State of the Market #82



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Market Summary

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Ecoinometrics - Market sentiment


If we break down the addresses on the Bitcoin network by the number of coins they control, we can use a scale that goes from small fish to whales:

- Addresses controlling less than 1 BTC (small fish).

- Addresses controlling 1 to 10 BTC.

- Addresses controlling 10 to 100 BTC.

- Addresses controlling 100 to 1k BTC.

- Addresses controlling 1k to 10k BTC (whales).

So as an example, if we see that the addresses controlling less than 1 BTC are accumulating coins in aggregate, we can interpret it by saying small fish are bullish on the market.

Now of course there are some caveats. First, this approach does not tell us who controls what. We are working with addresses, not entities.

For example, all else being equal, a whale might decide to move coins to a small address they control and we would see something that looks like an accumulation for the small fish. In fact, it is just some reorganization that might need to be interpreted differently. But for big enough moves we should be able to spot those kinds of transfers by observing some offloading on the whale’s side. As long as we are careful this can be sorted out.

Second, we also need to be mindful of the fact that not all buckets contain the same amount of coins in aggregate. E.g. as of today whales control about 5m BTC while the small fish only control 1m BTC. That means we need to be careful when comparing percentage changes between different categories.  A 1% accumulation in the whale’s category is 5 times larger in BTC terms than a 1% accumulation in the small fish category.

See the breakdown below.

Jack Dorsey hopes bitcoin will help bring about world peace


Elon Musk, Jack Dorsey, and Cathie Wood, CEO of ARK Invest, sat down to discuss cryptocurrencies during the virtual event "The B Word", in which each one gave their expectations about crypto. The event, which was created to promote the acceptance and institutional use of cryptocurrencies, fell right in the middle of a downturn in the crypto world. 

What was said:

Musk still has bitcoin in his sights, assuring that Tesla has not sold their position and that even SpaceX has some on its balance sheet. He also mentioned that he personally owns BTC, ETH, and, to no one's surprise, DOGE. He also said that he is closely monitoring Bitcoin's energy use and that he has seen a "positive trend" towards renewable energy. 

Wood said he believes BTC will one day be much more "environmentally friendly" than gold mining and traditional financial sectors. However, the biggest fan of Bitcoin at the event was certainly Jack Dorsey, who said: "My hope is that it helps create world peace"... Not asking for much, huh.

FTX raises largest-ever VC round for a crypto company


FTX, a Hong Kong-based cryptocurrency exchange that launched in 2019, raised $900 million in Series B funding.

The new funding values the exchange at $18 billion, and it's the largest-ever VC round for a crypto company. 

The latest financing round emphasizes the recent trend of investors flooding into crypto trading. According to Pitchbook, since the start of 2021, VCs have invested over $7.3 billion in nearly 670 crypto startup deals. This figure is already higher than the total for last year.

Dfinity Faces Class-Action Lawsuit Claiming ICP Token Is Unregistered Security


Resident of California, Daniel Ocampo filed a complaint on July 15 of 2021 targeting Dfinity’s founder Dominic Williams, Polychain Capital, and venture capital firm Andreessen Horowitz for selling its native Internet Computer Project (ICP) token as an unregistered security. Unregistered security is when security does not have a registration statement filed with the Securities and Exchange Commission (SEC). It is important to note that Bitcoin is not defined as a security by SEC Chair Jay Clayton but ICP is. 

Dfinity is a blockchain smart contract platform that aims to provide decentralized cloud computing which could potentially transform killer apps like Whatsapp, Linkedin, and Uber. The ICP token is to be used as a governance tool to pay for transactions fees within the network and also reward users who interact with the Dfnity platform. ICP was listed on Coinbase Pro on May 10 but since then has been extremely volatile with a 90% crash in the first month. Crypto Intelligence firm Arkham published a report identifying that approximately $2 billion ICP tokens were transferred to cryptocurrency exchanges by “probable insider addresses”, which coincided with the notable drops in ICP’s price. The lawsuit by Daniel claims that 469,213,710 ICP tokens that were made available during ICP’s launch event were “created out of thin air” and sold in violation of the 1933 Securities Act. The lawsuit also alleges that 24% of the supply of ICP tokens were given to Polychain and Andreessen Horowitz. The report and the class action suit concluded that Dfnitity has not been clear enough about the allocation of its ICP tokens. This caused a huge profit for insiders while leaving out the small investors and avid supporters of Dfinity.

Chart of the Week

Currently, Ethereum controls roughly 77% of TVL in major platforms, a drop of more than 20% compared to levels five months ago

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Texas Blockchain’s ‘State of the Market’ is a student-led editorial. None of the views expressed by the authors should be taken as the view of the University of Texas at Austin or the Texas Blockchain organization. Furthermore, none of the views expressed should be taken as financial advice in any circumstance.