DeFi With On-Chain Data | Deep Dive
Review Date: April 15, 2021
In this article we will illustrate how on-chain data provides a brand new framework that helps us analyze emerging monetary assets.
Believe it or not, the Intelligence Community’s 2021 Annual Threat Assessment Report indirectly tells you that crypto will be a means for consumers to protect purchasing their power and participate (out of necessity) in a decentralized financial system. According to that recent report, “The effects of COVID-10 pandemic will continue to constrain governments and societies, fueling humanitarian and economic crises, political unrest, etc. No country will be completely spared, and even when the vaccine is widely distributed globally, the economic and political aftershocks will be felt for years. Years. That means the printing press from central will never stop.
The report discusses food insecurity and the impact of severe weather and COVID-19 in Latin America. Reading those clauses made me think of DASH. I’m getting ready to call DASH the reserve currency of Latin America, a store of value, and a way to preserve purchasing power.
On-chain data is starting to hint at a coming explosion in defi. Defi will transform from a curiosity allowing technical savvy players to profit from a user experience that requires technical aptitude into a banking system as easy for people to use as a social media app. It’s happening now. As a result of the pandemic, the world is going to need a decentralized solution to everything. Banking is just the beginning
The transformation and expansion of the defi system are in full swing. On-chain data reveals footprints of big players coming into the space with gusto. For example, options and derivatives play Synthetix (SNX) has seen the largest daily and weekly volume from smart money. Buyers of SNX are likely betting that the future of Wall Street and derivatives will be decentralized. Technically, SNX is bouncing off support at $18.8 and could head for the next upside target of $29.
BINANCE:SNXUSDT, 1D 21.290 +1.267 (+6.33%) O:20.012 H:21.603 L:19.921 C:21.290
Data as of 4/15/2021
Past performance is not indicative of future returns
UMA is another derivatives play that may follow or even outperform SNX. On-chain data shows smart money is also purchasing UNI and COMP. Other significant inflows are depositing assets into the compound money market. As a result, Compound now has the largest total value locked (TVL) in the DeFi ecosystem.
Why is this important? Compound was the original Defi play back in 2020. Market’s love symmetry. If Defi 1.0 started with Compound, the next round also seems to be led by Compound. Compound, Yearn Finance (YFI), and UNI are possibly on the verge of massive breakouts.
The DEFIPERP futures contract that tracks all of Defi is making new all-time highs. Using Gann and Fibonacci’s work, there is theoretical technical potential for DEFIPERP to 3x or 4x.
FTX:DEFIPERP, 1D 14513.6 +962.7 (+7.1%) O:13550.9 H:14549.7 L:13331.2 C:14513.6
Alpha Finance (ALPHA) is currently running a liquidity mining scheme that incentives those to deposit ETH into APHA to get ibETH. It has resulted in greater than $1B in Total Value Locked. This development is of particular interest, considering ALPHA has been in a range that has tormented bulls who have been waiting for a potential breakout.
BINANCE:ALPHAUSDT, 1D 1.69250 +0.08139 (+5.05%) O:1.61229 H:1.75084 L:1.60000 C:1.69468
Bottom Line: Central will continue to print money. It’s not a matter of choice. The printing will run as a matter of national security. Said differently, if your grocery bill doubles, central banks don’t care. The preservation of sovereign nations supersedes the purchasing power of the currency. Citizens need to protect their purchasing power with digital cash (BTC, DASH, LTC, BCH, and NANO).
Defi as it exists now, and decentralized finance, in general, is going to replace traditional banking sooner than anybody expects. Charts hint that this trade has just started. Investors may have to stomach buying breakouts or buying things at all-time highs. Buying breakouts above all-time highs is a natural stage in bull markets. If you have trouble with the concept, remember how much bitcoin Michael Saylor b bought at the former bitcoin all-time at 20k. That trade worked out for him.
Fortune favors the brave.
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