💡 Welcome back to DV Chain's Weekly Market Commentary! Last week, crypto markets faced a sharp selloff alongside equities following the Fed's hawkish 25 bps rate cut. Despite the downturn, BTC and ETH saw net inflows of $449M and $63M, respectively, while MicroStrategy added another 5,262 BTC to its holdings. As we approach the holiday week, thinner liquidity may lead to increased market volatility. Dive in below for insights and upcoming catalysts shaping the market:
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Market Recap
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• Last week, crypto markets saw a steep selloff along with equities on FOMC day
  
  
• The Fed cut 25 bps last Wednesday but had a hawkish outlook
  • Triggered some panic in traditional markets, SPX had an implied move of 50 bps on the fed but instead saw one of the biggest down days of the year
    
    
• Net inflows last week: BTC +449M, ETH +63M
  
  
• MicroStrategy increased its holdings of 5,262 bitcoins at an average price of $106,662 for approximately $561 million.  As of December 22, 2024, MicroStrategy holds 444,262 BTC at an average cost of $62,257, with a total cost of approximately $27.7 billion
  • Smaller buys compared to previous weeks
  • From the average price, we can infer that he did all his buying last week around Monday or Tuesday and stopped after
  • It’s likely that Microstrategy buying will be put on pause, as historically they don’t do BTC purchases going into earnings
    
    
• Microstrategy will join Nasdaq 100 Index today
  
  
• Trump taps Bo Hines for Crypto Council
  
  
• Trump taps a16z Partner as AI Advisor
  
  
• SEC Approves Hashdex, Franklin $BTC $ETH Index ETF
  
  
• This week ahead is the week of Christmas so liquidity will be thin and volatility will be heightened
  
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Upcoming Catalysts
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• $BTC
  • MSTR blackout period upcoming, so the MSTR ~2B/week avg btc buying could be put on pause until after their earnings
    
    
• $ETH
  • ETF flows have been robust since the election
  • Future flows aren’t fully priced in yet, which has been the biggest driver of the cycle
  • Likely the staking ETF gets approved earning in Trump’s term (signaled by Hester Pierce)
    
    
• $LDO
  • DeFi as a sector is going to benefit from the shift in regulatory environment
  • LDO fundamentally is a very strong project, clipping almost $200m in fees on an annualized basis to its treasury
  • It has maintained majority of market share in the LST/LRT space, despite higher temporary yields in new competitor’s liquidity bootstrapping farms
  • From an institutional standpoint, it is much stronger than competitors in terms of safety and network effects. The Lido Dao’s roadmap prioritizes institutional adoption, which we think is an astute plan, given the recent interest in crypto and tokenization from Wall Street
  • It’s likely a Staked ETH etf will be coming under the Trump admin
  • Fee switch likely incoming
  • Consensys lawsuit thrown out
    
    
• $ONDO, 1/18/25
  • 3.2B unlock, representing about 10x the Avg Daily volume
    
    
• FTX creditor distributions in Q4 ‘24 - Q1 ‘25

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