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Re7 Capital is a research-driven digital asset investment firm specialising in DeFi yield and liquid alpha strategies.
Summary
In this edition, we cover:
Market rundown and seasonality
On finding the signals among the noise:
The emerging market regime change
Sector KPIs
Summer, Summer, Summer
Crypto markets are in a seasonal chop - trading at the strong psychological level of ~$2T.
This zone was also the resistance-turned-support during the 2021-2022 period.
As author, Regina Brett says: “Summer is the annual permission slip to be lazy”.
As people take their vacations and touch grass, it’s important to find the signals during these times as the volatility coil is being wound up.
So far this year, equities have been moving bang on their seasonality trend where summer typically comes with low volatility and sideways price action.
When we head into Q4, seasonality tends to be positive for price action for risk assets.
We’re starting to see the mechanisms that could enable a positive seasonality outcome.
Take Gold where new all-time highs have been continuing to print.
It seems that Gold is sniffing out currency debasement long before most others, as it always does.
The rate of liquidity change has spiked to new highs since April 2022.
With gold generally leading BTC by 5 months and alts by 7 months, it makes for an interesting set-up rolling out of the other side of summer.
While the overhang of the Yen carry trade will remain on consensus radars, it opens to possibility of dollar liquidity injections by the US to support those selling US assets.
The dollar is looking to break its multi-year wedge to the downside - all at a time when the Yen carry trade began to unwind. Likely not a coincidence.
So what for crypto? Typically, a weaker dollar is coupled with positive periods for cryptoasset valuations - as the denominator gets weaker.
And when it comes to alts, the rate of change of liquidity can also impact alt performance.
It is also during these periods of heightened liquidity injections that we see the fastest re-rate of the altcoin market.
And this also comes after a temporary period of consolidation - a pattern we find ourselves in today.
Sector KPIs
This equally comes at a time when sector fundamentals within crypto are unchanged.
Take the flows made between ecosystems. Bridging volumes ($8b) have sustained despite the broader summer price action.
Meanwhile, data posted by apps to infrastructure (DA) layers has also sustained - now consistently hitting 20k Mib. This can be used as a proxy for growth regarding the underlying app usage on modular blockchains.
One emerging sector, Re7 wrote about in its latest thought piece, SocialFi, has also shown sustained KPIs.
Lens, an on-chain social network protocol, has seen >50k profiles be created monthly.
And those profiles are also becoming more interactive writing more content on the platforms.
Last month, 4m publications were made on Lens - beating the previous record by >30%.
So with summer chop ensuing in typical predictive fashion, a new market regime could be underway.
Yet, we’re still seeing sustained activity and growth in several KPIs cross-sector.
Whether fundamentals or macro, it’s a game of finding the signals among the noise.
Summer can be a time for the lazy but also for the astute.
You just need to know where to look.
New tBTC and wBTC vaults with Mellow and Symbiotic
Symbiotic has added wBTC and tBTC assets for restaking deposits
Re7 Labs has launched two new restaking vaults with mellow that allow users to directly stake their BTC in symbiotic:
Caps are full on most other symbiotic assets so it’s one of the only ways to get earn more symbiotic points as their delegation features are set to launch soon
Users also get mellow points and will soon be able to use these LRT in DeFi.
ICYMI - SocialFi - Are you Paying Attention?
The genie is out of the bottle.
Re7 believes that the on-chain financialisation of digital social interactions represents the next evolution of the creator economy - projected to grow 120x to $242B by 2030. Re7 is also looking to capture the opportunity better than anyone else.
Disclaimers
The content is for informational purposes. None of the content is meant to be investment advice. Use your own discretion and independent decision regarding investments. The opinions expressed in all Re7 public research articles are the independent opinions of the authors at the time of publication and not the opinions of the affiliates of Re7.
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