Zayden is currently at start-up incubator, WhatNot Studios in Bangkok, Thailand. Originally from Singapore, his inquisitive nature brought him overseas to gain experience and learn new things.
It is that same nature that got him into DeFi and Web3, often spending hours a day reading up on it. Self-proclaimed Web3 enthusiast, and investor in cryptocurrency.
Guest Author: Zayden Qu
After an exciting week that saw Bitcoin hit its 52-week high levels, we are seeing a dull week of consolidation at around $51,000 to $52,000 levels. So what’s next for Bitcoin and the rest of crypto space?
Genesis cleared for $1.3 Billion worth of sales in $GBTC shares.
Our fears were confirmed last week during the court hearing as Judge Lane approved the sale of Genesis’ $1.3 billion worth of GBTC shares to repay their creditors. Does this mean we will see a huge sell pressure bringing Bitcoin prices massively down again?
Well the situation is a little more nuanced:
- Genesis mentioned in court that they intend to sell their $GBTC shares over time with a broker.
- Payment in-kind vs in-cash
When Genesis sells their $GBTC shares for cash, Grayscale will be forced to sell their Bitcoin to the market, generating sell pressure.
- As part of the approval by the court, Genesis will be allowed to repay the creditors in-cash or in-kind.
- If Genesis decides to repay creditors in Bitcoin (in-kind):
- They will repurchase Bitcoin using the cash from selling $GBTC shares, essentially negating the sell pressure generated by Grayscale.
- If Genesis decides to repay in-cash, the cash will go back directly to the creditors.
According to the Coinbase Weekly Report, they believe that eventually the money will remain in the crypto and remain net neutral. There will be a confirmation hearing scheduled for 26th of February.
My Take: We have to wait till 26 Feb to see how Genesis intends to repay their creditors. Either way, it is negative news. If creditors are paid in-kind, they have the choice to sell their Bitcoin for a profit as well, which basically feeds the sell pressure.
However, the buy pressure from the rest of the ETFs are significantly stronger than before. I foresee that the impact of any sell pressure from Genesis will be heavily mitigated. In the worst case scenario we could see the sell pressure cause 10% retracement before going up again.
ETF flows very healthy as long as demands remains constant
(Credits to HODL15Capital on X: https://twitter.com/HODL15Capital)
Speaking about ETF flows and buy pressure, HODL15Captial on X constantly provides amazing data, do follow him for up-to-date information. From his data, we can see really healthy inflows from the ETFs and they are constantly increasing.
My Take: There doesn’t seem to be any indications that the inflows are going to slow down. If anything, it should increase. These companies are asset managers, and they obviously see value in Bitcoin. As the Bitcoin spot ETF matures and continues to show promise as an asset, they will be able to market it easily to more of their clients, bringing in rather constant inflows.
Follow the “SMART” money
(Credits to HODL15Capital on X: https://twitter.com/HODL15Capital)
What is “smart” money?
- They are basically capital controlled by professionals, institutional investors, banks etc. They have better tools, more connections, exclusive information and manpower spending over 10 hours a day doing analysis on the market.
Unsurprisingly, they tend to move first and leave the masses behind. From the table we can tell that the “smart” money (100+ BTC) is buying into Crypto, specifically Bitcoin, while the masses are selling.
My Take: “Today” and “Yesterday” columns are saturday and sunday respectively. This means the 2,489 and 1,270 BTC bought are NOT from the ETFs as they are closed.
This suggests that other “smart” money is also flowing into Bitcoin. I believe it is wiser to follow them while it is early.
Tokenization
The CEO of BlackRock, largest asset manager in the world, Larry Fink had this to say back in January this year: “I see value in having an Ethereum ETF. These ETFs are stepping stones towards tokenization, and I believe that’s where we’re headed.”
The man who founded BlackRock as a small start-up back in 1988 and guided it through the 2008 financial crisis to the pinnacle of the financial industry believes Tokenization is the future, surely it is worth understanding what Tokenization is and how we can leverage this knowledge.
What is Tokenization?
Tokenization is the process of representing real-world assets, such as real estate, art or commodities, as digital tokens on a blockchain. They are used to indicate an immutable ownership of a tangible asset.
Essentially it is a way of bringing about the benefits of blockchain onto the real world.
Fungible Tokenization
- They are tokens on a blockchain with a specific value that can be swapped around based on their value. An Example would be Bitcoin or Ethereum.
Non-Fungible Tokenization (NFTs)
- NFTs are blockchain tokens without a specific value, they represent ownership of an Intellectual property or asset that determines the value of the NFT.
Governance Tokenization
- These tokens are governing tokens that grant voting rights and collaboration on a blockchain, they are the fuel for a Decentralized Autonomous Organization (DAO).
Utility Tokenization
- Simply put, they are tokens that are used to grant access to certain products or services such as paying transaction fees. They can also be a Fungible Token
DePIN
One of the most promising and popular narratives in Crypto space at the moment is DePIN – or Decentralized Physical Infrastructure Networks. It essentially uses blockchain technology and their tokens to incentivize the building of physical infrastructure such as data storage, wireless connectivity, computing.
For example, crypto project, Render ($RNDR) is a decentralized GPU rendering platform. Artists and studios, who want to render images or videos, are able to use $RNDR to exchange for idle GPUs.
My Take: Many Crypto projects now utilize AI to fulfil their goal of DePIN. I do believe DePIN will continue to be very popular as it is a way for us to visualize the tangible benefits of Crypto and blockchain technology. Definitely an industry to keep an eye on.
