Vol Commentary: Quiet Weekend

Cumberland is commenting on the recent volatility and potential opportunities to take advantage of it.

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Good Morning and Happy Monday from Cumberland APAC! It was a relatively quiet weekend for crypto, with BTC and ETH both essentially unchanged on ranges under 2%. Alts broadly weakened a bit over the weekend, with the L1 sector down about 1.5% and DeFi down around 2%, but otherwise a relatively calm period. We’ve been seeing an interesting trend the past few months: despite regulatory headlines and macro uncertainty, crypto has become less volatile, and at the same time volumes are actually increasing. This is a positive sign as to the maturation of crypto as an asset class, a welcome but not necessarily a given sign.

ETH Denver wrapped up yesterday, a well-attended conference with many guests traveling from Europe and Asia. Cross-chain interoperability was one of the key topics frequently discussed (potentially a result of the Interop Summit taking place right before the main event), a sign that even among the ETH-maxi-est crowd, there is a concession that the future will be multi-chain. There was a lower emphasis on gaming and NFTs as compared to last year, and a stronger emphasis on the boring-but-important stuff, infrastructure and stables. Stablecoins and asset tokenization were major themes, with the stablecoin conversation ranging from Aave’s GHO to major payment platforms talking about CBDCs.

In the stables space, two tokens in particular stand out as outperformers over the past three weeks. They are SNX and MKR, both up 35-40% over the past three weeks, projects which both have their own stablecoins, sUSD and DAI. SNX has benefited off the rally from OP, but while OP has faded and given up almost all the gains from the Base announcement, SNX has continued. Surprisingly, other coins in the DeFi stablecoin space have been fairly sluggish, matching ETH’s roughly-unchanged performance. AAVE has failed to see an outperformance ahead of GHO, and CRV and CVX are both fairly quiet despite both this stablecoin emphasis as well as the impending Shanghai fork, which should increase issuance of assets like stETH. (LDO is up 15% over the past three weeks).