What the bounce tells us about the next big crypto narratives
Manic markets have us all dreaming of sensible projects making steady but decent revenue
alexgo.photography/Shutterstock modified by Blockworks
This is a segment from the Empire newsletter. To read full editions, subscribe.
Whether you’re a believer in a V-shaped recovery from here, or you think we’re headed lower before an even bigger bounce back, you’d be forgiven for yearning for change on the other side.
Well, we’re getting a decent glimpse at how green the grass might be.
In the past five days, about $400 billion has been wiped from crypto’s total market cap, sending it from over $3.3 trillion to $2.9 trillion. That’s officially below the November 2021 peak.
Sounds exciting! Could crypto have purged itself of all things toxic about this cycle by sending vapid memes, vaporware ChatGPT wrappers and low-float VC coins on their way to zero?
Too early to say. But for all the noise, we can still see hints at what the market expects to pop during the next potential phase of the bull market.
Of the 77 cryptocurrencies in the top-100 by market cap which aren’t stablecoins, liquid staking tokens or otherwise wrapped assets, all but seven coins have lost value since Sunday following the Bitget hack two days earlier.
Those losses range from nearly 20% in the case of TKX, TRUMP and Bitget’s BGB, to barely negative returns for OP and APT.
Among the worst hit are coins tied to protocols that boast some of the highest levels of economic activity in the space right now, including AAVE, LDO, SOL and ETH. Like Keynes said, “markets can remain irrational longer than you can remain solvent.”
More telling is the small set of coins to go in the opposite direction: BERA and SKY (formerly MKR) are up 10% and 9.5% apiece while TIA is ahead by 3%.
Perhaps there’s not much to read into BERA, considering its mainnet launched only three weeks ago. But this could be a sign that corners of the market are looking for a fresh ecosystem narrative.
As for SKY, it could be benefitting from the increasingly tense air of strict stablecoin regulation in the US — with decentralized offerings set to take up greater mindshare moving forward.
And then there’s the extreme overperformance of IP, which is up 40% over the past five days and by far the strongest top-100 coin.
IP is the native token for a16z-backed PIP Labs’ Story Protocol, which it positions as a chain for tokenizing intellectual property. Its mainnet went live alongside the token less than two weeks ago and its price has only gone up since.
In any case, if I had to bet on the next big narratives for the rest of the cycle, mine would be twofold: fundamentals for sure, and really, really good market makers.
Get the news in your inbox. Explore Blockworks newsletters:
- Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
- Empire: Start your day with top crypto insights from David Canellis and Katherine Ross.
- Forward Guidance: Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin.
- 0xResearch: Get alpha directly in your inbox — market highlights, charts, degen trade ideas, governance updates, and more.
- Lightspeed: All things Solana, in your inbox, every day from Jack Kubinec and Jeff Albus.
- The Drop: The newsletter for crypto collectors and traders, covering games, tokens, apps, memes and more.
