from the wallet. So writing it down and keeping it safe might not be enough.

2. Avoid the habit of Copying + Pasting wallet addresses in times of crypto withdrawals. If you have to, try to cross-check the last 4 characters. Try to use the QR scan option for more accuracy.

3. Do not use any centralized exchange to hodl crypto. Use a ledger if possible.

You can also use a soft wallet (like metamask) as your cold wallet. Here is how.

1. Go to https://www.exodus.com/download/ and download exodus for your PC/Mac.

2. Turn off the internet, and create a wallet. Write down the seed phrase, and copy the public address (Bitcoin, ETH, etc.)

3. Uninstall the wallet and clear all cache.

4. Now, you can use the wallet address as a safe storage option. When you decide to take profit, install the wallet again and transfer crypto.

On PC or Mac

1. Install https://brave.com/download-beta/ as your crypto browser.

2. Never visit non-crypto websites or install any non-crypto extensions (Grammarly, Read Aloud, Screenshots, etc.). 

3. Passwords for your crypto wallet extensions shall be simple (12345678 also works but should not be saved in the browser prompt)

4. As a good practice, do not install unknown apps. 

5. Use a ledger for safe keeping of your assets, and use a hot wallet for daily transactions.

6. When you interact with a new platform for airdrops and NFT minting, try to use a burner wallet. The wallet shall hold minimal funds for gas.

7. Use chainlist.org to add networks in Metamask. Remember to disconnect from connected websites frequently

How to be safe when using a bridge?

Make use of explorers. You don't need to be on-chain detectives to stay safe from potential bridge hacks. 

For example, when you use the Celer bridge, check the block explorer first. (See the screenshot below)

Check the last 10 transactions in your preferred network. For example, if you want to bridge between Optimism and the BNB chain, check the transactions involving both. 

**Ensure that no large amount got bridged ( >1 million)  in the last 10 transactions. **You can find Explorer in most of the bridge infrastructure. 

Some On-chain Stats

• For the first time since 2018, crypto venture funding fell for two consecutive quarters. It means VCs are becoming conservative in their investment. Protocols that can generate revenue get ample funding. So investing in such tokens is crucial.

• Infrastructure startups continue to show strong growth at the seed stage, and funding is yet to plumb to the depths of pre-2021 levels.

• So institutions are interested in infrastructures. Allocate a small portion of your portfolio to infrastructure projects, and this can include layer-1s also.

• Bitcoin Open interest rose to 500,000 BTC. It shows the amount of leverage in the system is unreal and unsustainable. Even a small 5% move can flush out this leverage. So a leverage shakeout will not be scary as before.

• Funding rates turned negative since the drop from the $22K level. So exchanges can play with liquidity to liquidate shorters. A series of liquidations can sustain a small bullish price action.

Note: As miners are not profitable at this level, we should expect a capitulation event anytime in the next 30 days. Take long positions when that happens. 

Even though miners are at a loss, hashrate hits a new All-Time High! During a capitulation event, we can see hashrate going down, which will confirm the bear market bottom (Given WW3 or Covid 2.0 does not occur)

Alright! That’s a wrap for the week. Stay safe and Invest Wisely! ** **The intelligent investor is a realist who sells to optimists and buys from pessimists

Stakeholders of the Bitcoin System

Let's start with some on-chain activity. When it comes to Bitcoin, all that matters is that the health of the Bitcoin system remains strong. Yes, the price will rise and fall throughout the different market cycles. So we can not consider price as a leading indicator. On the other hand, price action results from the constant interaction between market forces.

Which are the pillars to safeguard Bitcoin's health?

1. Miners

2. Whales

3. Institutions

The Status Of Miners

We know that miners are operating at diminished profits, and some are even running at losses. 

The Miners Position Index suggests that the current situation is uncertain at its best. So what is the Miners Position Index?

Miners' Position Index (MPI) is an account for the average miner movement in a year. It means MPI tells us what miners are doing with their Bitcoin over a considerable period. That means whether they are selling Bitcoin or hodling it.

When miners sell Bitcoin in a bull market, that can indicate that the bull market is losing momentum. At the same time, when miners sell Bitcoin in a bear market, it has two explanations.

1. There are more downsides to follow in the bear market.

2. Miners are forced to sell, so a potential bottom is near.

Let's analyze the first explanation. The possibility of further downtrend does exist. If Bitcoin loses the $18k support, a move to $16k or even $15k is on the table. However, such price action will not extend for a long time. A wick? Probably. So it is best to place some limit orders when you see Bitcoin fall below $18k. 

But is it a certainty? Not really. We do not know what will happen and where the market can find a clear bottom. All we can do is respond to the financial opportunities (there is not much difference between buying Bitcoin at $18k or $19k if you are determined to sell at $60k).

Anyway, the second explanation is reliable when we consider Bitcoin as an isolated financial system, free from the influence of external agents like macro events. But sadly, it is not the case. That means miners being forced to sell their Bitcoin holdings is a reality. There are no ways around it, and the continuous selling pressure from miners will harm the price stability also. But even with all the negative news, Bitcoin has managed to hold on! 

Not only that, Bitcoin managed to stay afloat, becoming less volatile than the Dow Jones Industrial Indicator. How crazy is that!

Another fascinating thing is that the correlation of Bitcoin with Gold has reached a 1-year high. 

Essentially, bitcoin is becoming less volatile and contributing to a sideways market until the next bull run.

The Status of Whales

Let's not forget other big players, whales!

Bitcoin whale volume (Generally, a transaction over 1k BTC is considered whale volume) and realized price stands at $15.8k now. That means the average price of Bitcoin in whale deposits and withdrawals since 2017 is $15.8k. Below that price, whales are unlikely to sell. Does that put a hard limit on the bear market bottom? Apparently, yes. 

Let's face it. Even if most retailers panic and sell Bitcoin, it is unlikely to cause any major changes in the price action. Bitcoin price moves considerably when miners, whales, or institutions get involved. When miners are already at a minimal profit, would they sell when Bitcoin reaches $15.8k? Logically, no. 

Only institutions remain on the list. Microstrategy will not sell Bitcoin at any cost (they probably will not even sell at the next bull market top because their targets are so HIGH). 

Pain in the Market

Okay! What about the status of the market now? We assumed October is a green month, right?

The recent price action does not change anything. We have discussed buying any dips in the first half of the month. Technically, it is still the first half, and we have another half to go. 

As long as Bitcoin stays above $18k, October can give us a nice relief rally. Do we have any data to back the hopium? Yes!

For the first time in this cycle, the percentage of supply at a loss has reached 50%. That means half of the entire Bitcoin supply is at a loss. Let's take a moment to understand the situation. A lot of bitcoin supply did not move since the inception of bitcoin. There are miners and whales, who are still in good profits. But to have the 50% of the total supply at a loss, the actual number should be much higher. Most of the active circulating bitcoin supply is at a loss. 

Probably this has something to do with the recent crypto adoption trend. But we can not ignore the audacity of the situation. There is pain all over the market, and the investors, who are still buying, are here for the long game. If they are not selling at $18k, why would they sell at $16k? 

October plans are still on! DCA into your favorite projects slowly.

You can start putting small sums into low-caps also at this point. The NFT market is also suffering (Especially the Ethereum space). The Eth gas fee is too high, yet again. But it burns more ETH and thus actually pushes ETH to a deflationary track.

Alright! 

“It would be silly to expect every bear market to turn into the Great Depression. It would be equally wrong to expect that a fall from overvalued, to more fairly valued, couldn't badly overshoot on the downside”

Let's discuss how these events can affect the crypto market. 

What is a recession?

Technically, a recession is a period of low economic activity. When GDP falls in two successive quarters, we say a country is going through a recession. Most European countries are in a recession, and now the US has joined the list. 

So recession is just a technical, economic term, which is not synonymous with a financial crisis. A recession only slows economic progress and decreases trade and consumer spending. 

Do crypto holders need to worry about the recession? At least not this one. Bitcoin can see lower prices towards the end of the year. It is a possibility and an opportunity too. 

But to understand further, let's check previous bear markets and find common ground. 

The 2022 bear market is way less scary than the previous ones. One could argue that the macroeconomic situation is different. Yes, the condition is different indeed. But does that threaten Bitcoin's 18k level?

Bear Markets

Firstly, let's check the days spent in a bear market. The number of days between the previous bull market top and the bear market bottom can give us the days spent.

2011 - 159 days

2013 - 411 days 

2017 - 364 days

2022 - 319 days

Apart from 2011, most bear markets last for more than 300 days. 2022 is no exception. So clearly, there is no strict duration for a crypto winter. 

Let's also check the percentage retracement from All-Time Highs in various bear markets.

2011 - 93%

2013 - 84%

2017 - 84%

2022 - 72% so far

Is it the bottom already? Probably not. Since we don't have a crystal ball, it is safer to ride the tides rather than swim against them. If the majority believes the bear market is not over yet, it probably isn't. 

In other words, bull markets and bear markets derive from a set of shared beliefs. 

Credit Suisse Situation

With that in mind, let's discuss the second economic event - Credit Suisse.

What is Credit Suisse, and why a Bitcoin holder should care?

Credit Suisse is one of the largest banks in Europe and the second biggest bank in Switzerland. When Europe is fighting inflation and recession, a big bank failing can reignite memories of the 2008 Lehman brothers crisis.

Let me summarise what happened at Lehman for context. Lehman was a major investment bank in the US. In late 2003, Lehman invested heavily in the US housing market. Unfortunately, the US housing bubble caused the bank to fail. Long story short, Lehman filed for bankruptcy in 2008, which led to the infamous 2008 economic crisis. 

The impact of such ripple effects is undermined, but let's not make the same mistake. If Credit Suisse fails, the safe haven investors fail together. It can open up two extreme possibilities.

1. a collapse of the crypto market

2. a strong interest in bitcoin as a perfectly liquid asset

However, such a crisis can attract investors to defi protocols. But defi is not yet prepared to see massive institutional liquidity because one smart-contract hack could unsettle the market for years to come. 

But remember, these are extreme possibilities, and reality might not even be close enough. I expect a 15-22% move (UP) for Bitcoin in October. 

A relief rally? Yes, probably. The bear market is not over yet.

Bear Market Is Not Over Yet

But why?

A few things happened in the last three months.

1. Miners are at a loss.

2. Ethereum miners lost their stronghold and shifted to other chains. Some even sold their mining equipment.

3. Bitcoin hash rate spiked and reached All-Time High.

Bitcoin price, however, remains in the same range (18.5k-20k). But the rising hash rate shows the confidence of miners in the long-term future of bitcoin. Ideally, it reflects the overall health of the crypto market and is evident from the high correlation between gold and bitcoin.  

Other than that, Miner Balance has seen high outflows in September. Miners spend around 8000 $BTC to cover their expenses. So the absence of volatility in recent weeks has its roots in forced selling and equivalent buying (Microstrategy, long-term holders).

Notice the fast depleting miner reserve (blue line) from August level.

The overall sentiment is still following a bearish trend. But since miners are unable to hold and accumulate bitcoin, the bear market bottom is not easy to find. If you think about it, the rising energy cost is a vicious bear cycle. 

Conclusion

The UN has warned world leaders that the entire global economy is on the verge of a recession, and developing nations could bear the brunt of it. 

So the remaining three months of 2022 are crucial. The market might find a sharp bottom level in these months. 

**

**

• DXY and Bleeding Stocks

• Velocity and Bitcoin Stability

• Upcoming Macro Events

• October Spotlight - Altcoins

• A Green October Awaits

DXY and Bleeding Stocks

Let’s face it, the Dollar Currency Index (DXY) is on a bull run. The index is at a 20-year high, which is a good news for long-term investors.

But what is DXY?

DXY is a measure of the strength of the Dollar over other currencies. A strong Dollar increases the demand for the Dollar and promotes saving cash instead of investing in assets. It negatively affects stocks and cryptocurrencies. 

Let’s take a quick look at the S&P 500.

Crypto follows macro unless there is a large-scale tech decoupling. Although the chances are slim, a web3 adoption storm could do the needful. Okay, no more hopium; let’s see how DXY affects Bitcoin.

A falling DXY can precipitate a massive bull run in risky assets. But when the DXY pumps, investors lose confidence in stocks and other volatile assets. Although the strength is measured against a basket of currencies, the final number has a psychological gravity over ordinary investors.

Well-known investors have been deploying capital since June, but most have sold their investments in panic. Nonetheless, keep in mind that S&P 500 has fallen into a 2-year low.

Velocity and Bitcoin Stability

Bitcoin Velocity is the ratio of the total amount of BTC moved in a year and the total BTC supply. It simply indicates how fast the market distributes Bitcoin. Bitcoin velocity has been in an uptrend since August 2020.

August 2020 also marks the beginning of the parabolic bull run. It is no coincidence that the bull run and bitcoin velocity both changed gears in August 2020.

For any economy, velocity is a good indicator of a healthy market. When the stakeholders exchange money quickly, the value it serves increases. That means when $1 is exchanged four times, it serves as a $4 total value. But we are not here to learn economics but to understand how velocity can affect Bitcoin price action.

Despite the bear market, Bitcoin velocity was high, which means volatility and liquidity were high. Please note that the word volatility doesn't mean a bad thing; instead, volatility is a feature of cryptos, and we all love good volatility.

Institutional investors like MicroStrategy kept the velocity high even in the bear market. But since MicroStrategy appears to have bought enough (For Saylor, the whole 21 million Bitcoin can only be enough. We all appreciate his enthusiasm!) and thus the decrease in volatility can extend for some time.

Ideally, a minor decrease in velocity is not a concern. However, it suggests that even a tiny amount of Bitcoin can play a significant part in a dump.

Upcoming Macro Events

Oct 13 - FOMC Core Inflation - A critical event.

• The forecast suggests an increase in inflation. We do not know what the actual numbers will be, but if the inflation rate increases, the market is likely to dip.

• However, if the inflation numbers are reduced, the market will pump for some hours and return to normal levels.

• Overall, I expect October to be green. So that calls for buying the October dip for short-term gains.

Oct 28 - Personal Spending Data Stats - Moderately impactful event

• BEA’s personal income data shows a flattened curve. In July, there were fewer changes than in June.

• That’s why I am expecting similar data for August and September. So the income stats might not impact the market or have minimal impact.

Traders can make use of the volatility. How? 

1. Check the expected inflation rate, https://tradingeconomics.com/united-states/forecast - This is one of my favorite forecast tools. Check for CPI (Consumer Price Index) ** **

   • According to tradingeconomics, the predicted CPI is 7.3% in Q4, 2022. 

   • Overall CPI in Q3 was 8.3%. So macroeconomic experts predict less inflation in Q4, starting from October 2022. 

   • CPI is simply the inflation felt by consumers (reflection of the price hike or price fall for consumer goods at retail prices)

   • When FOMC declares the CPI to be 8% or less, you can open a long position. 

   • On the other hand, if CPI is more than 8.3%, say 8.4% or 8.5%, you can open a short position.

2. Check the DXY (Dollar Currency Index) graph - https://investing.com/indices/usdollar **

**

1. If DXY trends upwards of 114.5, open a short position. You can use the same to determine whether to close previous short positions.

2. If DXY falls below 113, open a long position, or close the short position. 

3. These numbers are relative and are valid for October only.

October Spotlight - Altcoins

• Cosmos (ATOM) has been trending in September because of the Cosmoverse. It might continue to trend even in October, as the community expects exciting announcements.

• Kava 11 is a bullish event for Kava and the cosmos ecosystem in general. ATOM, KAVA, and DYDX could benefit.

• ETH has seen a high volume, sell-the-news event. So ETH and altcoins might outperform BTC in October. (Dominance is low)

• Lukso has a successful testnet. They have announced ecosystem expansion by awarding some community projects. We expect Lukso to announce the mainnet in October, and that makes Lukso a good buy. However, post mainnet, lots of coins will come into supply + sell-the-news event. So you can sell it after the mainnet pump (to rebuy later)

A Green October Awaits?

• In recent years, October has outperformed September in the macro market.

• Even for Bitcoin, October was relatively a good month for investors.

• In 2022, September has seen record sell volumes, and still, Bitcoin managed to stay above 18k. In October, there are not many bearish events also. 

• Mt Gox unlock is not yet announced. It could be a panic sell event (the day of announcement and the day of distribution). So when that happens, treat it as a great buying opportunity.

• Digital Fund Flows remain net positive even in a bearish month. That means people are selling crypto and holding stablecoins. It is a positive sign for market health. 

• After the Mt Gox unlock, if the fund flow returns a net negative, it will signal an extended bear market. If the fund flow remains net positive in October, it is a strong buy indicator.

• You can check the fund flow data from Coinshares or Arcan Research. Although it is a lagging indicator, any tool can be handy in a bear market.

Well, that’s it for the week. 

Count on the light at the end of the tunnel Some tunnels just happen to be longer than others But crypto is here to stay,  DCA and chill :)  And remember, microcap 100X gains are NOT made in bear markets.

• Duplication of efforts

• Maintenance of energy-intensive infrastructure

• High energy consumption

While PoS supports block verification through validators and delegators. PoS could solve some of the drawbacks of the PoW system, perhaps more efficiently.

Let's look at the post-merge crypto structure from an investment perspective.

 Ethereum founders believed in natural growth in the initial days, which compelled them to adapt to PoW. The plan was to use PoW and solve issues on the go. This approach is in stark contrast to Cardano, which hopes to create a perfect blockchain. It is interesting to see Solana following the Ethereum philosophy of act-repair-act again. More on it later.

What exactly is the merge?

On December 1, 2020, Ethereum launched its beacon chain. The beacon chain is more like a demo chain containing Ethereum accounts that enable staking. So, the merge is the process of merging the beacon chain and the current Ethereum mainnet.  

Two immediate consequences of the merge will direct the market in the coming months.

These two form the narratives for major investment opportunities as well.

1. Carbon footprint 

2. Scalability

Energy Efficiency

The carbon footprint of cryptocurrencies has been a hot topic recently due to the global energy crisis. When Ethereum becomes proof of stake, it will significantly reduce its carbon footprint and energy consumption. It will be the first catalyst of the next bull run, cementing the bear market bottom once and for all. 

World cup football is around the corner. Back in May 2022, FIFA (Football Association that conducts World Cup) announced a partnership with Algorand. 

You can read more about the partnership here.

So, Algorand is now the official blockchain platform for FIFA, and Algorand wallet is the official blockchain wallet. Many crypto investors fail to understand the audacity of this partnership beyond some quick gain for their $ALGO bags. 

Let's speculate what can happen during the world cup football. Firstly, there will be banners and ads for Algorand in the live broadcast. There will be simultaneous blockchain meetups and events around the world cup too. FIFA can release NFTs and tokens in the algorand blockchain for sale. It is more like free publicity for the entire crypto industry, and this sporting festival can fuel the second wave of retail adoption. Let's be moderate in our expectations. I am not expecting the world cup NFT sales to trigger a massive bull run. But it can spread the word of web3 around, plant the idea that crypto is safe in commoners' heads, and ultimately propagate the asset class to new investors. 

These new investors are the exit liquidity for the old investors. 

But that's not it!

Algorand is synonymous with green blockchain infrastructure. That is precisely about minimizing carbon footprint. As the narrative of the energy efficiency from the merge cools down, the world cup will reignite the same narrative. 

A confluence of similar narratives from different sources becomes the second catalyst for the bull run. As the stock market recovers and the halving date appears closer, these new investors will kickstart and sustain the bull run. 

Yes, $ALGO can see some real-world adoption. It can also see some pumps, but what it brings to the table is a strong narrative of energy efficiency. 

Scalability

Scalability is the second outcome of the merge. However, this is not something of an immediate nature. The transition to proof of stake enables Ethereum to achieve scalability through sharding. Sharding is splitting up large blockchain data into small data sets for faster processing. It is futuristic but offers little to the short-term future. It presents some incredible investment opportunities too.

If scalability gets momentum as a narrative, the first project that could reap the benefit will be Polygon. Polygon is currently the most retail-adopted layer-2 of Ethereum. Optimism and Arbitrum are two layer-2 giants accruing significant volume and activity. Among these two, Optimism already has a token - $OP. On the other hand, Arbitrum plans for an airdrop, potentially in October. Evidently, Arbitrum can be the biggest gainer from the scalability narrative. 

Arbitrum is a pioneer in ZK technology, an innovative mechanism to verify block transactions without revealing all the transaction data. 

The space will get energetic with discussions of an $ARBI airdrop even after the merge. As Algorand takes the lead in the energy narrative, it will be Arbitrum that benefits from the scalability narrative. 

When layer-2 and other scaling solutions outperform the market, there will be an organic interest in other layer-1 blockchains.

Impact On Layer-1s

Solana

I have explained earlier that Solana is mimicking the Ethereum philosophy. It deployed, onboarded users and dApps, and then started to fix problems as they arose. After the Luna crash, Solana has seen decreased developer activity which is reflected in its price action. But recently, Solana shifted the focus to cater to itself as an NFT chain for the time being and restarted the development. This newfound enthusiasm can help Solana to outperform other layer-1 chains. 

Cosmos

Cosmos is another chain focused on value accrual among layer-1s. However, its ecosystem is the chief contributor to the success of $ATOM. Many innovative projects with good VC backing are preparing to launch on Cosmos as separate chains. Cosmos also has a lot going for it, from the Cosmoverse conference and ATOM 2.0. Cosmos plans to redesign the functionality, interoperability, and general architecture of the Cosmos ecosystem. If the proposal for interchain security and app chains goes well, $ATOM can be one of the best performers among layer-1 chains. It also fits the narrative of scalability and energy efficiency. The user experience in the cosmos ecosystem is highly refined, making it attractive for new investors. 

BNB

$BNB is a bluechip crypto along with the likes of Bitcoin and Ethereum. It is like the Apple of the web2 tech world. Binance ships innovative products, improves its ecosystem, and contines to attract new investors to its platform. It stays relevant and modern too. Recently Binance announced a Zero Knowledge solution for the BNB chain, which fits the narrative of the post-merge period. The merge is supposed to bring better interoperability between the EVM chains, and Binance is one of them! 

But what is the catch?

We have discussed possible narratives and trends for the post-merge web3 world. But what if the merge goes south?

The Ethereum testnet has finished integration with the beacon chain without any issues. Thus the chances of the merge failing are low. Even if it fails, there will be an extreme FOMO towards other layer-1 chains. Talks around the 'next Ethereum' can bring more liquidity to Solana, Cosmos, and others.

Update On MVRV

MVRV ratio is an estimate of price fairness. The ratio can spot the market top/bottom quite efficiently for value investors. MVRV ratio over 3.5 indicates a possible market top, and we should start taking profits at values over 3. While values below 0.9 signal a market bottom. An increasing trend in MVRV contributes to increasing selling pressure and vice versa.

MVRV is breaking out from the buy zone. Last time, the breakout presented a good relief rally to $24k. We will get a confirmation of the breakout after the merge, and if it stays above 1, we can conclude the local bottom was at $18.5k. However, a sell-the-news event can take place after the merge, which will be the best buying opportunity for Layer-1 cryptos in the short term. 

As the Mt Gox unlock date is confirmed, it will then become the best entry for Bitcoin. For Mt. Gox we need not wait for the actual unlock, as the confirmation of the unlock will have a much bigger impact. 

That’s it for the week, happy merge to all of you!

The centralized exchange will remove spot, future, and margin trading with USDC, USDP, and TUSD pairs too.

However, it will not affect users’ choice of withdrawal. Users will be able to withdraw funds in USDC, USDP, and TUSD at a 1:1 ratio to their BUSD-denominated account balance. 

Why Binance is removing USDC?

USDC is issued by Circle and backed by BlackRock, Fidelity, and FTX. It is the second largest stablecoin with over a $50 billion market cap. At the same time, BUSD has a market cap of $19.3 billion and holds the 3rd spot among stablecoins.

Binance wants to avoid a situation like UST collapse or a regulatory outbreak on USDC, USDP, or TUSD. To cement the top exchange spot, streamlining user experience is necessary, and that's what Binance is doing with the latest announcement. 

Impact on USDC

Practically, the only impact on USDC will be the downfall in trading volume. Because Binance hosts the most trading volume among exchanges. Also, users can not store their funds in USDC making it less attractive to hold in their wallets. 

Although Binance has promised 1:1 withdrawals, the deposits are not much discussed as of now. 

What should you do as a USDC holder?

If you hold USDC, you can convert to USDT or BUSD now. Or you can leave it as it is and Binance will convert it for you automatically. This does not undermine the stability of USDC in any way possible, and your funds will not be affected also.

** **

TL DR

• Fear and Greed Index

• Increasing Exchange Reserves

• Greyscale Premium

• Binance Inflows

Fear and Greed Index

Market sentiment is one of the best tools to consider while making investment decisions. But analyzing and keeping track of investor sentiment is often tricky because there is no perfect definition for market sentiment. It is not limited to fear and greed but has multiple dimensions that convey macroeconomic realities. It is also the most easy-to-understand tool in the world of on-chain analysis.

Alternative has an excellent market sentiment aggregator, which is free. But let's learn how to read the chart and what to make of the numbers.

https://alternative.me/crypto/fear-and-greed-index/

The chart ranges from 0 to 100. A value above 80 says the average investors are extremely-greedy. When most investors are greedy, it suggests the market is overvalued. Essentially, holding onto bags in an overvalued market is a bad idea. But is it practical to exit all at once and miss out on future moves? Not really. It is where DCA as a strategy becomes relevant.

Long-term investors should consider DCA exiting positions whenever the fear and greed index trends above 80. 

At the same time, the fear and greed index can help you time your buys too. Although it can not capture small moves, buying below when the index dips below 10 is clever. This way, you are eliminating the risk of buying a falling knife. 

The falling knife is a sharp price drop without any clear indication of a bottom. In other words, it is a point when people buy the dip, but it dips again. Is there a point in giving away your stablecoins as exit liquidity? Certainly not. 

In the chart, the fear and greed index went above 80 on two occasions. First on October 20 and then on November 10. 

That means the Fear and Greed Index could time the top almost perfectly. 

Now let's take a look at the dates when the index fell below 10. Although the indicator stayed at 10 for most of June, there were 3 particular days on which it dipped below 10. They are May 17, June 16, and June 18.

From the Bitcoin chart, the dates indicated local bottoms for Bitcoin at the respective time. Yes, the indicator could not time the bottom, unfortunately. But these are good DCA points. Also, there was a lot of FUD in the market, which is unnatural and unrelated to Bitcoin.

Exchange Reserves Increasing

Exchange reserve is going up in most of the top-tier exchanges. However, the growth is slow considering spot trading volume. The majority of the exchange inflows flow towards the derivatives. It increases volatility in the market. 

Binance - Spot Reserve

Earlier, a swift change in the exchange reserve could indicate a possible market momentum shift. It means the price action could behave opposite to that of the ongoing trend. When the trend is bullish, a change in exchange reserve can affect the bullish momentum. Likewise, when the price action is bearish, the exchange reserve change could bring some volatility, promoting sideways action.

However, this idea depends on the strength of the derivative market. When the derivative market is strong, a change in reserves has the least impact.

Let’s take a look at the derivative market stats.

Clearly, the derivative market is leading the price action rather than the spot market. It promotes even more volatility in the coming days. 

A sudden downfall in the derivative reserve can help Bitcoin to reach the bear market bottom. In that case, $16k is the best scenario for now. 

Greyscale Premium

Greyscale premium is at its all-time low levels. It indicates the institutional bet on bitcoin is suffering a setback. However, it is not all doom and gloom out there. Institutions are one of the first few people who are ready to exit the positions if something goes wrong. Even though institutional engagement provides more visibility and authenticity to Bitcoin, it can destabilize the OGs. 

We are so used to the 4-year cycle theory. A bull market that starts before halving is an established principle in crypto. But the institutional engagement brings more correlation with the traditional market, which can destabilize bull markets. That means the bull market can come early or even arrive late to halving.

Binance Inflows

Perhaps miners are the most affected in this bear market. The surges in electricity costs across the world make it extremely difficult to sustain a mining business. No wonder miners are moving their mined Bitcoin to exchanges too often these days.

In the last three months alone, miners sent an average of 4500 BTC in three transactions. Two transactions were in mid-June, which was the local bottom of Bitcoin. 

However, in September beginning, the miners are active in sending Bitcoin to exchanges, specifically Binance.

The miner inflows tell us of upcoming volatility, coinciding with the merge date.

Conclusion

There can be high volatility towards the merge. The volatility can be unidirectional (pump or dump) or bidirectional (sideways). Probability suggests unidirectional volatility (dip) and then a sideways market.

Step 1

Bridge ETH from mainnet to Arbitrum Nova using the Arbitrum bridge.

https://bridge.arbitrum.io/

It will take around 10 minutes to complete the bridge with an average fee of around $1.5 worth of ETH. Remember to keep some ETH in mainnet too for future transactions like claiming an airdrop. Also, bridge more than 0.02 ETH.

Now, you are on Arbitrum Nova.

Step 2

Bridge to Arbitrum One using Orbiter Bridge.

https://www.orbiter.finance/

Note that we can even use the Arbitrum Bridge again, but there is no fun in that, right? Anyway, using a different protocol helps us to get airdrops of that protocol token too. It is not assured or anything, but there is no harm in trying. Moreover, if the ecosystem gets big, all these transactions will be classified as OG transfers, and make the wallets eligible for future airdrops as well.

Make sure you have selected L2 Bridge option. Now select Arbitrum Nova as the ‘From chain’ and Arbitrum as the ‘To Chain’ (refer to snapshot). Bridge all ETH available in Arbitrum Nova to Arbitrum. It will cost you some gas around $0.5 and bridging will be completed in 50 seconds.

Now your ETH is on Arbitrum One.

Step 3

You can now bridge back to Mainnet using the Arbitrum bridge. But if you want to experiment more for possible airdrops, proceed to Step 4.

Step 4

Go to Kromatica Protocol.

https://app.kromatika.finance/#/swap

Connect your Metamask wallet and switch to Arbitrum Network.

If you are unable to find Arbitrum, go to Chainlist (link below) and add the network.

https://chainlist.org/chain/42161

Now swap some ETH to KROM or USDC or USDT. The purpose is to generate some trading volume. Swap back to ETH after a minute.

You have ETH in Arbitrum Network now.

Step 5

Bridge ETH from Arbitrum to Optimism using LIFI Transferto.

https://transferto.xyz/swap

Remember to leave some ETH as gas fee and select the fast route.

Now your ETH is in Optimism. I suggest bridging a small amount only, to be on the safe side.

Step 6

Now Bridge ETH in Optimism to Mainnet using Bungee exchange.

https://bungee.exchange/

The transaction takes 5 minutes to complete and uses a gas fee of approximately $1.

Well, that’s it. Overall, it costs you less than $5 to do all the transactions, but the potential for the airdrop is very high. Also, you are leaving your wallet-prints all over the bridge solutions, which can help you get early access into NFT projects too. Fingers crossed :)

• The Final Test

• Paper Hands 

• Traders And Open Interest

• The Market Trend 

• Game Plan - Let’s Not Quit Now

The Final Test Awaits

In the previous editions of the weekly market outlook, we have discussed the relevance of the LTH-STH ratio. To summarize, LTH or Long Term Holders are wallets that hold Bitcoin for more than 155 days (roughly five months). On the other hand, STH or Short Term Holders are wallets that store Bitcoin for less than 155 days. The ratio of these two numbers gives us the LTH-STH ratio. 

To clarify, the ratio is not truly representing the number of wallets. But it gives out the profitability estimate. In other words, the  Spent Output Profit Ratio (SOPR). 

A SOPR value greater than 1 implies that the investors are selling at a profit. However, a value less than 1 signals that investors are selling at a loss. But what happens when SOPR is exactly 1? You guessed it right, the investors might be selling at break even. 

Let's discuss the investment psychology of the masses (uninformed investors aka FOMO investors). When the market is moving up after a bearish wave, the uninformed investor is in disbelief. He thinks the relief rally will end at any time and there are more downsides. 

Say the market continues to go up, he changes the strategy and buys the local top. Effectively, he is buying the exit liquidity of early investors. The market undergoes a correction, and the FOMO investor panics and exits his position at a loss. 

Let's consider another scenario. The market goes down. However, the FOMO investor does not buy the red candles but rather waits for more lows. It doesn't happen, and this cycle continues. 

So, how can we apply this logic to SOPR-based investment? When SOPR moves to 1+, the market is overvalued and it is time to exit (DCA exit is best in this case). Alternatively, when SOPR goes under 1, the market is relatively undervalued. This is the best chance to ladder entries or DCA.

What Is The Data Telling Us?

LTH-STH ratio - 155-day Moving Average (red line) is entering the green box. It happened in 2016 and 2018 before. In 2018, the 155 MA's entry into the green box is followed by a market correction. In 2022 August the same event is repeating. 155 MA enters the green region, and if we compare the current flow with 2018, the similarities are massive. 

At the same time, when the 155-day MA bounced from the bottom part of the green box, that acted as a strong buy indicator. 

Long story short, the market can see a swift correction. The good news is that this correction could be the last one in this bear market. Let's not count surprise macro events for this, but strictly following the on-chain data, the market is due for a swift correction. Surprisingly, this coincides with Mt Gox's unlock of 137K Bitcoins. Fasten your seatbelts, we might get juicy investment opportunities at the end of August and in September.

Money is flowing out of BTC and ETH to low caps now. It's normal after a relief rally. If BTC crash again later next week, you can add to your long-term bags (25% again). We had bought 25% in June also. The plan is to accumulate long-term projects between September and November, logically, 25% in each month. 

Paper Hands

Paper hands are investors who invest for a short time frame. There is a common misconception that diamond hands are the best investors in the market. Not necessarily. Diamond hands are not smart enough to switch their coins and stables at the right time. But let's talk about paper hands now. 

Adjusted Output Profit Ratio is the SOPR for wallets that lived for an hour or more. In other words, the profitability estimate of paper hands. Why does it matter? 

It helps us to filter out scalp traders and account for the whole market movements. In the grand scheme of bull and bear markets, wallets less than an hour old are mostly inconsequential. 

The ratio works similar to SOPR but from a paper hand point of view. 

When Adjusted SOPR moves higher it indicates that the illiquid supply might be liquid again. The current market has a liquidity problem. Thus when the indicator trends higher, the sudden introduction of liquidity can create flash crashes.

Now, this remains just a possibility. For example in a bull market, additional liquidity is absorbed effortlessly by the positive market sentiment. But in a bear market, the liquidity creates a supply-demand imbalance, and prices crash.

Open Interest

Open interest is the number of open positions on a derivative exchange. It accounts for both longs and shorts. 

When open interest is large, Bitcoin experience high volatility. This happens because there is a massive amount of liquidity present in derivative trading. Remember the Exchange Leverage Ratio? Open Interest is closely related but is a more accurate measure of derivative health.

On another note, the exchange leverage ratio appears to be unstoppable. Each week the indicator chases its all-time highs. Even in leverage flush-outs, new leverage is added in form of shorts. 

Back to open interest, a low open interest indicates the closing of future positions. It is correlated with macro events too. When the Open Interest decrease swiftly, the possibility of a short squeeze increases in a bear market. 

What Is The Current Status?

Open Interest is trending low. That suggests a short squeeze is inevitable. Combining the LTH-STH SOPR analysis with the Open Interest, we can assume that any quick fall in Bitcoin will be absorbed. Probably if Bitcoin falls steep in September or at August end, that will be the final dump of the bear market. 

It does not mean the bear market ends and the bull market begins. We still need volume for a bull market, which is not yet present. The best we can hope for is a sideways market till the end of November. 

The estimates are assumptions from on-chain data alone.

Let’s Not Quit Now

Funding Rate

Funding Rate is negative now. It is crucial because it is the first assurance that the relief rally is over.

Bitcoin is back to 21k levels and the market is resetting the Open Interest. Shorting for large time frames can backfire at these levels. 

But is it good to start DCAing now?

MVRV

MVRV ratio is an estimate of price fairness. The ratio can spot the market top/bottom quite efficiently for value investors. MVRV ratio over 3.5 indicates a possible market top, and we should start taking profits at values over 3. While values below 0.9 signal a market bottom. An increasing trend in MVRV contributes to increasing selling pressure and vice versa.

Now MVRV is going to 0.9 (not yet there). That means the market is optimal for DCA entries. 

If the Market dips as per LTH-STH SOPR, and MVRV touch 0.8 - 0.72, add long-term bags. At all other levels, you can continue DCA.

Alright, that’s a wrap! 

Robert Arnott says: “In investing, what is comfortable is rarely profitable”. Let’s follow the plan, and remind ourselves that it is not a time to quit! 

That means even in the worst of times, the NFT space can be unreal and uncorrelated. It is not necessarily true for Bitcoin and Altcoins. Why? Because the valuation is not derived from inherent value. Please do not feel confused. Let me explain.

We invest in Bitcoin because of its appeal as a quality asset that has high liquidity, trust, and history. The speculative nature is commonplace, and we need not worry about that, at least for now. But NFTs are artworks that communicate to specific sections of society. It gives the owner prestige, joy, purpose, and a sense of ownership.

Market Stats

Since the downturn in May, sales volume seems to have found an equilibrium. It has almost flattened since mid-June ranging between $21 billion - $23 billion. Nevertheless, August year-on-year figures are not so rosy. Because August 2021 was the peak month for NFTs. Anything that looked cool was sold for an ETH pretty effortlessly. But, let us face the truth, we are nowhere near those highs, and it is unlikely that such volume can come in anytime soon. 

Are Traders Bored?

The Holders v/s Traders chart does not induce confidence. In the last seven days, traders' numbers are down nearly 24%. For the sake of volume, let us hope they are on holiday. 

Buyers are down too, but that connects with the market conditions. Sellers are desperate for liquidity amidst many collections turning illiquid. Desperate sales call for YOLO buys. Yes, it is an excellent opportunity to accumulate projects you missed the last time. $ETH and $SOL are cheap too, adding a cherry to the top.

Are Solana NFTs Doomed?

We already know that Ethereum NFT volume dwarfs Solana by a margin. Magic Eden’s weekly volume of nearly $33 million is inconsequential compared to OpenSea. But what interests me is the user count. The week-on-week Solana NFTs users are steadily growing. A 20% increase from the last week is impressive, especially in harsh market conditions. Presently, Magic Eden has 108K users, and a 20% uplift means 21K additional users. I think the active user count is a good metric to gauge the health of Solana NFT space rather than its volume. Volume does matter, and ImmutableX has overtaken Solana in terms of volume.

Does ImmutableX threaten Solana's cheap NFTs image? It just might!

Bluechips - What Is Next?

Bored Ape Yacht Club (BAYC) NFT collection is trading at 79ETH. Otherside is at 1.8ETH, with Moonbirds and Doodles at 12ETH and 7ETH each. 

These blue chips are down 50 to 75% from all-time highs a few months ago. Logically speaking, only a strong catalyst can push them back to respective all-time highs and beyond.

1. The upcoming ETH merge could be such an event. Firstly, it can fetch attention to Ethereum, and secondly to Layer-2s. Layer 2s are much scalable and cheaper than Ethereum. 

2. Another catalyst could be a web3 platform like OpenSea or MetaMask releasing a token. It can pump some free money into the community.

3. Institutional interest is another potential catalyst that can pump all NFTs. However, this is unlikely to occur anytime soon.

Unique Making Moves

Unique Network has acquired CryptoPunk #3042 to make the original NFT collection accessible to everyone. It is a signature move and also revolutionary. Unique wants to project blockchain interoperability and universal accessibility. I will go deep into these topics some other day. 

Back to the topic, the best thing is you can sign up for a share of Punk #3042 for FREE. 

Visit https://unique.network/punk/ and connect your Metamask wallet. Follow the on-screen instructions to complete the registration.

Interestingly, once addresses claim a fraction of Punk #3042, there will be significantly more owners of the single Punk on Polkadot than the entire 10,000 original Punks on Ethereum. Fascinating is the word to describe the possibilities of NFT fractionalization. 

Also, Unique Network plans to fractionalize the ownership of one of its flagship projects - Substrapunk NFTs. Inspired by CryptoPunks, Subtrapunks are the first NFTs on the Polkadot blockchain. 

That's a wrap for this week!

We have entered a whole new market led by Ethereum and Solana. Both have gained throughout the week, thanks to the merge date announcement. Also, the macroeconomic conditions were instrumental in deciding the price action. CPI numbers invoked a positive reaction, and the NFT market has considerable volume now. Although the numbers were encouraging, they are still remarkably high. Given all the positive sentiment, surprisingly, we are not seeing the surge of volume that usually accompanies confidence.

OpenSea's daily volume is just shy of $30m. It is important as $30m remains the highest number for the past 30 days. Market cap is also up 5.24% month on month. In the last NFT weekly, we discussed how August is a favorable month for NFTs.

Consistent Transactions

Transaction count maintained an incredible start to August but has failed to reach the momentum of July beginning. In defense, there are a few more days to go until 1st half of August. There is no doubt that if the positive sentiment stays, the relief rally will have a bit more room to grow. Confidence usually comes back when traders realize there are bargains in the market. Perhaps it might be late for them, but that is the game we all play! Take calculated risks, and accept profits or losses.

Best of the best take advantage of the opportunity, while beginners look for exit liquidity. On a more serious note, most collections are not liquid now. It is a fact, maybe an ugly fact as well. But it is counterintuitive also. Why would someone buy an NFT to exit in a hurry?

If your reason is

1. Utility - ask yourself; has the utility disappeared?

2. Community - is the community inactive?

3. Art - is the artwork not appealing anymore?

4. Flipping - Now we are talking, let's focus on flippers and traders.

What problems do flippers face or are likely to face?

1. Liquidity

2. Rug (DYOR is a joke)

3. Floor drops

4. Your NFT isn't rare, but a random piece of garbage.

5. Your influencer dumped on you.

While I do not have the final solution to all these bewildering, confusing problems, let's tackle them one by one.

1. Liquidity

Wassies is a trending collection in OpenSea. It has a 0.5 ETH floor and 9.5K ETH volume. A total of 12.3K NFTs held by 2.5K wallets.

OS throws all these data at you, making you believe that this is a pretty good collection to trade.

But what is the reality? Let us inspect the all-time sales activity. Hmm.. the sales seem okay, and the floor continues to hold. But what about the volume? Then you look at the little blue lines in the chart, but there aren't any after April. But when you hover over a particular day, you can see the number of sales range in 1-3.

However, there is no point in accusing the collection if the sales are low. It could be due to the bad market conditions. Or the holders belong to the elite diamond hand category. To avoid confusion, you filter the collection with the listings parameter. You can see that many holders have listed their NFTs (to sell), but nobody is buying them!

The takeaway is straightforward. Check sales and listings before you decide to flip an NFT.

We will discuss the second problem - rug, next week. How to avoid rugs, how to identify rugs, and finally, how to confirm you got rugged!

Top 5 Collections

NFT space moves at a fast pace compared to other arms of the crypto market. For the first time in a while, we see new entrants in the Top NFT Collections. The Bored Ape Yacht Club has moved out of the Top 5. However, the OG bluechip, Crypto Punks remains in the Top 5, from last week. We have three new collections in the Top 5.

RareApepe YC is an unholy mixture of BAYC and RarePepesa. This degen collection has certainly sparked interest among the community.

Webaverse Genesis Pass allows holders to participate in The Upstreat open metaverse. Holders get to claim a parcel of land and future airdrops.

We also have Moonbirds re-entering into the top 5. There is a lot of fud surrounding the collection as it recently transferred to a CCO license. Anyone can now utilize Moonbirds NFTs without any copyright limitations. A bold move for sure. Holders who invariably hated the idea have sold to entry liquidity for the supporters. The volume has gone up more than 200% since last week.

What Is Derisk?

Derisk is a user-friendly tool that calculates the actual profit of selling an NFT, factoring in gas, royalties, and marketplace fees. It saves a lot of time if you flip too often. Having an idea of the breakeven price can be helpful too.

https://www.derisk.tools/

NFTInit

The NFTinit profit calculator is a more advanced tool to calculate the profit/loss with even more features to play with.

In the bear market, too many people are selling for a loss. It is not because they sell for an amount lower than entry. Unfortunately, most people fail to factor in all the costs.

https://nftinit.com/nft-profit-calculator

And that’s a wrap for this week’s NFT outlook - see you next week!

But does crypto pose a challenge to the global energy infrastructure? Or are we slow to fathom the idea of galactic species?

Let me clarify something beforehand. Through this article, I am not trying to validate bitcoin because it needs no validation at all. Nor am I trying to support it because it desires no support either. Bitcoin is simply a mathematical beauty. Whether it can become a global reserve asset is a debate for another eon!

International Energy Agency (IEA) is the global leader in energy studies. Their primary energy supply data compares the energy output in 1979 and 2019. What changed in 40 years? 

Firstly, the world is still predominantly dependent on coal and oil for its energy needs. Both contribute to more than 50% of the global energy supply! While the share of renewable sources is less than 10%. 

So let's respectfully reject the conspiracy that Bitcoin precipitates a global energy crisis. 

The overall renewable energy adoption has been increasing at a slower pace. The World Bank data shows the population has doubled in the last 40 years. At the same time, the global supply has increased by 150%. But the demand outgrows the supply, and we can not hold Bitcoin responsible for the same.

Yet, Bitcoin is forced to wear the shame for existing!

In this article, let's focus on three things.

1. the global anxieties about the energy drain

2. need for Bitcoin to embrace the new age dilemma of Energy Efficiency

3. Kardashev scale and the future of humanity.

What Is Kardashev Scale?

Kardashev scale is the measure of consumption of energy in each progressive stage of human development. In other words, it quantitatively outlays the idea of the amount of energy a civilization can harness for its growth. We will discuss this in simpler terms later in this article.

Humans, the protagonists, can utilize the energy on Earth and from the Sun (Solar Energy - to some extent). But during a population explosion, the need for energy grows exponentially. In that aspect, Blockchain is an experiment in the right direction. Is it wise to halt and abandon what we achieved with crypto? Or should we look for other solutions?

First, let's dig into some facts on Bitcoin's energy usage. As Bitcoin uses proof of work, it is ideal comparing its energy usage with an existing system, fiat money. Be it Pounds, Dollars, or Yuan: it takes an average of 4.4 KWh for a nominal number of transactions, say 100. At the same time, Bitcoin can accomplish the same number of transactions under 1KWh!

Assuming the technology maintains its momentum, one can see that, 

• The number of Bitcoin users will increase.

• The number of transactions would grow linearly and substantially.

So why this impressive yet complicated theory is relevant for cryptocurrencies as a whole and Bitcoin in particular? The same question can be an answer to the current turmoil faced by Bitcoin & Co.

Kardashev - Type Of Civilizations

Nikolai Kardashev is a Russian astrophysicist born in 1932. He lived his childhood during the age of the Great depression. Essentially, his theory is deeply rooted in the growth and evolution of humans as a species.

Kardashev talks about three men or three civilizations. For ease of explanation, we can call them Bob, Paul, and Steve.

Planetary Civilization

Bob is a planetary man. He can use the energy confined within the planet, like Coal, Oil, Gas, etc. He can survive as long as these energy sources are readily available. However, his progress is restricted by limited and exhaustible resources. Currently, most of us are Bobs, the earthly creatures.

Nevertheless, some of us are semi-Pauls. Why semi? Because we have progressed from Bobs but not yet evolved to Paul. In other words, we are maturing into Paul slowly. 

Stellar Civilization

But who is Paul? Paul is the stellar man who can use the planet’s energy and the energy of the planetary system associated with the star, the Sun. You might wonder, the world has Solar panels, so how are we not yet Pauls? Earth receives an average of 257 Trillion kWh of energy daily from the Sun. That figure is roughly one-fourth of the Shiba Inu Total supply. The global energy demand in a day is around 277 Billion kWh. That means Sun alone gives a thousand times the energy needs of humans! Imagine what the human race can achieve with that level of energy!

Galactic Civilization

Okay! For now, let us leave Paul and those bulky numbers behind. Steve is the smartest and most highly evolved of them all. He is the galactic man who can use the energy of the whole Galaxy itself. That figure is roughly 10^20 times the energy needs of Earth, not just humanity. 

So the ultimate question comes to us, are we in a pole position to become Paul, the stellar man? In my opinion, we are ready, and the growth of technology will determine the fate and future of our civilization.

To make Bitcoin sustainable in energy governance, we need to embrace sources that are renewable in the true sense. Let me put this into perspective. A single bolt of lightning can power a city for a day, and there are at least 40 bolts of lightning occurring each second. Here is the opportunity to leverage alternative, renewable energy sources. Currently, hydropower is the most widely used, and solar energy might take the first place sooner rather than later. 

Conclusion - Who Are We?

Perhaps it is too early for Bitcoin or a digital currency to become the reserve asset. Maybe some decades from now, people will look back at us and wonder how we used a piece of paper and hold it as something so valuable. How could we let some people print as many as they want to finance their illusions? Also, how we repeatedly reinforced the story of money and complicated financial systems. Yes, paper money is just another fictional story the whole world chose to believe. 

Back to the Kardashev scale, if the civilization wants to evolve into a galactic species, it is critical to have a positive outlook toward Bitcoin and other cryptos. And sometimes, it is incredible to hope for this abundance, although we have just 21 million of them!

So, What Is Tornado Cash?

Tornado cash is a crypto anonymity enabling service. But isn't it inherent in the very concept of crypto? Not really. With the expansion of on-chain analysis, anyone with a basic blockchain understanding can figure out the entire history of funds. Tornado cash solved this problem with its unique capability to conceal the transaction details of the sender. Basically, you can send some money to Tornado cash and receive it in another account. That too from a source that can not be mapped to you. Fascinating, isn't it? Tornado cash achieves this by mixing several transactions it receives from users. As it is part of the Ethereum ecosystem, thanks to its highly decentralized nature, freezing assets is not likely. Although, Binance and Circle have frozen assets of wallets that were part of any illicit activity. 

But What Is The Reason Behind The Recent Sanction?

Technology, by and large, benefits people with awareness and understanding. But this does not imply it can not be misused. 

US Treasury Department says that Tornado Cash has laundered $7 billion worth of crypto in the last three years. Moreover, it was leveraged by hackers to legalize their crimes too.

1. North Korean Hacker Group (Lazarus Group) has used Tornado cash to launder $455 million.

2. Tornado was instrumental in covering the tracks of the Harmony bridge exploit.

3. Most recently, the Nomad bridge hackers also used Tornado cash to divert $96 million.

Unsurprisingly, the US government sees Tornado Cash as a device to facilitate cybercrimes and terrorism financing. But Tornado cash had initiated a wallet flag system some months ago. The system helped on-chain detectives and agencies to filter out the bad actors. 

What Are The Implications Of Sanctions?

1. Properties of Tornado cash in the United States are blocked. 

2. People who own more than 50% of the assets of sanctioned persons are also blocked.

3. US citizens are prohibited to use Tornado Cash.

   In short, for common users, the only implication is that they can not use Tornado Cash. The DNS is also banned. Is there an alternative? Yes, https://blendar.io/ is your answer.

However, there is a catch. The OFAC is closely monitoring Blender.io too. However, Blender allows only Bitcoin transactions and charges a 0.6% to 2.5% service fee for each operation. 

** **

Stablecoins, A Lot Of It

In crypto, there was no single market influencer other than Bitcoin and probably Ethereum. While the market went to hibernation mode, short-term holders and some institutional players exited the market en masse. But in this bear market, things are different. Nevertheless, many short-term holders left the crypto space out of panic due to strangulating regulations. Still, many players remained here, storing their wealth in stablecoins. 

In November 2020, tether had a $17 billion market cap, and circle USDC had a $2.8 billion market cap. These were the only stable coins in the top 15. $USDT ranked third, and $USDC ranked 12. At the same time, bitcoin was near its 2018 Bull market top and preparing for a parabolic bull market.

A year before, in August 2021, we had an entirely new market structure. Bitcoin had retraced from 64k, and the investment atmosphere was slightly negative.

Tether remained at the 3rd spot, with a $62.5 billion market cap. It is an increase of 260% in 10 months. But it was the new players who made significant progress.

USDC by then occupied rank 8 with a $27.8 billion market cap. Out of nowhere, BUSD came into the race and was occupying a market cap of $12 billion.

Surprisingly, UST and LUNA were out of the picture.

This new market structure communicated three points.

1. The growing trust in the crypto market 

2. Investors want to park their funds in crypto even when not investing.

3. There can be multiple stablecoin champions, even for different ecosystems.

These three factors were crucial in the 2021 November rally. 

Today, on 8th August-2022, USDT, USDC, and BUSD are in the top 10. Does that mean there is a lot of buying power in the system? Yes! 

When these buying walls be activated remains to be a hot topic. Last week, we discussed the market forces and their little game of finding balance. The same story applies, as there are very few changes in the macro environment. Feds can print more money and trigger another inflation wave. 

It is perhaps the best hopium shot for a bull market in a short time.

Who Are Left To Buy

Since crypto has a lot of stablecoin reserves, that essentially points to a lot of buying power. An on-chain indicator sheds more light on the status of stablecoins. 

Exchange Inflow in Stablecoins is the number of stables flowing into the exchange wallets. On the other hand, exchange stablecoin outflow is the number of stables leaving the exchange wallets.

Now, stablecoin inflow and coin inflow are two different concepts, and that's why they have entirely different outcomes. In short, when the exchange inflow of bitcoin goes up, it may lead to a downtrend. But when the exchange inflow of stablecoins increases, it signals a reverse of the downtrend or slowing of the bear market. 

Firstly, let's consider the status of the exchange outflow. The exchange outflow in stablecoins has been relatively stable since 2020. The matrix had regular ups and downs throughout the years. 

However, in 2022 May and 2022 June, there were two big spikes in outflows.

The May spike coincides with the Luna - UST crash. Many people had to withdraw their UST from exchanges to swap for another stable asset. Some centralized exchanges experienced a liquidity crisis, aggravating the issue. 

The spike of June 2022 is, however, more organic and fascinating. It implies many players (short-term and long-term) withdraw their funds from exchanges. Why? 

It is probably because of Kucoin FUD, Indian Taxation, and other global events like WHO announcing monkeypox as a health concern.  

The spike signaled a few things to the general market.

1. A chunk of buying power has left the market, and there is no point in waiting for lower levels.

2. The fear in the market has reached the maximum pain level. 

3. People who expected 15k have bought at 18k already. Even if Bitcoin goes to 15k, they do not have the interest to buy.

Winners And Losers

Arguably, BUSD was the winner of the bear market. It not only went up in volume but also in the number of users. Binance strategically removed UST, and the USDT FUD helped BUSD to find stable ground. Although the daily volume of USDC is five times that of BUSD, it is one of the most trusted in the space. More on this later.

UST lost the narrative, lost the peg, and eventually lost its place. Along with it, the scope of algo stablecoins has taken a hit. Maybe when regulators come hard at stablecoins, decentralized stablecoins will have a revived interest from the crypto community.

With that in mind, who stands as the winner of the bear market among the investors? Of course, it is the people who did DCA in the difficult times, along with long-term holders. The exchange inflow in stablecoins confirms this idea.

Since November 2020, the exchange inflows of stablecoins have been on the rise. It added more and more buying power and more volatility to the market. More investors came to the space, and crypto became a hot topic among traditional investors.

The January 2022 crash accelerated buy the dip events. Investors deposited large sums of money, which explains the first peak. The May crash also saw increased inflows, which acted as a buying wall for bitcoin. These were whale buyers. Finally, towards the end of June, there was another spike. It points to extensive buying from whales and the bear market bottom (hopefully).

In July and August, the inflows have reduced by a magnitude. The weekly moving average is now at 2021 January levels (relatively, not exact). If everything goes well, Bitcoin can oscillate between 24k and 20k for some more months before another eventful bull market.

Asset Transfer

The weekly asset flows are an excellent tool to check whether the inflows and outflows are intra-web3. At present, web3 is not an isolated area. It is closely linked with the web2 world and its financial system. Also, hoping for a perfectly detached scenario is too much hopium.

The asset flows tell us that since July, the net asset transfer has been positive for crypto. That means more investors are transferring money into crypto, and fewer buyers are withdrawing money from crypto. It reassures the healthy state of the crypto assets.

However, investors are better off if they don't interpret the signs of reduced outflows as a pre-bull run condition. In other words, we are still in a bear market. We can sigh that the most tricky times are possibly over. But, a more conducive bullish environment is still far-off.

NFT volume remains low on OpenSea. Blue chips, art projects and some degen-free mints amount to maximum volume. Despite the macro conditions, crypto is holding relatively well so far. 

Although the volume is significantly lower than January highs, August seems more stable than previous months. July also saw a slight uptick in market cap growth, essential for the space.

User activity did not drop below 20k in June, but at the same time, it struggled to break beyond 30k. The chart tells us that more sellers exist than buyers at this point, in line with crypto as a whole. However, what is concerning is the lower lows for both buyers and sellers. It looks like the NFT space is trying to find a bottom before any significant relief rally.

Solana In Focus

Ethereum continues to attract the highest trading volume. However, Solana has become a force to be reckoned with. The NFT space on the Solana blockchain continues to grow. Many OGs see the Solana space as a cheaper alternative to Ethereum NFTs. That is debatable; however, transacting on the Solana blockchain is cheaper and faster. 

As the NFT marketplace continues to merge and grow, Magic Eden is implementing Ethereum NFTs into their marketplace. To kick things off, a project called EZU - will be the first ever cross-chain mintable Ethereum NFT collection to launch on the Magic Eden Launchpad. EZU will be available to mint in $ETH or $SOL. Without a doubt, Magic Eden is bridging the gap between the two of the largest NFT blockchains. Innovative, right? It is certainly bullish for the NFT space.

https://twitter.com/ezu_xyz/status/1554498771689836544

NFT Collections Check

OpenSea continues to be the most dominant platform in volume and users. All top 5 collections belong to the Ethereum ecosystem. 

Crypto Punks and the BAYC both enjoyed a positive week. But MAYC and Otherdeeds had a fall in interest. The odd one out is The Potatoz collection, an extension of the Memeland ecosystem. Even with a recent pump, Potatoz is still down around 35% across the week.

https://opensea.io/collection/thepotatoz

Notable NFT project - Ledger Follow-Up!

The famous hardware manufacturer of crypto wallets is in talks to raise an additional $100m. A crazy figure, especially in such bearish times. But with hacks and security issues on the rise, there is a demand for better security. In addition, Ledger is miles ahead of its competitors. Valued at $1.5b in June 2021, this additional funding could take the company above $2b. With 5 million customers and a recently launched NFT collection, now could be the best time to get in on the action.

They have promised a physical ledger to customers who purchase and hold a Ledger NFT. With a snapshot rumoured to be in November, there is still time to pick it.

How To List NFTs on Multiple Marketplaces

Did you know that you can list NFTs for sale on OpenSea, X2Y2 and LooksRare, at the same time, using gem.xyz in a very easy-to-follow process?

1. Go to https://www.gem.xyz/sell and connect your wallet.

2. Select the NFT(s) you want to list

3. Select the marketplaces you want to list on and the price for each marketplace (or list for the same amount)

4. If you have never listed on the other marketplaces, you have to initialize your wallet so that the smart contract can access your wallet.

5. Approve the item for sale (you have to pay gas for every marketplace when you are listing the collection for the first time)

6. Sign the listing for every marketplace

7. Gas for listing is low, and having your NFT listed on more marketplaces increases the chances of a sale. However, marketplaces have different fees. OS takes 2.5%, LooksRare 2%, and X2Y2 0.5%. It can make a notable difference in the profits you are making.

Well, that’s a wrap for the week.

But did Bitcoin hit the bear market bottom already? An on-chain indicator says so. Net Unrealized Profit shows some variations in the movement that historically has pointed to a local bottom. Market forces are back to normal levels. When the bullish momentum and the bearish activity fade together, we get confirmations of organic price discovery. 

The market may have been slow this week, but conditions are heating up. Ethereum opened at around $1,355 and touched a high of $1,785. This marks five consecutive weeks of green candles. With this in mind, July’s NFT volume looks to close higher than June’s. In terms of volume, much of July has remained above $30 million per day. Market cap is also making higher highs in line with Ethereum's recent run of green candles. Everyone seems to be in a buoyant mood. Some collectors are hoping for NFT August, with a view of a re-run of last year's NFT hype. We will have to wait and see whether the volume can come in.

However, current macro factors can affect Bitcoin as well. Revenue and Profit Reports of major tech companies and GDP growth rate with Inflation data can give us more clarity in the coming weeks.

Tips from the Market

• On any pullback, adding some quality high caps and mid caps might be a good idea. 

• It is better to stay away from low caps because the extent of the bear market can be brutal to low caps. 

• Either way, having some Ethereum exposure, be it ETH itself or scaling solutions looks attractive now, as the mainnet is approaching.

• On the other hand, as ETH 2.0 might not be able to solve the high gas requirements of Ethereum, Layer-1 alts can once again come to the center of attraction!** **