Europe Passes MiCA, MakerDAO Strengthens Reserves, and More!

Bitcoin and Ethereum are down by 3% and 3.6%, respectively, over the past week. In this regard, Bitcoin dropped the least out of all the major Layer 1 protocols, as shown in Figure 1. On another front, Metis and MakerDAO outperformed in the Layer 2 and decentralized finance landscapes, respectively. MakerDAO appreciated 16.3%, while Metis had a 20% increase in TVL on the back of a 26-week-long builder incentive program.

Figure 1: TVL and price development of major crypto sectors

Source: 21Shares, Coingecko, DeFi Llama

Key takeaways

• Europe passes landmark crypto regulation for a final vote.

• $560M stolen as BNB Smart Chain gets hacked in yet another bridge exploit.

• MakerDAO is allocating $500M of its balance sheet to short-term US Treasuries and corporate bonds.

• US Trademark applications for NFTs and Web3 tools have doubled year over year.
Spot and Derivatives Markets

Figure 2: Perpetual Futures Open Interest on Binance

Source: Kaiko

Bitcoin and Ethereum open interest on Binance, the world’s largest crypto exchange, rose to all-time highs. As per Kaiko, BTC’s open interest measured in native units surged by around 20% since the end of September to 183K BTC. Over the same time frame, ETH’s open interest rose by 10% to 1.3 million ETH. As a reminder, open interest refers to the total number of outstanding derivative contracts that have not been settled. The increase in open interest suggests that new money is coming into the market despite the macroeconomic uncertainty.

In addition, we can observe that BUSD-denominated instruments have gained traction due to Binance’s decision to automatically convert USDC to their native stablecoin (BUSD) to enhance users’ liquidity and capital efficiency.

On-chain Indicators

Figure 3: Bitcoin’s NUPL ratio

Source: Glassnode

The NUPL ratio, which we have featured in past newsletters, measures the P&L of BTC investors — ranging from 1 to negative numbers. This metric has been instrumental in evaluating investor sentiment and identifying the tops and bottoms for the price of BTC over the past decade. Depending on whether we are in a bull market or a bear market, the level of the NUPL ratio categorizes investor sentiment in 5 brackets, as you can see in Figure 3. NUPL is back in the capitulation zone after slightly recovering in July-August.

Next Week’s Calendar

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Research Newsletter

Each week the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com

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