Weekly Update #16
GBTC discount reaches sub 10% as stablecoin supplies up $2 billion over last 2 weeks
Key Takeaways:
Crypto structured products see yearly record weekly inflows of roughly $350 million, highest since 2021
GBTC discount to net asset value reaches sub 10% for the first time since mid-2021
Stablecoin supply growth continues, now up $2.2 billion over the last two weeks
Solana TVL continues to rise, closing in on $600 million
Blast goes live, attracting over $400 million in TVL within 4 days
Crypto Structured Products See Yearly Record Weekly Inflows
This week structured digital asset funds saw the highest week of inflows of the entirety of 2023 at $343 million, according to CoinShares. There are two ways to interpret this; on one hand this may signal euphoria around ETF-front running, on the other, a potential prelude of continued institutional demand for digital assets to come.
Source: CoinShares
GBTC discount to net asset value reaches sub 10% for the first time since mid-2021
In addition, we’ve seen the Grayscale Bitcoin Trust’s discount to net asset value continue to close in. GBTC’s discount to NAV is now less than 10%. While this may partially represent demand to get Bitcoin exposure, this largely reflects sentiment towards the likelihood of a Bitcoin ETF getting approved, and GBTC’s conversion into an exchange traded fund that would trade at par with the underlying Bitcoin that it offers exposure to. Combined with the inflows shown in the previous chart and price action from crypto proxies such as Coinbase (COIN), it is clear that traditional financial firms have the ETF trade put on and are placing a high likelihood of approval by the January 10th deadline.
Stablecoin supply growth continues, now up $2.2 billion over the last two weeks
In prior weekly updates one metric that we placed a great deal of importance on was the 90 day change in aggregated stablecoin supplies. This looks at the percentage change in the total number of stablecoins in circulation. Let by minting of USDT, after flipping positive two weeks ago, we’ve seen continued growth in stablecoin supplies. Over the last two weeks aggregated stablecoin supplies are now up $2.2 billion, a 2.8% increase over the last 90 days. Increasing stablecoin supplies means that on-chain liquidity is improving and there is more capital in the crypto economy to be deployed into directional bets on crypto tokens as well as in yield strategies within DeFi.
Solana TVL Continues to Grow
It is no secret that Solana has been the best performing large cap crypto asset of the year, up nearly 6x from its lows reached during the end of 2022 after the collapse of failed crypto exchange FTX. Throughout its price recovery, one trend we’ve seen is the recovery of the amount of total value locked on the Solana network. Partially a bi-product of price action, the USD denominated value of total value locked on SOL is nearing $600 million; a benefit to DeFi protocols within its ecosystem.
To put this into perspective, total value locked on Ethereum sits at just shy of $26 billion across its entire ecosystem, as shown in the chart below.
Blast goes live, attracting over $400 million in TVL within 4 days
One of the most controversial developments of the week was the launch of Blast, an Ethereum L2 scaling solution launched by NFT marketplace Blur’s founder “Pacman”. Blast claims to be the first ETH L2 with native yield, allowing individuals to put their ETH and stablecoin assets on Blast to work through protocols such as Lido and MakerDAO through its “auto-rebasing” stablecoin called USDB. There are some that have expressed security concerns around Blast’s multi-signature setup, with all of the wallets associated with the multi-set being relatively new and unknown; potentially signaling centralizing risk. Nonetheless, seeing the L2 garner $400 million of TVL in just four days speaks to the current state of the crypto market, with many market participants eager to pile capital into newly launched protocols.