Data & Insights Recap - April 17, 2023

Unstake your claim

Source: The Block

• April 12th saw the Shapella upgrade (a combination of Shanghai and Capella) go live on Ethereum mainnet, the most anticipated change since The Merge. 
  • While the update did include some transaction fee optimizations, the main attraction was the enabling of the withdrawals of staked ether. 
• Previously, users either staked multiples of 32 ETH directly to run their own validators and, in turn, earn staking rewards for proposing and validating blocks or people used staking services to lock up any amount of ETH and have the service maintain the validators, earning a portion of the rewards earned by the all the ETH staked by the protocol.
  • Liquid staking services became a popular solution, as well, offering a liquid staking derivative token in addition to what was previously described, allowing users to still have access to funds while staking their ETH. 
  • Withdrawals being enabled now means those LSDs can be burned and redeemed for the underlying ether that was staked.
• There was a lot of speculation about what the ability to unlock all the staked ether would do to its price. Ahead of the Shapella activation, over 18 million ETH were staked, more than $36 billion at today's prices.
  • Many thought the ability to withdraw would put sell pressure on ETH, as people moved to cash out on funds they had previously not had access to. However, most people staked their ETH at a price higher than what it is now, so the desire to exit may not be that high for users still underwater. 
  • Regardless, there were limits in place to prevent a mass exodus, with only a certain amount of validator withdrawals allowed in a day. Quite the queue formed shortly after Shapella made its grand entrance, exacerbated by the fact that Kraken has to unstake their over half a million ETH after settling with the SEC.
• And we have seen a pretty steady stream of withdrawals from the Beachon Chain contract and an overall net decline in ETH staked since unstaking was enabled. 
  • However, people are still depositing, so the net change is not as negative as it could be if people did not deposit at all. In fact, there have been many hours where deposits have exceeded withdrawals, and overall deposit levels are higher than pre-Shapella.
  • Additionally, ETH breached $2,000 on the 13th, so the mass sell-off fear seems to be alleviated despite the withdrawals, which, as of this morning, exceeded 1 million ETH. 

Micro's Strategy 

Source: The Block

• I suppose there is something to say about having conviction and HODLing now that MicroStrategy was momentarily in the green from their $4.17 billion purchase of bitcoin. 
  • The company, led by now chairman and previous CEO Michael Saylor, has accumulated 140,000 bitcoin since 2020. 
  • For the most part, the firm has never sold, barring a small sale of 704 BTC for tax purposes, which it quickly repurchased. 
• The 140k threshold was reached earlier this month, following a large purchase disclosed at the end of March. 
  • The two recent purchases pushed the average purchase price of BTC for the company to $29,803. 
  • In June 2022, the prices of crypto assets began a fall that we have not really seen any strong recovery from until now. By June, MicroStrategy already had almost 130k BTC in its possession, bought at an average purchase price of $30.66k. Since June, the company has been in the red on its investments in the popular cryptocurrency.
  • However, with the recent rally, we have seen, which pushed BTC over $30k for the first time since last summer, Saylor and co can rest easy knowing the price of one bitcoin was higher than and still remains close to their average purchase price. 
  • At time of writing, BTC has slid back down below the $30,000 mark, putting MicroStrategy back in the red. However, the slip started today after remaining relatively stable at over thirty thousand last week and could be tied to recent news of the SEC going after Bittrex, shaking overall crypto sentiment. 
• MicroStrategy is the largest corporate holder of BTC by a long shot, especially after Tesla sold the majority of its initial $1.5 billion investment. 

Spot the difference

Source: The Block

• On April 9th, the 7-day moving average of spot volumes for BTC and ETH reached their narrowest gap since July 4th, 2022, at only $2.1 billion. 
  • The gap has gotten a bit wider but has stayed below $3 billion since April 6th, which is much smaller than the over $19 billion difference we saw in March. For most of 2023, the difference has been over $9 billion. 
• The huge spike for BTC in March was caused by panic selling amidst the depegging of USDC, and we see ETH also has a bump but on a much smaller scale. 
  • We can see from other spikes on the chart, like in November when FTX collapsed and May during the Terra ecosystem fallout, that increased trading activity tends to impact BTC more, with the difference in volumes between the two rising during these peaks. 
  • This is not super shocking given bitcoin is the most well-known cryptocurrency and also is the highest price crypto asset, so any volatile period in the market will turn eyes to bitcoin. 
• For most of 2023, we saw a large distinction in spot volumes break out between the two assets, regardless of whether there was an uptick in activity.
  • Year-to-date, BTC is up 83% compared to ETH's 76%, so bitcoin outperforming ether probably helped contribute a bit to the wider gap in USD pricing. Any new retail interest from the crypto rally at the start of the year was likely directed toward BTC.
  • The narrowing seems to not be tied to an increase in ETH volumes but rather a decline in BTC volumes, which have hit their lowest point since November 2020 on April 10th with only $4.68 billion in volume, despite the fact that BTC has been on the upswing this month. 
  • Bitcoin's spot-to-futures volume ratio has been dropping since mid-January, reaching levels not seen since last July, meaning that despite this slowdown in spot, people are still interested in trading BTC, but derivatives might be looking like a more attractive option. 
  • Binance, the exchange with the largest volume by far, also ended its zero-fee bitcoin trading promotion, leaving only BTC/TUSD with no fees. While BTC/USDT is still Binance's highest volume spot pair, its volumes are down significantly coming out of March. The pair put up $231 billion of volume last month but has only seen $23 billion so far in April, putting it on pace to only reach about $47 billion in volume for the pair's first full month with fees reinstated. 

Twitter trader

Source: Sensor Tower

• eToro saw itself reach the top 250 finance apps on the App Store for the first time this year on April 13th, after a spike in its ranking from 404 on the 12th to 221. 
  • While still ranking lower than many of its crypto competitors, the rise in eToro's popularity could continue following its recently announced partnership with crypto's favorite social media platform, Twitter.
  • The partnership will allow users to buy and sell crypto and stocks in the Twitter app through a button that says "View on eToro" and will then lead you to eToro's site to trade. 
  • The plan seems to be part of Musk's greater ambition to make Twitter a "super app" that goes beyond just social media, with this most recent step increasing its financial capabilities. Musk has hinted before that crypto payments through Twitter were also a consideration, although as of late, those plans seem to be tabled. 
• On the Google Play store eToro actually saw its ranking in the finance category slide 19 spots on the 13th but has more recently seen a slight upswing. 
  • On the App Store, since eToro's initial spike on the 13th, the app has now been dropping in rankings, currently sitting at 327. While it has fallen over 100 spots since Thursday, it still is higher than it was prior to the announcement.

De-parting from Solana

Source: The Block

• At the end of 2022, the teams for both DeGods and y00ts, two of the most popular NFT projects on Solana at the time, announced they would be migrating to Ethereum and Polygon, respectively. 
  • Both collections were created by Rohun Vora, who is better known as "Frank Degods" on Twitter. 
  • The news of the change came at a time when the Solana ecosystem was in a tight spot after the collapse of FTX, given the chain's close connections to the exchange and SBF. 
• The end of Q1 saw DeGods actually move over to Ethereum, with the token contract deployed on March 30th and an announcement made to Twitter on April 1st. 
  • The first full week of trading volume, from April 2nd to April 8th, saw $7.24 million in volume on Ethereum, which is higher than any week of volume the collection saw on Solana, which had reached a peak of $7.02 million.  
  • However, this past week saw volumes fall to just $3.6 million, falling by slightly over 50%. The number was still relatively high compared to old numbers on Solana, though. 
  • The large drop-off is indicative that the high volumes initially came from hype around the migration. Time will tell whether volumes will continue to be comparable to those on Solana. 
  • Moving forward on Solana, a 33.3% royalty fee will be enforced, compared to a 0.33% fee on Ethereum, seemingly to discourage too much trading of the collection on the old network.