The MegaBrainX Crypto Investment Newsletter

The newsletter is designed to be an Investor’s best-friend, each week we’ll cover:

1. Macro Overview

2. Crypto Overview

3. NFT Overview

4. Building an Investment Thesis

Together, we grow as Investors. Let’s dive into it

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Key Metrics

• Digital asset investments saw record inflows of $1.76 billion over the past 10 weeks, the highest since the 2021 US futures-based ETF launch, led by Bitcoin, Ethereum, and blockchain equities.

• Fifteen projects secured a combined $291.06 million in funding during the past week, with Wormhole leading the way with $225 million in investments.

• Two ICO launches this  week, with 23 projects launching in December.

• There are 8 projects with token unlocks scheduled for this week, with the most notable ones being $4.33M (5.56% of circulating supply) for HFT coin of Hashflow project, $3.06M (2.26% of circulating supply) for GAL  token of Galxe project, and $3.52M (1.61% of circulating supply) for GLMR  token of Moonbeam project.

• Developer activity has seen a slight increase in November, with Internet computer (ICP) in the lead in number of hours and commits in Github by a wide margin, followed by Solana & Then Pancakeswap. The total number of developers have been in a downward trend with a 31% decrease year on year in October 2023.

• Ethereum is back in the lead as the top revenue-generating blockchain protocol with $9.7M avg daily fees, a 20% Wow increase, followed by Bitcoin at $3.3M. DeFi leaders Uniswap, Kyberswap & Aave round out the top 5

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World Events Highlights

This Week’s Major US Economic reports

December 5: Job openings

December 6: US Trade deficit

December 7: Initial jobless claims

                       Wholesale Inventories

December 8: Consumer sentiment

                       U.S employment rate

                       U.S. unemployment rate

• The US bond rally this month, the strongest since the 1980s, has ignited powerful gains across assets on mounting evidence of cooling inflation that could keep the Fed from hiking further, but sustaining the rally into 2024 depends on that soft landing narrative holding. Learn more

• The US economy grew faster than expected in Q3 at a 5.2% rate, but the surge is fading as higher rates to curb inflation slow consumer and business spending, putting GDP on track to expand at a much weaker 1-2% pace in Q4. Learn more

• US consumer sentiment fell for the fourth straight month in November while inflation expectations rose, with medium-term outlook hitting its highest level in over a dozen years, concerning for the Fed as it tries to reduce price pressures. Learn more

• Corporate executives and officers have been snapping up shares of their own firms in November amid the stock rebound, driving the insider buy-sell ratio to a six-month high in a sign of confidence the rally has room to run. Learn more

• Mega hedge funds piling into crowded trades sparks regulatory worries of destabilizing stampedes, but tighter risk controls make systemic crises less likely even if painful double-digit losses occur. Learn more

• Eurozone inflation seen dropping under 2% target sooner, by early 2025, though core rate stays higher; economists expect first ECB rate cut in June 2024, not September, but some officials say rate cut talk premature. Learn more

• OPEC+ agreed a surprise oil output cut of 900,000 barrels a day, yet crude prices fell as traders doubted if it would be fully implemented and remained wary of soft demand, while Angola rejected its new lower quota and Brazil said it would join the cooperation charter. Learn more

• China Evergrande is scrambling to avert imminent liquidation and final collapse with a last-ditch debt restructuring proposal, but creditors dissatisfied with low recovery prospects in previous offers are unlikely to accept the new plan. Learn more

• NATO chief warns allies must support Ukraine in good and bad times and prepare for potential bad news from the front as Russia boosts troop levels, though he says Kyiv's strikes on Russian fleet and territory are big victories. Learn more

• US destroyer shot down drones after Yemen's Iran-backed Houthis targeted commercial ships in Red Sea, marking escalation that threatens shipping and prompts US warning it won't tolerate attacks on its troops. Learn more

• China criticized the US after a warship sailed near the disputed Second Thomas Shoal, saying it "seriously violated China's sovereignty and security" and undermined regional stability, underscoring lingering military tensions. Learn more

• A senior US official said Putin likely won't agree to peace in Ukraine before he knows the winner of the 2024 election, given concerns Trump could upend Western support for Kyiv if he wins, so NATO allies reiterated backing for Ukraine knowing a near-term deal is unlikely. Learn more

• Putin seized control of St. Petersburg's Pulkovo airport from German and Gulf investors via decree, placing it under temporary Russian management while allowing foreign shareholders to eventually restore rights if they comply with Russian investment laws. Learn more

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Investors need-to-know | Macro

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Overview

Crypto Market Pumps on ETF Hopes

Bitcoin closed last week around $39.9k after rallying on mounting hype for a potential spot BTC ETF approval. The SEC is expected to rule on January 8th/9th, with a green light for all applications at once being the anticipated move.

But even with the excitement building, a Bitcoin price correction seems likely soon following its rapid ascent.

Regulatory scrutiny also looks poised to shift to USDT next on the heels of recent Binance developments. Potential stablecoin issues could weigh negatively.

On the macro front, the US jobs report hits Friday. With unemployment key for Fed policy, the crypto market may react to the results.

While ETF optimism and Fed dynamics remain intertwined top-down catalysts, some profit-taking seems probable near-term given Bitcoin's vertical climb.

You can also check crypto project-specific upcoming events Here

Key Charts

Bitcoin Percentage of Supply In Profit/Loss

This chart shows the percent of existing Bitcoin that last moved on-chain at a price lower or higher than the current price.

Putting in new all-time highs means 100% of supply is held in profit. After multiple new highs, the percentage in profit can linger near 100% for some time.

Historically, bull market tops happen when supply in profit crosses below supply in loss.

In bears, bottoms typically occur around 40-50% of supply in profit.

Currently 87.59% of supply is held in profit after the recent pump, with just 12.41% in loss.

This indicates we likely remain far from the next cycle bottom, with room for more upside before topping signals emerge.

Bitcoin Market Value to Realized Value (MVRV) Z-Score

The MVRV Z-Score compares Bitcoin’s market cap versus its realized cap (the on-chain value of BTC last moved).

It shows when market value deviates extremely high or low compared to realized value.

The Z-Score is calculated by taking the market cap minus the realized cap, divided by the standard deviation between them.

This helps identify overvalued and undervalued conditions adjusting for data extremes.

Using the Z-Score

Historically, buying Bitcoin below a Z-Score of 0 has been a good move.

Selling above a Z-Score of 6 has made sense as well.

The current reading is 1.42, trending higher recently.

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Investors need-to-know | Crypto

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Market Moves

Last week saw the highest NFT trading volume since July, with over 250K ETH changing hands. This past Sunday capped off the week with a massive $40 million in transactions, nearly double recent highs.

Key drivers behind last week's surge included a flurry of activity from FlamingoDAO, who swept 448 ETH across 26 collections, as well as a series of announcements from DeGods that sparked thousands of ETH in volume.

As the wider crypto market rallied, traders seized the opportunity to accumulate blue-chip NFTs. Bored Apes saw 154 sales for 4,458 ETH ($9.9 million) after Morgan Stanley announced its $600 million Bitcoin acquisition. Moonbirds also rallied with 503 sales for 1,117 ETH.

Speculation continued heating up going into Art Basel Miami, with Pudgy Penguins leading the charge (287 sales, 2,854 ETH, $6.4 million). World of Women (156 sales, 216 ETH), Moonbirds (435 sales, 944 ETH), and Pixelmon (349 sales, 566 ETH) also saw strong interest.

With ETH pushing back above $2,200 and yesterday's NFT volume topping 18K ETH, sentiment appears to be shifting as traders bet on a continued crypto recovery.

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New Highlights

• Pudgy Penguins tease a new Igloo merch drop coming next week. Know more

• Christie's Auction House announces "Next Wave: The Miami Edit," which focuses on 24 artists at the "forefront of digital art today." The curated auction will include works from popular Web3 names such as Jack Butcher and Grant Yun. Know more

• Cool Cats Winter Collection for merch is now live, fresh with an opportunity to purchase collectibles from their collaboration with Macy's. Know more

• ESports behemoths Team Liquid announces a playtest partnership with Illuvium and will help guide their esports strategy into 2024. Know more

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This week’s spotlight

The Evolution of Inspect

Inspect, a leading Web3 social intelligence platform, recently announced the limited release of its Professional tier product ahead of its token launch. This represents the next stage in Inspect's evolution into a versatile Layer 2 solution for social engagement and transactions.

With backing from major investors and involvement from notable developers like Cygaar and 0xQuit, Inspect is expanding beyond NFT analytics on Twitter. The forthcoming Inspect token will enable direct transactions and access to Pro platform features.

The initial exchange listings on Gate, Kucoin, and ByBit provide solid liquidity for the token launch. While not topping Binance's volume, these exchanges still see a combined $12.2 billion in 24h volume - nothing to sneeze at.

As influencer and gaming persona Alex Becker takes on a strategic advisory role, gaming integrations seem imminent. 

The potential is certainly there for Inspect to bridge digital worlds, enhancing social connections and transactions. Its evolution merits close attention from both retail and institutional Web3 participants. Though some platform risk remains due to reliance on Twitter's API, Inspect may yet pivot into an indispensable SocialFi ecosystem.

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Investors need-to-know | NFT

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A while back we began by outlining a framework to analyze narratives that will shape the next crypto cycle. Rather than chasing hype, we want to map secular trends.

So far we’ve explored major sectors like:

• Smart contracts - Scaling and interoperability improvements underway

• NFT gaming - Long-term potential if sustainability issues are addressed

• DeFi - Innovating quickly but facing regulatory uncertainty

• Real world assets - Tokenization set to unlock trillions in value

• Decentralized identity - Empowering but early stage overall

Since we may be past the depths of this bear market, it’s a good time to dive into the research.

Subscribe to this Newsletter, this is where we’ll be tracking the research process and following the narratives from the thesis.

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