Messari Daily Brief Jan. 6, 2021 - Closing in on $1T

Crypto is closing in on $1 trillion in market cap, and the only thing I can think about is how sustainable it all feels. BTC is at the beginning of its institutional supercycle. Depending on your outlook, ETH can be a function of a) BTC’s price, insofar as more bitcoin holders take the blue pill after they’ve digested (and enjoyed gains from) the red one, or b) ETH network fees, which are now regularly in the mid-seven figures. In other words, does 6:1 BTC:ETH feel right? How about a 50x multiple on ETH network earnings? Stablecoins are $30B+, and the diversity between fully reserved and regulated, to crypto collateralized, to algorithmic is incredible (and healthy).

The non-ETH Layer1s are a function of ETH’s price, and the cumulative potential for smart contract platform value capture; again, $40 billion for them vs. $130 billion for ETH...doesn’t seem crazy? DeFi has an awful lot of underlying activity and fee generation for a $12 billion market, and with cash borrow rates in CeFi soaring, there seem to be structurally higher interest rates available for a while. Web 3 infrastructure (e.g. oracles, computing, IP marketplaces) are just getting started, but $10 billion isn't frothy to buy an option on the whole index. And synthetics! Wow, $10 billion for quasi-securities with real cash behind them (exchange tokens, synthetic shares, debt, etc).

It all seems reasonable, but not cheap, since this time around, we’ve got more product launches than white papers. I guess this is me calling the top.

Headlines That Matter:

• INTEL: Loopring initiates liquidity mining, Matic lists on Huobi, Blockchain, Genesis drop XRP.
• Bitcoin is #11 and ETH is #97 in the world’s top assets by market cap. (h/t Decrypt)
• Stellar doubled overnight. Buyer beware. Less shady, but the same structural issues as XRP.
• $20 billion is now locked in DeFi led by Maker, Aave, Uniswap, Compound, and Synthetix.
• Hong Kong crypto broker BC Group / OSL raised $90 million. (CoinDesk)
• CoinDesk buys Grayscale index provider Tradeblock in a tuck-in acquisition. (The Block)
• The Democratic People’s Republic of Britain crypto derivatives ban begins. (CoinDesk)
• It looks like the Democrats are going to take the U.S. Senate: more brrrr, higher taxes.
• Ripple’s lead Series C investor sues for its money back. A slow death for XRP. (The Block)
• Daily shade: Bill Miller calls BTC rat poison for cash in his latest investor note. Nice.