Dehydrated poster: Glassnode says arbitrage trading limits Bitcoin price rise

Highlights of this issue :

1. This round of copycat season ends early

2. The conflict of interests behind LayerZero’s anti-scam mechanism

1. Axel (@AxelAdlerJr): Investors remain optimistic

Growth Rate shows the difference between changes in Market Cap and Realized Cap. Positive values ​​suggest MC is growing faster than RC, indicating investor optimism.

Thresholds >0.002 indicate an overheated market likely needing a price correction. Now = 0.001.

(Translation: The growth rate reflects the difference between BTC market value and realized market value. A positive difference means that the market value is growing faster than the realized market value, which indicates investor optimism. When the threshold is greater than 0.002, it means that the market is overheated and the price may pull back. Currently it is only 0.001)

2. Dayu (@BTCdayu): When will the altcoin bull market come?

At 312:00, the total market value of Bitcoin was 4T, ETH was 0.6T, other altcoins were 2T, and stablecoins were 0.04T;

The top 21 players in 2021 are: Bitcoin 62T, ETH 27T, other 52T, stablecoin 1T

It can be seen that there has been a huge increase from stablecoins to coin prices, a physical bull market, and a big victory for coin hoarders.

Currently: Bitcoin 69T, ETH 22T, other 35T, stablecoin 1.1T

in conclusion:

(1) The current inflow of stablecoins is comparable to the bull market in 2021. If there is no large amount of new inflow, it will be enough to support a coin price comparable to that in 2021.

(2) The total market value of Altcoin is now slightly lower than that of the previous round, but considering the current clever low circulation and high release of altcoins, the difficulty of rising will be greater than in 21 years - you buy in order to double your money, and he sells it to make a hundred times the money on the spot.

(3) Overall, ETF buying is based on sentiment rather than substance. The size of the crypto is already very large, and the impact of the ETF's hundreds of billions of funds in a few months on the overall market trading volume is far less than that of Grayscale back then.

(4) The large-scale external money injection has not yet come, but it will come; therefore, there will be a violent copycat bull market, but it may not be as sudden as it is now. The most ideal situation is that the starting price is lower and lower, and the lower it is, the better.

(5) Perhaps one scenario is that the price of cottage industry stocks is low enough, coupled with a future interest rate cut, to trigger a surge at some point in the future.

3. Tom Dunleavy (@dunleavy): Retail investors haven’t come back yet

Youtube views for popular crypto shows with BTC at $70k:

● 2021: 4,000,000 views/day

● 2024: 800,000 views/day

Retail still isn't even close to back

(Translation: When BTC reached 70k, the number of viewers watching crypto live broadcasts on Youtube: 24 years was only 1/5 of that in 21 years. Retail investors have not returned yet.)

CryptoChan: LTH/STH indicator suggests Bitcoin has not yet reached its peak

The indicator has now dropped to 0.5606, which is 0.5605 on December 8, 2020 and 0.5605 on February 17, 2017. It is worth mentioning that the price of the coin on these three occasions was near the top of the previous bull market ($1.05k, $18.3k, $67k).

Embers: A whale may have sold 3.879 million ENA

The last 3.879 million ENA ($2.79M) of this ENA whale was also transferred to Binance 15 minutes ago. In this way, the 23.239 million ENA he redeemed from Ethena 20 hours ago has been transferred to Binance. These ENA were withdrawn from Binance at an average price of $1.29 and are now transferred to Binance at a price of $0.726. The final loss is $13.12M (-44%).

According to Coinmarketcap data, the top five currencies in terms of 24-hour popularity are: IO, AIAT, STRUMP, PEPE, and BTC. According to Coingecko data, in the crypto market, the top five sectors with the highest growth are: Retail, Avalanche Ecosystem, Loyalty, Ferrum Network, and Runes.

Hot Spot Focus - The Conflict of Interests Behind LayerZero's Anti-Slip Mechanism

In a sense, the current debate in the community about LayerZero is essentially a dispute over interests, and LayerZero's anti-scam mechanism cleverly uses human nature to try to counter it. When LayerZero touches the cheese of the scammers, it will inevitably lead to an unprecedented war of words.

Judging from the results, Layerzero screened out a large number of wool users, but it was obviously not enough. According to LayerZero CEO Bryan Pellegrino, more than 3,000 witch reports and 30,000 complaints were received within a few hours of the start of the bounty campaign. Bryan Pellegrino then said: It is estimated that only 6.67%-13.33% of the 6 million addresses are eligible for airdrops; 90%-95% of the reports are valid, or even more, and of course bad reports are quickly "discarded". Nothing is perfect. On June 5, Bryan Pellegrino further posted on the X platform: "I hope to have another two months to deal with the inspection of witch reports. There are some very obvious large witch clusters, including tens of thousands of addresses, but due to time reasons, I have to give up checking them because they are extremely unlikely to meet LayerZero's final airdrop qualifications, but I am sure they may get other airdrops. However, it should be noted that this is just my personal venting because I don't have that much time. LayerZero's TGE timeline remains unchanged."

In a sense, wherever there is a chance to get rich overnight, people will flock to it. This was the case with the ICO in 2017, and it is also the case with the current airdrop. However, from the mutual explosion of Layerzero, we can see a phenomenon: airdrop is moving towards industrialization and professionalization, and this phenomenon actually has obvious drawbacks. Before the project issued the tokens, a large number of airdrop institutions participated, creating a false prosperity on the chain. After the tokens were issued, the airdrop institutions sold them in large quantities, causing the project tokens to fall sharply, which discouraged many investors. This may also be the reason why many well-known projects in this round fell as soon as they were launched.

From the perspective of trend development, the game between project owners and airdrop institutions will continue, and the core lies in the balance of interest distribution. From the perspective of project development, a large number of traders are indeed needed to test network performance in the early stages of project development, but their selling is indeed not conducive to the later stages of the project. Project owners may try to retain some profits; in addition, linear release of airdrop tokens may also be a way to reduce short-term selling pressure.

In general, the chances of getting rich overnight by taking advantage of airdrops will become fewer and fewer, and a balance of interests may be found between project owners and profit-taking agencies; and the two may also try to bring their previously under-the-radar behaviors into the open in an open and fair manner.

Glassnode: Why is the astonishing inflow of US spot ETFs unable to drive a sharp rise in BTC?

1. ETF Total Proportion

Another divergence that has recently gained attention is that despite the staggering inflows into US spot ETFs, prices have stagnated and moved sideways. To identify and assess the demand side of ETFs, we can compare ETF balances (862k BTC) to other major entities.

US Spot ETF = 862k BTC

Mt. Gox Trustee = 141k BTC

US Government = 207k BTC

All exchanges = 2.3 million BTC

Miners (excluding Patoshi) = 706k BTC

The combined balance of all of these entities is estimated to be around 4.23 million, or 27% of the overall adjusted circulating supply (i.e., total supply minus tokens that have been idle for more than seven years).

2. Coinbase deposits correlate with GBTC outflows

Coinbase as an entity holds a large portion of total exchange balances as well as US spot ETF balances through its custody service. The Coinbase exchange and Coinbase custody entity currently hold approximately 270,000 and 569,000 BTC respectively.

As Coinbase serves both ETF clients and traditional on-chain asset holders, the importance of exchanges in the market pricing process has become apparent. By evaluating the number of whales depositing to the Coinbase exchange wallet, we can see a significant increase in deposit volume after the launch of the ETF.

However, we note that a large portion of deposits are associated with outflows from the GBTC address cluster, which has been a long-standing supply overhead throughout the year.

In addition to the selling pressure on GBTC as the market rebounded to new highs, there is another factor that has recently led to weakening demand pressure for US spot ETFs.

3. Spot arbitrage trading may be an important source of ETFs

Looking at CME Group futures markets, open interest has stabilized above $8 billion, having previously hit an all-time high of $11.5 billion in March 2024. This could be a sign that more traditional market traders are adopting spot arbitrage strategies.

This type of arbitrage involves a market neutral position that combines the purchase of a long spot position with the sale (short) of a futures contract position on the same underlying asset that is trading at a premium.

We can see that entities classified as hedge funds are building larger and larger net short positions in Bitcoin.

This suggests that spot carry trade structures, where ETFs are vehicles for gaining long spot exposure, may be a significant source of demand for ETF inflows. CME Group has also seen a significant increase in open interest and overall market dominance since 2023, suggesting it is becoming a preferred venue for hedge funds to short futures through CME.

Currently, hedge funds have a net short position of $6.33 billion and $97 million in the CME Bitcoin and Micro CME Bitcoin markets, respectively.

4. Conclusion

The emergence and size of spot arbitrage trades between long US cash ETF products and short futures through CME Group have largely dampened buy-side inflows into ETFs. This has had a relatively neutral impact on market prices, suggesting that organic buyers from non-arbitrage demand are needed to further stimulate positive price action.

Aaryamann Shrivastava: The Altcoin season ends early

Changing market conditions have created a bearish atmosphere that is hurting the potential of the Altcoin season.

1. The end of the Altcoin season

Altcoin season, also known as “altseason,” is a period in the cryptocurrency market when Altcoin significantly outperform Bitcoin. This phenomenon is primarily identified by observing two key metrics: Bitcoin dominance and Altcoin price performance.

Bitcoin dominance refers to the percentage of the total cryptocurrency market cap that Bitcoin represents. During the Altcoin season, this dominance declines as investors move funds from Bitcoin to various Altcoin. The clear decline in Bitcoin dominance indicates that Altcoin are gaining a larger market share.

The last time such a drop occurred was in January this year, when BTC’s dominance dropped sharply from 54% to 50%. However, since then, its dominance has been on an upward trend, reaching 55% in the past month.

This is the first time BTC has dominated the crypto market since the March 2021 crash, when BTC's dominance fell from 70% to 40% in a matter of days.

As Bitcoin dominance declines, Altcoin prices typically surge. The surge in Altcoin prices often outpaces Bitcoin’s growth, a clear sign of an Altcoin season. Investors seek higher returns by diversifying their portfolios into Altcoin, driving up Altcoin prices.

Generally speaking, an Altcoin season is considered active and successful when 75% of the top 50 Altcoin (excluding stablecoins) outperform BTC over a three-month period.

However, only eight cryptocurrencies have outperformed Bitcoin over the past 90 days. Even the hype surrounding the meme coin craze and Ethereum ETF approval has failed to boost Altcoin.

This provides a disappointing answer to the above question: the Altcoin season is over before it even began.

2. The next copycat season will be in early 25 years

The answer to this question is not simple, as the volatility of the cryptocurrency market makes everything very uncertain. In addition, the development of the macro financial market also affects the direction of cryptocurrencies.

However, since 2022, a pattern has emerged. August 2022 was the penultimate Altcoin season, six months before the Bitcoin season began. The next and most recent Altcoin season began eight months later, in January of this year. Now, five months later, we are witnessing a Bitcoin season once again.

Therefore, if this pattern continues, investors can expect the Altcoin season to begin in about seven to eight months. This means that the potential timeline for the next Altcoin season would be February 2025.

Still, it's wise to be wary of cues from the broader market and macro financial markets.