The Week in Charts: Issue #45
The charts and themes from the past week that tell an interesting story in crypto and investing…
1. So Far So Good
Two weeks have flown by since the historic launch of spot Bitcoin ETFs, and the dust is starting to settle. In my last issue, I discussed a fee frenzy and unprecedented seed funding but cautioned that long-term success would hinge on one crucial factor: assets under management (AUM). This week, we'll dive deeper into the AUM battlefield, where the true crowns of "winner" will be forged.
Remember my prediction? A power law distribution, where a few titans rise above the rest. And boy, was I right (at least for now).
Grayscale, with its decade-long head start and hefty $20+ billion in AUM (excluding other GBTC products), remains the undisputed king and is excluded from the analysis. But the battle for the #2 spot is heating up, with BlackRock's iBIT and Fidelity's FBTC neck-and-neck at $1.9 billion and $1.8 billion respectively. Together, they've gobbled up 70% of the total AUM (excluding Grayscale), proving the allure of established financial giants in the crypto arena. However, it's important to peel back the layers. When we exclude Grayscale's mammoth presence, the combined AUM of the remaining ETFs explodes to a staggering $4.47 billion. This translates to a remarkable 0.54% of the current Bitcoin supply, highlighting the growing institutional weight entering the space.
Now, here's a stat that truly blows your mind: BlackRock and Fidelity, in just two weeks, have amassed a collective 132,000 BTC, surpassing 70% of MicroStrategy's legendary 189,000 BTC holdings. Talk about a power shift! These numbers showcase the insatiable appetite of traditional financial players for a slice of the Bitcoin pie.
So, where do we stand after two whirlwind weeks? The AUM narrative has solidified itself as the key metric to watch. BlackRock and Fidelity are making a serious play for dominance, while Grayscale maintains its untouchable lead. Meanwhile, the sheer volume of institutional inflows paints a vibrant picture of a rapidly maturing Bitcoin market (we saw inflows of $1.6 billion this week alone).
2 Modularity Winning
Early this year, Lyra Finance migrated its Data Availability (DA) layer from Ethereum to the significantly cheaper Celestia network. This strategic shift, evident in the above charts showcasing a dramatic rise in sequencer profits, is a harbinger of a larger trend poised to sweep the industry in 2024: the mass exodus of rollups from Ethereum's costly DA infrastructure towards more affordable alternatives like Celestia and EigenDA.
This shift promises a win-win scenario for all stakeholders. Rollups can slash their operational costs, leading to increased sequencer profits and, consequently, more revenue flowing into the DAO. Users benefit from cheaper fees and faster transactions. And the broader crypto ecosystem witnesses a healthier, more diversified DA landscape.
Lyra Finance is not alone in this pioneering venture. Manta has already made the switch, and just this week, Aevo boldly announced its own Celestia migration. This domino effect underscores the undeniable appeal of Celestia's cost-effectiveness and scalability, factors that are proving irresistible to rollup developers seeking to optimize their operations.
As rollups continue their flight from Ethereum's DA clutches, the "Ethereum alignment debate" is bound to resurface. Should rollups prioritize security by remaining tethered to Ethereum's expensive DA layer, or should they be free to pursue cheaper, independent solutions that ultimately benefit their ecosystems and the wider DeFi community?
Only time will tell how this debate unfolds. But one thing is certain: The above discussions are going to be had.
3 “Tenks for playing”
Remember Friend.Tech, the platform that once sparked a Twitter key trading frenzy? It seems the party's over, with a recent crash bringing daily transaction count down a staggering 99% from its peak just four months ago.
For those unfamiliar, Friend.Tech allowed users to buy and sell keys associated with popular Twitter accounts, offering a novel, if controversial, way to monetize online identities. I explored the potential and pitfalls of this trend in a research piece last year here. While I leaned towards a cautious outlook in my analysis, even I must confess surprise at the speed and severity of Friend.Tech's descent. In four short months, it's gone from a hot potato to a lukewarm afterthought.
However, things usually don't go down without a fight in crypto. Is Friend.Tech's story truly over? Could it rise again like a phoenix from the ashes (much like Solana's recent resurgence)? The truth is, we simply don't know yet. The crypto landscape is notoriously unpredictable, and what seems like a terminal decline today could hold a hidden spark of rebirth tomorrow.
Friend.Tech's fall offers valuable lessons on the fleeting nature of hype and the ever-present potential for unexpected reversals. Time will ultimately reveal whether this is the final chapter, or merely a dramatic plot twist in an ongoing saga.
And that's it for this week.
Have a great weekend everyone.
- Passie
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