The market remains well bid, even as the Tether premium continues to sit close to 6%. So much so that Bitcoin has now pared back the losses suffered since the Bitfinex/Tether news and is trading close to cycle highs. At the same time, while Ethereum has also recovered somewhat from the negative ripple effect from the news, it remains well below the cycle highs of close to $190. Back then, with Ethereum in contango, the spread between the perpetual rate and Sep contract was close to $15, and, at the moment, this spread is close to $2 (data from Deribit exchange).

The latest surge higher came in spite of reports that the man at the center of an investigation by the US Attorney’s Office has been described as a “serious flight risk”. Reginald Fowler was hit with charges of “bank fraud and operating an unlicensed money transmitting business” by the USAO in an April 30 filing. The bank fraud counts carry a maximum sentence of 30 years and are related to Fowler’s alleged failure to return $851 million as part of the relationship between his “shadow bank” and Crypto Capital, which is alleged to have outstanding obligations to Bitfinex.

Still, it appears that the move is largely being driven by the hype surrounding Bitfinex’s IEO, which is said to be in the region of $1bln. The total token supply will equal 1 billion tokens, worth $1 each. According to Chinese trader Dong Zhao, half of the supply has already been allocated for purchase. In order to take part in the offering, investors must make a soft commitment by the end of this week but they can retire it after reviewing the token’s white paper.

Call it irrational exuberance but the crypto market is like a power-train; when it decides to go one direction, you better be careful going against the flow.

In other news, research presented by Fidelity Investments shows digital assets are viewed positively by institutional investors. In fact, seven out of 10 respondents find some aspect of digital assets attractive. 47% see digital assets as innovative technology; 46% find their "low correlation to other assets among the most appealing characteristics”; four in five perceive its characteristics favorably. While approximately 22% of institutional investors have already invested in digital assets; four in ten claim they are interested in making such an investment in the next five years.

Finally, the total amount of ETH locked in MakerDAO credit ecosystem has declined to 1.9161% vs 2.11% at its highs. The stability fee now stands at 16.5% and the Decentralized Inter-Protocol Offered Rate (DIPOR) sits close at 16.19%. Watch the DeFi market very closely for any signs of distress; things can turn very ugly very quickly in such a high leveraged market.

Thank you for reading,
The BeQuant’s Analytics team

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