Axie's Largest DeFi Hack, Musk's Twitter Play, Bitcoin Supply Shock
Ronin Network compromised, Bitcoin's Supply Squeeze
1.) Axie Infinity $620 Million Largest DeFi Hack To Date
Last week, Axie Infinity experience the largest DeFi Hack to Date where 173,000 ETH or $620 Million was siphoned marking it the largest DeFi Hack in history.
How It Started:
The Ronin Network, an Ethereum-linked side chain to support Axie Infinity’s play-to earn game was exploited which hackers started draining ETH and USDC via the Ronin bridge contract.
The half a billion dollar hack went unnoticed for nearly a week before a user’s attempt to withdraw nearly 5,000 ether from the treasury didn’t go through and developers started noticing the private keys of five validators were compromised.
Although law enforcement and blockchain analytics firms are tracking the whereabouts of the funds, the funds currently seems to be held in just two wallets controlled by hacker or a group of hackers.
Previously, wrapped Ether on Solana and Wormhole sponsor refunded the $320 million within a day. Singular believes DeFi hacks such as Axie and Solana Wormhole hack could spur interest in cross-chain interoperability using chains like Polkadot and Cosmos. However, this could spur developments in building a more resilient blockchain and alternative scaling solutions like layer 2 rollups.
2.) Elon Musk is Now Twitter’s Largest Shareholder
This week, Elon Musk recently purchased 9.2% of Twitter stock and became Twitter's largest shareholder . Result of the purchase sent shares of Twitter (TWTR) soaring 22% in early trading on Monday.
The other top shareholders of the social media company were asset managers Vanguard, Morgan Stanley, BlackRock and State Street.
Musk reportedly paid about $2.9 billion and his stake’s value went up to $3.5 billion after the spike early this week. Musk added he was giving serious thought about creating a new social media platform to adhere to free speech principles in one of his tweets.
Although purchase in a company’s shares of more than 5% has to be disclosed with the Securities and Exchange Commission, a stake of less than 10% is still considered ‘passive’ by Wall Street.
Singular believes that Musk move to purchase Twitter could prompt other activists investors to force board and management team to start discussions and force change in how Twitter is run in the future with its 217 Million Daily Active Users.
3.) Bitcoin’s Supply Squeeze
Over the last 3 months, data has shown that short-term market participants are selling to long term holders of bitcoin creating a supply squeeze that could push BTC higher from the top to $60k in the end of 2020.
A metric called the Illiquid Supply Shock created by Woo and Clemente which models the probability of Supply Shock is giving an indication that the ratio of 3 meaning for every bitcoin that is available for trading, 3 are being held in cold storage and not available for trading. That’s a whopping 75% of bitcoin outstanding supply is locked away today and the Supply Shock Gap is still growing as the likelihood of supply squeeze increases
Supply Shock = unavailable supply / available supply
Bitcoin has been range bound between $34k - $47k during the first few months of 2022. We have explained the rangebound in past newsletters, but the quick recap is that the average cost basis for those short-term holders who bought towards the end of last year when bitcoin was on its way to new all-time highs sits just under $47,000.
Singular’s Take: The steady trend of increasing market participants is setting up stage for a sharp upward movement sometime this year. Bitcoin is coiling up like a spring and once the last marginal short-term seller has been exhausted, thus removing that upper bound resistance, bitcoin should have a clear path to new all-time highs. Predicting exactly when that will happen…well, your guess is as good as mine.
Singular’s Action: The number of active entities that were either a sender or receiver of bitcoin has steadily been increasing over the last several months. Long on Dips for BTC, ETH into the end of 2022.