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ETFS 21Shares Crypto Monitor - 23rd February 2022


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Market Outlook

The market is still struggling through this season, with Bitcoin falling by 9.3% since last week, pulling down Ethereum by 7.9%. Open interest is also declining, which indicates lower long risk-on strategies. In fact, for the first time in two years, investors that bought Bitcoin one to two years ago represent at least 14% of selling pressure. Furthermore, funding rates are mostly flat for Bitcoin perpetual swaps — implying a neutral market sentiment given the macroeconomic outlook with the lingering uncertainty with the Russia-Ukraine conflicts. On that account, prices will likely oscillate within a range in the next few months.

It’s important to note, however, that crypto is a narrative-driven industry, especially in the short to medium run – which causes discrepancies between valuations and fundamentals. DeFi was the archetype in 2021 with the rise of NFTs. One example of this differential is Curve, the largest DEX in the world with $18.85 billion in assets under management, up more than 1,000% from last year all the while its token was down by 90% from its all-time high. As our Director of Research, Eliézer Ndinga, elaborated here, 2022 onwards will be remembered as the return to the importance of fundamental metrics not just in crypto but also in the private equity market.

Bitcoin: Week 8 Price


US Regulation

In other news, Chairman of the Securities and Exchange Commission, Gary Gensler is continuing to lobby against crypto. Last week, Gensler addressed Democratic members and legislative staff during an annual retreat, where he compared crypto advertisements flooding this month’s Super Bowl to the surge in subprime mortgages that led to the financial crisis of 2008.

More on that front, the Senate Committee on Foreign Relations introduced a bill titled the ‘‘Accountability for Cryptocurrency in El Salvador Act’’ requiring the State Department to work out a plan to mitigate potential risks of El Salvador’s adoption of Bitcoin as a legal tender to the U.S. financial system. Senator Jim Risch is afraid that with this move, El Salvador would be empowering “malign actors” as Bitcoin by its decentralized nature weakens the imposed US sanctions.

A massive leak broke out a few days ago revealing the hidden wealth of some of Credit Suisse’ clients involved in torture, drug trafficking, money laundering, corruption among others. The Credit Suisse’s scandal proves that financial crime is not exclusive to crypto, while in fact crypto is far more transparent and illicit use cases represent 0.15% of the total traded volume. The Bitcoin heist that happened two weeks ago is a further testament that crypto isn’t anonymous and therefore traceable and accountable.


The non-fungibles are no longer out of the so-called “Crypto Winter”, as the market’s daily trading volume dropped by 76% compared to its peak in the beginning of February. Three days ago, $1.7M worth of NFTs were stolen from 32 users in a phishing attack on OpenSea, the world’s largest NFT marketplace valued at a little over $13B last month. OpenSea’s co-founder Devin Finzer announced on Twitter that some of the NFTs were returned.

This is not the first time NFTs get stolen from OpenSea, and it’s not the largest attack. In October 2021, OpenSea experienced an attack that snatched $2.7M worth of NFTs. Our thesis is that time will heal this pain point in the market on two fronts:

  1. Scandals like these will either break OpenSea, and other marketplaces in the space, or make them more resilient against attacks.

  2. Users will be able to identify the malicious from the genuine as this young market grows into maturity.

The Hardware that Never Forgets

Amid the ongoing war waging between Ukraine and Russia, a crypto project has been working to bring important documentation to the light. Describing itself as a global, permanent hard drive built on the blockchain, Arweave now has more than 2M files documenting the Ukraine-Russia crisis. By preserving history, Arweave prevents others from rewriting it, or so says the company’s press kit.