Q9 Weekly | Leapfrogging the Competition

Q9 Capital
6 min readMay 11, 2023

10 May 2023

  • Markets recede after volatile week
  • Crypto companies look to go public again
  • Meme coins return: Pepe the frog hops to $1.6bn mkt cap 3-weeks after launch

Bitcoin dropped midweek, falling below $28k after network congestion pressures caused Binance to temporarily pause withdrawals over the weekend (Binance resumed the service Sunday night). The congestion of the BTC and ETH networks was primarily due to minting of BRC-20 tokens (ie Ordinals) and an intense trading frenzy of new meme-token Pepe Coin. The rest of the crypto market also tracked down before jumping slightly on the release of US inflation data, which eased to 4.9%. BTC closed the week at $27.6k and ETH at $1.8k.

BTC/USD and ETH/USD, 1 Month

Source: TradingView

However, long term BTC holders are adding to their positions implying that investors view the recent pause in price movement as an opportunity to acquire more.

BTC Long Term Holders, Net Position Change

Source: Glassnode

The CoinDesk Bitcoin Trend Indicator (BTI) is showing that the asset is in the middle of a significant uptrend and implies that price may move higher. The Bitcoin Trend Indicator (“BTI”) is a dynamic signal designed to convey the presence, direction, and strength of momentum in the price of Bitcoin.

CoinDesk Bitcoin Trend Indicator (BTI)

Source: CoinDesk Indices

ETH holders are rushing to stake their tokens, with network validators pushing deposit activity to the highest level since the Shapella upgrade earlier this year. More than 200k ETH have been deposited to the network since the start of the week, data from Nansen shows, marking the first time deposits have outpaced withdrawals since Shapella went live last month. The additions bring the number of ether locked for staking purposes to over 19mn tokens — about 15% of the total circulating supply.

ETH Deposits and Withdrawals, 7 Days

Source: Nansen

Crypto exchange Bittrex filed for bankruptcy on Monday, several weeks after announcing it would wind down operations.

The New SPAC(e) Race

Crypto companies are once again exploring an option that appeared off the table just six months ago: going public.

Bitcoin-mining company Bitdeer Technologies listed on the Nasdaq last month after merging with a SPAC. Blockchain company Chia Network recently took another step toward going public, while cloud-mining company BitFuFu and crypto cash-machine company Bitcoin Depot are working on plans to go public via SPAC mergers.

The rush of small crypto companies toward public markets seemed like a long shot when 2023 started. But this year has brought a sustained rebound in the riskiest assets across markets, from crypto to technology stocks.

Shares of publicly traded crypto companies such as Coinbase, Marathon Digital and Riot Platforms have also soared this year. If the market continues to perform as it has since January, the trickle of IPOs could turn into a steady stream.

The Price(ss) and the Frog

“Pump the Frog” is the newest rallying cry to ricochet around the crypto-sphere as new meme-coin, Pepe became the fastest growing ERC-20 token in crypto’s existence.

The token gained a $1.6bn market cap at one point (before falling to $780mn) and over 100k holders — all in only 24 days.

Pepe Market Cap, 1 Month

Source: CoinGecko

PEPE’s meteoric rise is unlike anything we’ve witnessed in crypto history. Its first two days were relatively quiet, but by the third day, its daily holders were increasing by the thousands. It only took PEPE 22-days to surpass 100k holders on-chain.

This is even more impressive when compared to the historical growth of other fast-growing Ethereum-based tokens. When SHIB entered its period of hyperbolic growth in 2021, it still took 90-days for the token to reach 100k holders. Viral assets from 2020’s DeFi Summer, such as YFI and YAM, never even reached the 100k holder milestone.

PEPE Holder Base Grows at Record Pace

Source: Messari

As a result, both the Ethereum and Bitcoin networks are experiencing congestion and elevated transaction fees. While PEPE has grown at record pace, it still remains a fraction of DOGE and SHIB’s valuations.

ETH Average Transaction Fees

Source: Etherscan

Pepe coin, whose name comes from a popular meme co-opted by the American alt-right and later adopted by pro-democracy protesters in Hong Kong, was released with a total supply of 420.69tn coins (Get it !!!). It is now listed on major exchanges like Crypto.com and Binance.

Trading volume in all meme-coins totalled $2.3bn last week, the highest since May 2021, according to Dune analytics tracker.

Meme Token Trading Volume

Source Dune Analytics

Meme Token Creations Over Time

Source Dune Analytics

The Pepe token is only the latest chapter in the meme’s almost two-decades-long history. But it’s certainly not the first memecoin. Dogecoin, (created in late 2013) was the first meme-coin to land on the market. As opposed to Bitcoin or Ethereum, Dogecoin unapologetically had no purpose. That didn’t stop the token from taking off. Since then, a flood of memecoins have saturated the market, including Shiba Inu and recent additions like Good Gensler.

Some people will get rich quick from this. One crypto trader claims to have made £3mn in just three weeks. But it’s not all a positive thing. Many will lose and get stuck holding the bag as early adopters rush out the doors. The crypto industry is struggling with a massive reputation problem post-FTX and episodes like “pump the frog” only reinforce the popular prejudice that crypto is just for scammers and charlatans. At a time when the industry is trying to rebuild, Pepe coin is the last thing it needs.

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