Means of Distribution

Q9 Capital
10 min readApr 29, 2022


29 April 2022

Q9 Capital:

  • Mixed week for crypto markets
  • Bitcoin becomes official currency in Central African Republic
  • Fidelity to allow Bitcoin investments in retirement plans

A mixed week of headlines saw crypto ending slightly down after a volatile week. Markets witnessed an aggressive early-week rally due to Elon Musk’s $44bn Twitter takeover deal, with Bitcoin and Ethereum temporarily reclaiming $40k and $3k levels before falling back after the delayed launch of the much-anticipated Australia crypto spot ETF, one day before its proposed listing.

In other positive news, Fidelity is gearing up to offer Bitcoin in 401(k) retirement accounts and the Central African Republic announced it is to become the 2nd country to adopt BTC as legal tender.

Markets sunk but investors APEd in…

ApeCoin was the notable exception with a standout +53.7% rally — making it the largest metaverse token in town, surpassing MANA, SAND and AXS in size. Terra (LUNA) witnessed a $500mn stamp of investment as Fireblocks gave its clients access to the token (this week, we launched ApeCoin, Terra, Near Protocol, Ren, THORChain, Fantom on our platform so you can partake in the rally).

The APE rally was fuelled by the upcoming ‘Otherside’ land auction to be held by Yuga Labs and Animoca Brands in conjunction with Bored Ape Yacht Club NFT project tomorrow. The Otherside launch will consist of a Dutch auction-style sale and only Know Your Customer (KYC)-approved wallets will be allowed to participate in the sale of the first 100,000 land parcels. A Dutch auction is a type of auction in which the price of an item is lowered until it gets a bid. The first bid made is the winning bid and results in a sale, assuming that the price is above the reserve price. This is in contrast to typical auction markets, where the price starts low and then rise as bidders compete among one another to be the successful buyer. All transactions will be settled in APE, all the interested parties have aggressively bid up the market in the anticipation of sale. Wallets that already hold a BAYC or Mutant Ape Yacht Club (MAYC) NFT will be able to claim a land parcel for free for 21 days after the auction without needing to be KYC-approved to claim. Ongoing governance votes within the ApeCoin community have also helped increase demand for APE, a clear demonstration that BAYC and MAYC holders are looking to get more engaged with the direction the ecosystem will take in the years ahead. Or is it?

While the spot market is printing new highs the leveraged (perpetual) markets’ annualized funding rates have gone to the south pole — particularly this week. With each day declining further we have seen funding payouts annualizing below -100% on FTX in past 36 hours, the growth in funding decline is an indication of how poor inventory supply on APE coin seems to be majorly held by market makers or other prop traders.

These folks definitely like the airdrops and the money making part of APE or ape-like coins. It’s not to say that retail doesn’t. But when professionals are at the table driving this action you are going to see a lot of hedging of their long APE. Like it makes sense. Buy APE, hedge out the market risk, collect said airdrops. If you cover your cost of capital this is a pretty good, classic type of trade. The community events and free t-shirts are probably a little less interesting. But if the pros are the main (only?) drivers of this flow then it doesn’t really work. If the swaps trade low and all these hedged trades cost money, they will be quick to get out and w/o long term/retail/community interest, who will hold your bags?

This is just one more example of institutionalization of crypto. It’s not great, but it’s not unsavoury, this is just kind of their job. You got to take the good with the bad. They need to be long on these coins to meet retail demand. The question is how much retail demand is there? Institutional access increases liquidity and access for everyone else. But the flows will be the flows. And we see it in BTC too…

BTC’s Correlation to Nasdaq is Peaking…there is more

A very messy week in stock markets, but one true to the pattern that has held all month: tech/growth stocks selling off while consumer staples hanging in there. This is having an impact on the price of BTC and other crypto assets given the recent surge in correlation. Bitcoin’s bear market may have some steam left in it according to an impending “death cross”, a technical indicator that has previously signalled sell-offs. The death cross occurs when the 50-candle simple moving average (SMA) crosses below the 200-candle SMA. While its predictive powers are questioned given it is based on backward-looking moving averages, its past record on the three-day chart as a doom indicator is very accurate.

The delay of “the merge” may also be weighing on Ethereum’s near term performance.

Everyone has been concerned about Bitcoin (and crypto markets) being strongly correlated with global equities (tech names particularly) this year, it’s a known fact in extreme markets in mass consensus people want to be brave (in a bull market) to put risk on and wise (in a bear market) to take risk off. We should perhaps zoom in a bit on the extent of the move and not just the same direction of the move. Beta of Bitcoin (vs Nasdaq as a benchmark) for 2021 was ~1.21, you would expect Long BTC Short NDX basket to underperform, but it has surprisingly (I know) fared well.


Source: TradingView

Another interesting thing to note is that VIX saw an uptick last week for the first time since the beginning of the war, BTCDVol continued to contract and talks about FED aggressive hikes began.

Source: TradingView

So what’s going on here? Lots of things certainly, but here are some ideas. As we have discussed, the mainstreaming of crypto is here and institutions are playing. There may be a line out the door of firms waiting to get in, but the crypto market buyer holding the ticket standing at the front counter looks more and more institutional.

If you are an equity player, you are probably thinking about two things. One is that we are in a sideways/to bear market right now, at least in terms of real growth. Nominal growth may be another story and might even mean you should be buying this market, best to make some nominal money than none at all. We will see. But this brings up the second point which is (extremely) related and that is inflation. And one thing that people don’t like in inflation is high valuation growth stocks that were previously discounted at 0% for infinity years.

Basically, the market no longer likes big tech/Web 2. They will sell this and given that bonds are (or maybe were) uninvestable, they need to buy something. That something will be some real world stuff, but not all. It’s hard to make the argument that tech/software/metaverse won’t continue to eat the world. You see how I did that? Just threw metaverse in there because you already knew the answer. They will also buy some Web3. But for the newly converted large institution, Web3 is mostly BTC. It’s what they know, and what they can access. So that may be what you are seeing.

Old school asset managers wake up every day and bemoan the old price for NFLX and sells some Web2 and buys some Web3. The net effect is that BTC is well correlated to tech (because it’s the same players/flow) but outperforms it’s old beta and has been the better place to be even though neither is crushing it this year. As an added bonus, this rotation and these buyers cushion the blow and we get lower volatility in BTC. See, institutions aren’t so bad. Somebody to buy your bags after all.

401k? Not as far away as it looks

Investment giant Fidelity, which manages $2.7tn of assets and provides employee benefit programs for nearly 23,000 businesses, is set to become the first major retirement-plan provider to allow Bitcoin exposure in retirement accounts.

The investment giant will bring the new option to its clients through its new workplace digital assets account (DAA) launched on Tuesday, according to a press release. Employees won’t be able to start adding cryptocurrencies to their nest eggs right away, but later this year.

This essentially means that if the company you are working for offers a 401(k) retirement plan and decides to adopt this feature (such as MicroStrategy recently announced) then employees will be allowed to allocate up to 20% of their retirement accounts to BTC.

“There is a need for a diverse set of products and investment solutions for our investors,” said Fidelity’s head of workplace retirement offerings and platforms. “We fully expect that cryptocurrency is going to shape the way future generations think about investing for the near term and long term.”

Fidelity estimates that about 80mn US individual investors own or have invested in crypto.

The asset manager also opened a virtual eight-story building in the metaverse this week that offers financial education.

When Will the Merge Emerge?

ETH was supposed to be weeks away from the “merge”, a transformative upgrade of its blockchain Ethereum to make it faster, cheaper and less power hungry, holding out the prospect of a meaner and cleaner crypto future — but has been delayed. The transition to a proof-of-work system is highly complicated and still uncertain as to whether it can actually deliver on its promise of lowering costs and increasing transaction speeds.

Source: Twitter

This is an extremely important moment for the #2 crypto. The upgrade will allow it to compete with other smaller, faster altcoins such as Solana and Cardano — but each delay gives its competitors more time to gain traction. However, with billions of dollars on the line, a misstep would be catastrophic for the whole ecosystem.

Ethereum has long been hobbled by issues of speed and processing costs. It only processes 30 transactions per second as a proof-of-work blockchain, but expects to process as many as 100,000 transactions per second once it moves to POS.

FIL-ing a Void

Recent flows in alt-coins and old coins as well the endorsement of the US’s largest retirement-plan provider suggests crypto investing is moving further into the mainstream. Crypto investing has been virtually non-existent in 401(k) plans to date and Fidelity’s embrace of BTC should prompt wider acceptance among both employers and employees. It sends a significant message to other pension providers as well — nobody wants to be first, but nobody wants to be last.

Morgan Stanley also provided a strong endorsement for BTC week, stating it has now reached an important milestone and is close to becoming a currency. They highlighted that Strike integrating with the BlackHawk network allows BTC to enter the physical locations of shops and restaurants which still make up 85% of US transactions (the BlackHawk Network is the largest payment processor in the world).

The evolution of Bitcoin usage as a medium of payment will be fuelled by the ability of consumers to choose paying with BTC through Lightning in physical locations rather than only being able to use the peer-to-peer (P2P) currency online.

There is still a huge gulf between traditional and crypto infrastructure but movements by the likes of Fidelity (FIL) and the BlackHawk Network are beginning to fill this void and make crypto accessible for everyone. This probably means that the line out the door waiting for their ticket will see more direct and indirect participation by mainstream retail investors. These are just normal people who want to make crypto part of their portfolio. They probably won’t become crypto degens anytime soon. But they have money and there is a lot of them. If you have access to the crypto market today you can ‘cut the line’ through spot trading or auto invest. DYOR, but “the future is already here, it’s just not evenly distributed”.

In the News…

Crypto Markets

  • BTC & ETH slipped -1.9% & -1.7% respectively on the week (8am). The total market cap of the crypto market stayed north of $1.9tln mark and Bitcoin dominance hovered above 41%
  • Among other majors, SOL dropped -3.5% this week while CRV popped +9.2%, however talk of the crypto town was APE which jumped over 53.7% in the past one week
  • Annualized realised volatility in markets continued to contract, sub 40% both for BTC& ETH this week

Legacy Markets

  • US Equities (SPX) declined -2.4% week on week as earnings this week fuelled fears of a slow down in economic growth
  • In currency markets, the US Dollar index (DXY) printed a fresh high since 2017 while the Japanese Yen made a 20 year low this week
  • Elsewhere the 10 year US Treasury yields were unch and the Gold & Silver index dropped -7.8%

Our Flows

  • Our client pad was bid up (only buyers) during last week, we are seeing buy the dip action
  • Flow dominated by buyers in BTC and ETH
  • Modest buyers of SOL and APE, which has been hottest among the 6 new coins we added yesterday on spot trading



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