Monthly Market Roundup: February 2024
Disclaimer: Author holds ETH, SOL, TIA & PYTH and may have intra-day/week positions and/or airdrop allocations in other coins mentioned in the article. Views and opinions are that of the author alone and do not represent the views or opinions of Etherscan. None of this is financial advice. Always do your own research before apeing.
Note: This is the second ever Monthly Market Roundup so we’re keen to get feedback. We’d really appreciate you answering a few questions in this form.
Mooning into the Lunar New Year
Enter the year of the Dragon Bull. Headline for February, BTC and ETH closed the month up ~44% and 46% respectively. For BTC this was a $18,600 move from open to close, the biggest nominal value monthly increase ever. BTC Spot ETF inflows have been positive for 12 of the last 14 trading days, aggregate stablecoin supply is trending up and they’re talking politely about us on Bloomberg and CNBC. BTC’s ETF success also validates a bull case for ETH’s Spot ETF leading into the next possible decision deadline in May. Meanwhile, further down the risk curve, the hot ball of money is back, spinning from one meta to another.
404
We had Pandora introduce a new unofficial ERC standard 404, combining features of the fungible ERC 20 and non-fungible 721 standards. The token went ~150x from listing price of $210 to $31,400 in 5 days, with a peak market cap above $300m. Following a 60% pullback, the token has been trending up at a healthier trajectory, closing the month at $24,900. As with any successful new primitive, 404 forks came but generally haven’t shown any staying power. Would expect the next major catalyst for this meta to be approval of eip 404, making it an official standard.
AI
Next, we saw heavy rotation into the AI narrative fuelled primarily by 3 catalysts: 1) OpenAI’s raise at an $80bn valuation, up from the previous $29bn round last year; 2) Sam Altman’s association with both OpenAI and Worldcoin (WLD, +220% in February); 3) Record NVDA earnings pushing the behemoth over 2 trillion market cap. Crypto proxies being GPU DePIN tokens like RNDR (+75%, Feb) and FIL (+65%, Feb).
Memes
The final week of February saw heavy rotation into Memecoins, with BONK (+108%, Feb), PEPE (+198% Feb), WIF (+230%, Feb) leading the way. OG Dogcoins DOGE and SHIB also had respectable 49% and 40% monthly moves. No obvious fundamental catalysts as far as we know.
Liquid Restaking
Eigenlayer now has a TVL of 2.94m ETH (~$10bn), capturing 9.45% of total ETH staked. 60% of this TVL are LST deposits, with the remainder being natively restaked ETH and Liquid Restaking Token protocol tokens (LRT’s). The new LRT DeFi building block or “primitive” has seen an explosion in protocols this year, almost all of which have a points program. The leader here is Ether.fi, capturing half the market with 535k ETH staked. TGE for their governance token has been publicly announced for April. Another leading provider, KelpDAO, introduced Kelp Earn Point (KEP) tokens, representing points earned by the DAO. These currently trade at ~$13c with a $375m FDV. Whether this represents good value depends on the share of tokens to be distributed to points holders, as well whether distribution will be linear or tiered. For a deeper dive into Restaking, read this article by Etherscan’s TY.
PENDLE had another big month, closing another +24% for the year after January’s 115% move. One of the big winners of the LRT narrative, the Pendle protocol offers markets between LRT yield + points vs. fixed yield on restaked ETH. For a deeper dive, check out PendleIntern’s thread using Etherfi’s eETH as an example.
Airdrops and Network Launches
STRK, governance token of Starknet was distributed 20th February, debuting at $3.55, (2.5bn market cap/35.5bn FDV) before falling to lows at $1.70 2 days later. Controversy regarding the airdrop criteria and 13.4% cliff unlock of total supply on 15 April has been met with lower highs, although Feb 22nd’s low has yet to be swept. Frax Finance launched Fraxtal, its Ethereum Layer 2 on Feb 8th. Since the timeline of Q1 ’24 had been public for months, it’s no surprise that this was a sell the news event, with the governance turned multi-utility token closing the month -8%. Blast, the Ethereum L2 built by the team behind Blur, launched Febuary 29th without a token while TVL holds steady above $2bn.
Apart from Ethereum L2s, modular narrative “RollApp” platform Dymension mainnet and DYM token distribution went live on on February 7th, trading up to above $4 within minutes of Binance listing and continuing trending up to highs around $8.7 on Valentines Day before pulling back 35% into monthly close at $6 ($890m mcap/6.1bn FDV). After a social airdrop farming campaign, Web3 Gaming platform Portal launched February 29th, trading in a 1hr close range of $2.05–2.60 since. Currently sitting at $2.40 ($399m mcap/$2.4bn FDV).
Perp-DEX volumes reached all time highs above $4bn in February, with Aevo dethroning DYDX from the number 1 spot, possibly buoyed by its farm boost program. The team also confirmed snapshots had been conducted before and during the campaign, with a final snapshot to take place at the end of the campaign next week. A key differentiator for Aevo has been the listing of pre-launch token futures including ALT, BLAST and DYM.
Miscellaneous Mentions
Uniswap Foundation’s governance lead submitted a “fee switch” proposal to the Uniswap DAO, which if accepted, would share revenue protocol with UNI stakers. The news saw UNI up >60% on the news, still trading at 2-year highs just below $13. Currently, a Snapshot Poll that ends March 7th shows holders are overwhelmingly supportive of the proposal.
Ethena launched a synthetic dollar USDe, backed by a basis trade being long staked ETH and short ETH on futures with positive funding rates (i.e. where longs pay shorts for the privilege). The protocol paid out 33.3% APY and 44.3% APY on staked USDe over the past 2 weeks respectively and has already amassed >$500m in TVL, fuelled by a gamified airdrop farming campaign. The risks include the possibility of funding going negative for sustained periods and the possibility of liquid staking token contracts or futures trading venues being exploited.
Ondo Finance announced their Global Markets platform, which will enable trading of tokenized representations of public securities using public market liquidity. This differs from previous incarnations of “stocks on the blockchain” such as the now defunct Mirror Protocol, which offered synthetic markets through collateralized debt positions. The news catalysed Ondo to break its week-long resistance level $0.43, currently trading at $0.52.
Technical Outlook on Majors
Figure 1: BTC/USD 1 Month
Bitcoin closed February right at monthly resistance and has since closed both days of March above, signalling a successful reclaim of the level with immediate upside target being all time high at $69k. Should this monthly level at ~$61.3k fail as support, the next one presents itself at $45.5k. For intra-month traders, the next weekly and daily supports can be found at $53k and $60.5k respectively.
Figure 2: ETH/USD 1 Month
Similarly, Ether closed the monthly just above monthly resistance and has closed above every day since. The next monthly resistance being the highest ever monthly close from 2021 at $4,635. Supports are found at $3,280 and lower ~$2.7k. For intra-month traders, there immediate weekly resistance at $3,520 and highly confluent resistance at $4k.
Closing thoughts
Majors are at high timeframe resistance near all time highs, the market is speed-running multiple meta-rotations in the space of weeks if not days and perpetual futures funding rates are hitting >60% on majors and >100% for alts. Plenty of justifications to be cautious and perhaps at least partially take profits from entries below. That being said, animal spirits were clearly awakened in February and if/when majors reclaim all time highs, they’ll only get stronger.
Bid you good fortune and may your candles be evergreen.
