[Daily] Solana is giving up space

Good morning! Welcome to The Daily Moon. Google Cloud will soon become a validator on the Tezos blockchain. It’ll help large companies develop web3 apps on Tezos. Apparently Google’s so generous that it will even forego the transaction fees. Too much decentralisation. 🙄

As of Wednesday, 8PM IST

The markets continued the bear hug. Bitcoin took an extended break from the rally with whales MIA. Ethereum was jittery ahead of the release of the FOMC minutes. Nasdaq rose in early trade on a spike in demand for technology stocks. Back home, Sensex and Nifty ended lower over rate hike fears in the US.

BTD For Bitcoin?

Bitcoin briefly crossed $25,000 in the past week. Instead of immediate sale to book profits, investors chose to HODL. Now that BTC is down to ~$24,000 levels, there is a call to buy the dip.

What’s the proof?Data from Glassnode shows that the sell pressure has reduced but investors are not in a rush to sell. A technical metric called Adjusted Spent Output Profit Ratio or aSOPR is often used to look at the buy and sell pattern. The current stats reflect that aSOPR is at a neutral position of 1.0, which means that profit booking has slowed down. Typically, investors look to sell their BTC when the token rallies. This time, that didn’t happen.

Short term holders are calmNot many short term investors are anxious about price flips anymore. We know because exchange transfers are muted. The same is true for long term HODLers too.

1. The proportion of long-term holders in loss has fallen to 21% compared to 58% in mid-January. This indicates more room to HODL.

2. The recent rally has made HODLers believe that patience is profitable.

The market seems to have achieved a level of maturity. Investors are no longer overtly concerned about selling their BTC at a loss in the future. Plus, the growth in Ordinals NFTs on the blockchain has made Bitcoin even more attractive.

Meanwhile…While we are on Bitcoin, its forked token Bitcoin Cash crossed a six-month high and touched $150. However it has inched closer to overbought territory.

Are You Betting Against Crypto?

Sometimes, best bets can go awry. That’s what has happened with crypto stocks. Short sellers who bet on the stocks to fall have been caught by surprise. Rather than a fall, these stocks zoomed.

FYI Shorting involves borrowing and selling it in the market in the hope of a price crash. Short sellers buy back the stock when prices fall and pocket the difference.

So what happened?Marathon Digital, MicroStrategy, and Silvergate Capital. These have been the most-shorted crypto stocks in 2023. But short sellers have probably lost a lot of money because:

• Silvergate rose ~13% in a month though it started the year with a dip.

• Marathon Digital is up over 108% since the start of 2023.

• MicroStrategy is up ~10% in a month and over 90% since December 31.

The net losses on these short positions have topped $900 million. Sudden price spikes hit harder. Continuous price rise means that short sellers may need to buy more shares to cover their losses. This causes another bull rally, making it worse for the short-ers.

Hard to borrow You need to pay a fee to borrow stocks for shorting. Price fluctuations have made it expensive to short crypto stocks. The average fee is almost 20-30% of the total value. All the more reason to stay away.

Mastercard For Crypto Payments

This one may be a hit or miss. But either way, this new partnership between payments giant Mastercard and a web3 payment protocol is interesting. Because who knows, it might actually take off.

Hold on. What is it about? Basically, Mastercard will allow customers to make crypto payments in the physical and digital world and also the metaverse. Customers will be able to use their Web3 wallets to make payments. Once a transaction goes through, the USD Coin (USDC) will get converted to fiat currency. The web3 payment protocol will handle the USDC payments bit.

Going mainstreamThe mainstreaming of crypto payments is an ongoing challenge. Some large companies accept payments in crypto. Mastercard has been very excited about the metaverse and this seems more like a way to enter that arena early.

Solana Spaces Shut Down

Talking about going mainstream, here’s another experiment that didn’t quite work. Solana Spaces is shutting down, which opened in July 2022. It was a physical store to promote Solana and the larger ecosystem.

So it didn’t work?Whether it was successful or not is subjective. The Solana Spaces founder Vibhu Norby penned a note explaining why they’re shutting it down.

Touchy founder. What’s new?DRiP. Obviously. Norby says DRiP is onboarding 50-100 customers everyday. The draw? Free NFT airdrops that may increase in value. Throw in some loyalty rewards, merchandise, and white listings and you have the recipe for something viral. The hopes are to get people interested in Solana again.

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Who are we? This newsletter’s ambition is to educate (and to entertain). The world of money is changing everyday and we want to help you decode what’s happening in the world of crypto, public markets in the US and India.