Alpha Hunt — September 3

Source: Tenor

To say that crypto market dynamics change at warp speed isn’t an overstatement; the past week was the testament. With only three days into September, BTC and ETH are already up by almost 4% and 10% each. 

Source: Delphi Digital

Investors are hunting for alpha in the Layer 1 projects this August. Not surprisingly, AVAX, FTM, and SOL came in as the top three runner-ups. As ETH continues to soar, Layer 1 will continue to see an upward trend. 

The Printing Goes On

Source: Reddit

Jerome Powell’s comments at last week’s Jackson Hole Economic Symposium have been perceived as dovish by the broad market with the Dollar Index falling by almost 1%. While he signalled that the tapering of purchases will happen this year, he also made clear that it wasn’t an indication for the rising rates (largely accommodative in relation to market expectations pre-Jackson Hole). With cryptocurrency being the highest beta beneficiary of the weakened USD, market sentiment is now the most bullish since the market low in May.

NFT Mania and ETH

Driven by the mania we’re currently seeing in NFTs, ETH has experienced tremendous tailwinds in the form of EIP 1559 cumulative burns, which have doubled since a week ago. The phenomenon has been exhibited in the ETH/BTC pair, which is closing at previous year high. 

While EIP 1559 didn’t bring the gas fees down, it’s been clearly beneficial to ETH holders that this trend isn’t likely to wane anytime soon.

Is Degen Season Back? 

Since the crypto market nosedived in May, leverage levels were reset across the board — with spot dominance taking the center stage. Funding rates and basis for both stablecoin and coin-margined swaps as well as futures are clearly firming up over base levels, with recovering open interest levels to boot.

Long story short: Leveraged longs are regaining confidence to re-enter the markets. While funding rates and basis levels aren’t overheated yet, the risk of liquidation-driven selloff is gradually growing and should be monitored closely.