Quick Valentine’s Day Update
Love (for crypto research) is in the air.
Today, we’re excited to release an upgraded version of the Delphi Daily, our flagship daily newsletter delivering insights on the latest market trends (now with even more exclusive Delphi Research content!).
What’s the TLDR?
The new Delphi Daily will include:
- Featured “Chart of the Day” (and details on why it matters)
- Highlights from our latest sector newsletters (more info on these below)
- Tweets of the Day
- Occasional “Pro Takes” pulled directly from our exclusive Delphi Pro reports
We recently launched a full suite of weekly newsletters to keep our members informed on the latest developments across various sectors. This includes our weekly DAO Insights, NFT Insights, Yield Insights, and Market Insights reports, which form the backbone of this effort, each of which we’ll be highlighting portions of in the Delphi Daily newsletter going forward. Occasionally, we’ll even open source notable sections from our Delphi Pro reports, especially if there’s something particularly relevant.
For those interested in receiving all of our premium content, and joining our growing community of crypto experts and enthusiasts, look no further than a Delphi Insights or Delphi Pro membership, where you can access all of our top research, analytics, and exclusive Pro members community chats!
Now, on to today’s Delphi Daily.
Chart of The Day: NFT Activity Shows Signs of Waning
- The year started with a booming NFT market as high-profile projects like BAYC generated headlines from rapid celebrity adoption. However, the party seems to have slowed down somewhat, with volume and unique buyers trending lower over the past week.
- Total NFT sales on Ethereum, specifically, have fallen ~35% week-over-week (in USD terms). The total number of unique NFT buyers on Ethereum are also down more than 20% since last week.
- Other major chains have also seen total NFT sales slide over the same period, including Solana, Avalanche, and Flow. However, Ethereum is still the dominant chain for most NFT activity by a long shot.
- Volatility in NFT sales isn’t exactly out of the ordinary, however. These types of slowdowns often follow periods of extreme hype and excitement. For example, after the significant jump in NFT volumes back in late August, we saw total NFT sales get cut in half over the following few weeks. These kinds of mini-cycles are healthy for a market like this, especially one that’s still driven in large part by speculation.
- Interestingly, this week’s NFT lull didn’t deter Deepak Thapliyal, CEO of Chain Protocol, from spending 8000 ETH on an ‘Alien’ CryptoPunk, which marked the highest recorded purchase of a CryptoPunk to-date. Notably, the ‘Alien’ CryptoPunk he bought was ranked 8th based on rarity.tools.
The Policymakers Conundrum
[Excerpt from our weekly Market Insights]
- Since our last edition of Market Insights, bitcoin has notched an extremely impressive week, rallying nearly 20% over the last 7 days and nearly 40% off its January lows (around $33K). This week’s move was a vicious one, sparked by a reinvigorated spot bid across all major exchanges, as well as a flurry of short liquidations as late sellers were mercilessly squeezed. All of this culminated into a nearly 10% move on February 4th. Since the February 4th “chad candle,” price momentum has started to slow for BTC and most other crypto assets.
- With the sharp $12K move off of the lows, bitcoin is heading into resistance on multiple timeframes. What we mean by this is BTC is moving into an area of daily, weekly and monthly resistance. This is notable because it is a level that market participants of all kinds will be looking at as a potential price ceiling; this is also known as multiple-factor confluence. As we mentioned in our recent Monthly Chartbook, this area is a logical place to expect profit-taking and risk reduction activity due to the confluence of resistance zones and the speed and magnitude of the move off recent lows.
- The following are key levels on both the upside (if BTC keeps grinding higher) and the downside (in the case of a pullback).
- Resistance at $46-$48K: This is the daily, weekly and monthly supply zones that will likely be a heavy level of resistance. Above this level and we likely see a squeeze towards $50K+
- Support at $40-41K: If the structure is indeed shifting from a downtrend into a more bullish market structure, we would like the first level of support to hold and for buyers to front run our lower levels. This means we want to see $40K hold. We also have confluence with the white VWAP line, which is anchored to the 2022 Yearly Open.
- Support at $38.5K: Should we lose $40K, the next level of market structure is at the $38.5K area, as it previously acted as resistance, and has since become support. Should we lose this level, we’d expect prior lows to be revisited once again.
- Notably, whenever there is such a sudden impulse move in price, it’s important to make a note of the structure and makeup of the move itself.
- In the below chart starting on February 1st, we’ve included a volume profile very similar to the one discussed in a prior note back in early January. To summarize, a volume profile is a histogram that reveals each candle’s volume distribution and is meant to help identify significant price levels based on volume; in the chart below, these are the gray histograms attached to each candle.
- Attached to the y-axis on the right, you will find what is known as a Delta Profile. This is similar to the volume profiles but with two key differences. First, this histogram is a composite, or culmination of all volume histograms merged together (the last 10 days since February 1st). Second, the delta profile shows you the delta, or difference between buying and selling volume present at each price level (denoted by blue for buying and red for selling).
Looking at the chart, a few things become immediately clear:
- The “value area,” shown as the highlighted sections of the volume profiles where 68% of BTC volume was transacted, has migrated upwards over the last 10 days, as is typical when you see a sudden move in price. However, this particular move left behind volume gaps, or inefficiencies due to the violent nature of shorts being liquidated. This immediately becomes an area of interest as price often reverts to fill in market inefficiencies over time (note: we’re planning to do a deeper dive on market structure and the theories behind this soon for those interested).
- When looking at the Delta profile on the right, the composite profile shows a top-heavy distribution. This means that the majority of price action over the last 10 days has occurred near the top of the move, including both buyers and sellers denoted by the heavy amount of blue and red volume bars.
- Where price moves next will be crucial; if price begins to lose this area of high volume, you will likely see buyers begin to puke their positions and push price lower. You can see a high volume node right around $41-$41.5K, which is likely to act as a support zone should this occur. If that level is lost, we likely move towards the volume gaps left behind that we just discussed, which happens to coincide with ~$38.5K…funny how all this confluence works sometimes.
- For more details on the topic, see our latest Market Insights report.
Virtual Lands in Sandbox & Decentraland
[Excerpt from our weekly NFT Insights]
Virtual lands have been in vogue these past few months, catalyzed by Facebook’s recent name change to ‘Meta’ and the announcement of its bold vision for the metaverse. Others like Grayscale have weighed in with estimates that the metaverse may represent a $1 trillion annual revenue market opportunity. Everyone is talking about the metaverse. Just last week, Decentraland outlined its 2022 manifesto, which includes new desktop clients, in-world experience improvements and upcoming content/activities. The chart below shows how virtual land sales in Decentraland and Sandbox have performed.
There are a few noteworthy observations here:
- Land prices in both Sandbox and Decentraland have risen considerably since the Meta (Facebook) announcement on Oct 28, which sparked a buying frenzy into metaverse-related assets including $SAND and $MANA.
- Sandbox land prices increased ~445% between October 2021 and January 2022. A significant part of this is related to $SAND token price appreciation ($SAND +320% over the same period) since new public land sales are denominated in a fixed amount of $SAND (1,011 $SAND for a regular 1×1 land plot).
- Decentraland land prices increased ~36% during the same period. Interestingly, land price is lagging behind token price appreciation ($MANA +175% over the same period). All land has been minted and can only be purchased via secondary sales.
- Sandbox land has consistently higher trading volumes than Decentraland (more than 3X in the last 3 months), which is an indicator of relative interest between the 2 projects; Sandbox is the most popular virtual land metaverse currently.
- For more on the subject, Delphi members can see the full report here.
Notable Tweets
Thread on the $LOOKS Controversy
Anyone surprised by this did not research the token properly at all.
Was pretty obvious in the token incentives from day 1. Assumed everyone knew this was happening.
It’s actually a pretty innovative ponzi model, kinda similar to a perpetual ICO but obfuscation layers on top.
—Cobie (@cobie) February 14, 2022
Singapore’s DBS Plans to Launch Retail Crypto Exchange by Year-End
During an earnings call, the CEO of @dbsbank said that the bank is planning on launching a retail crypto exchange by the end of the year.
@thesamreynolds reports.
— CoinDesk (@CoinDesk) February 14, 2022
Curve Finance Launches on Moonbeam
Launched on @MoonbeamNetwork https://moonbeam.curve.fi!
— Curve Finance (@CurveFinance) February 14, 2022
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