Market Update 24/03/23

The purpose of this circular is to provide a market update regarding Valour’s current underlying exposures.

Bitcoin closed the week at $28,100, having reached a nine-month high amidst recent turbulence in traditional financial markets. Following the month’s difficulties faced by Silvergate, SVB, Signature Bank, and Credit Suisse, digital assets have once again proven themselves a safe haven for investors, challenging their status of a highly volatile risk asset once again. In light of the U.S Federal Reserve's announcement of increasing the frequency of dollar swap lines with major central banks, BTC broke beyond the $28,000 level, before seesawing around Wednesday’s FOMC interest rate decision. Whilst investors were hopeful that recent TradFi developments would prompt the Fed to pause its year-long endeavour of rate hikes, the latest 25 bps increase saw BTC follow a slight drawback trading in the mid $27k range. With the amount of BTC supply (holdings of 1 BTC and holdings of <10 BTC) owned by entities reaching new highs, crypto’s Fear and Greed hit a 16-month high reaching (reading of 68). Meanwhile, on the ecosystem front, NFT marketplace Magic Eden announced the launch of its Bitcoin NFT marketplace, capitalising on the continued interest in Bitcoin Ordinals. According to data from Dune Analytics, the number of Bitcoin Ordinal inscriptions jumped from 679 to 240,000 between February and March this year, with total inscriptions now sitting above the 565,000 count.

Ethereum held steady in the $1,800 range before the Fed’s interest rate decision resulted in a brief slide back into the $1,700 territory. Having boasted a 26% increase since the start of SVB’s woes earlier this month, Ethereum has benefited from wider market gains despite its 6-month low in BTC terms. With developers having set April 12th as the target date for its long-awaited Shanghai (Shapella) hard fork in which staked ETH withdrawals will be enabled, the network has seen a reversal in the course of its censorship fears catalysed by the U.S Treasury’s action on Tornado Cash in August of 2022. With the majority of subsequent transactions moving to become OFAC compliant, the current share of ‘censored’ blocks has shrunk to less than a third due to the Ethereum community’s push towards a censorship reversal and the introduction of non-censoring relays. The recent change comes as the network marked its second consecutive deflationary month as a surge in on-chain activity resulted in significant transaction fee burns (a feature introduced by EIP-1559 in 2021). On the Layer-2 front, Ethereum scaling solution Arbitrum hit an all-time high in daily transactions as close to $2bn of liquidity was introduced to its ecosystem following the airdrop of its native $ARB token.

Cardano’s DJED stablecoin is set to be migrated to Ethereum and the BNB Chain after it proved its reliability this month as other stablecoins lost their peg as a result of the SVB collapse. Whilst Cardano’s price followed general market movements, its DeFi ecosystem has continued to see unprecedented growth. Notwithstanding the new DeFi projects launching across the Cardano ecosystem, network TVL has seen a month-on-month increase of circa. 20%, up more than 150% since its previous low. Meanwhile, on a development front, Cardano backers IOG have begun testing a new node version which will bring dynamic peer-to-peer (P2P) networking functionality. The upgrade aims to ensure network uptime and stability, whilst simultaneously enhancing the blockchain’s overall resilience. With the new dynamic P2P capabilities, communication will be simplified via the bidirectional usage of connections, increasing the network’s resilience against potential failures and malicious behaviours.

Avalanche’s recent software release resulted in a brief outage of the network’s X and C Chains, causing a lag in the processing of network transactions. Composed of 3 chains, Avalanche’s C-Chain is the smart contracts chain used for the network’s dApps, whilst its X-Chain is used for sending and receiving funds, and its P-Chain used for staking AVAX and validating transactions. Whilst the outage caused a minimal effect on AVAX’s price, the native token is up 4.5% this week, not least following the blockchain’s recent announcement in which it partnered with Shopify and TYB to bring a web3 loyalty program to Shopify’s network of merchants. Allowing brands to reward their community for participation in various activities, Avalanche-based tokenised rewards points are awarded to users for their engagement, creating a more engaging and interactive shopping experience.

BNB mimicked market momentum by rallying over 28% at the start of the week as investor inflows into Binance surpassed $370m. Bringing weekly inflows up to $1.7bn, Binance posted total assets of $78bn, with BNB trading at $322, up 20.3% from its lowest point this month. Meanwhile, Binance’s IEO launchpad saw the successful pre-sale of Space ID tokens, a Web3 domain management platform allowing users to exchange, register and manage crypto-based domain names. With over 8.4m in BNB contributions ($2.8bn), the launchpad’s lottery system will be used to determine allocations given the project's $2.5m hard cap. Previous token sales on Binance’s launchpad have yielded large returns for investors, with December’s launchpad for the Hooked Protocol (priced at $0.10) currently trading at $2.00, netting a 1,900% return for investors.

For Polkadot, Solana, Uniswap, Cosmos and Enjin, no noteworthy updates this week.

Macro & Markets 🏦💱

The Week Behind: 🗓️⬅️

20/03: U.S Fed coordinates central bank action to enhance provisions of USD liquidity
23/03: BoE announces quarter point rate hike to 4.25%
23/03: U.S new homes sales increased to 6-month high in Feb, posting 3rd consecutive gain


The Week Ahead: 🗓️➡️

27/03: GER ifo Business Climate Index (Mar)
28/03: U.S CB Consumer Confidence (Mar)
30/03: GER CPI (YoY) (Mar)
30/03: U.S GDP (QoQ) (Q4)
30/03: CNY Manufacturing PMI (Mar)
31/03: UK GDP (YoY & QoQ) (Q4)
31/03: EU CPI (YoY) (Mar)


Fear & Greed Index 😨🤑

The multifactorial index looks at investor sentiment across Bitcoin and other large cap crypto markets, covering volatility, volume, momentum, dominance, and social trends. A score closer to 0 represents ‘Extreme Fear’ whilst a score closer to 100 is linked to ‘Extreme Greed’.


The crypto fear and greed index reached a 16-month high this week, surpassing levels last seen during Bitcoin’s all-time high in November 2021. Firmly placing itself in the ‘Greed’ category with a reading of 68, recent market sentiment towards digital assets has been overwhelmingly optimistic since the collapse of SVB and wider TradFi fears. Following the Fed’s latest interest rate decision, markets faced a slight pullback, bringing the index down to 61 before prices rebounded given the effect liquidity supply has on the demand for digital assets. Over the last 7D, the total market cap for digital assets has risen by 4.4%, reaching a cumulative total of $1.18tn.

CBOE VIX Index 📉🦘


The CBOE VIX Index measures the implied volatility of S&P 500 Index options, traditionally following an inverse relationship.
The VIX started the week with a tumble as stocks rebounded upon unified government action addressing concerns of a possible financial meltdown. The decrease was short lived as the Fed’s FOMC meeting led to a 4.1% rise in the VIX amidst prevailing inflationary pressures. Friday’s sharp sell-off in Deutsche Bank shares saw the VIX up 8.4% in early trading, reawakening contagion fears triggered by the collapse of SVB earlier this month. At time of writing, the VIX stood at 24.02 (pre-market).

BTC/DXY Correlation 💵📈


The DXY provides an indication of the value of USD relative to a basket of U.S trade partner currencies.
The DXY experienced a volatile week, falling despite the Fed’s continued interest rate hikes. Concerns amongst investors led to a decrease in 2-year treasury bond yields, in spite of the DXY’s rebound off a 7-week low following a tumultuous week for banking stocks and mixed economic data. Hawkish comments from the US Treasury secretary indicated further rate hikes to align with the Fed’s 2% target, sending the greenbacks’ index up to 103.2. As of Friday, the DXY/BTC 1Y correlation stood at -0.73.

Market Dominance 📊👑


Bitcoin dominance: 46.2% (+1.2%)
Ethereum dominance: 18.8% (+0.1%)
BTC EU Crypto ETP dominance: 53.6 (+1.8%)
ETH EU Crypto ETP dominance: 26.4 (-1.2%)

Risers & Fallers 📈🚀

⬆Mask Network ($MASK) was trading at $6.17, up 35% from last week. The privacy focussed protocol bridges Web2 users to Web3, bringing an ecosystem of dApss to traditional social networks. Via its Mask extension, users can leverage encrypted, decentralised messaging, payment networks, file storage and sharing, all whilst on mainstream social networks. YTD, $MASK has risen by over 198%.

⬇️ Immutable ($IMX) dropped 17.15% this week, currently trading at $1.17. The Ethereum-based Layer-2 scaling solution aims to advance the next generation of Web3 games via its targeted approach of making asset ownership and commerce in digital worlds more accessible, scalable and flexible, through the use of NFTs. The company recently announced a strategic partnership with Polygon Labs to simplify the process of onboarding game studios and developers into Web3, utilising Polygon’s zkEVM technology.  

Upcoming Conferences


23/03/23 - 25/03/23: Art Basel, Hong Kong
28/03/23 - 30/03/23: Ethereum Brazil, Rio de Janeiro
29/03/23 - 30/03/23: WOW Sumit, Hong Kong

That’s all for this week!

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