Trick or treat?!

The market had both in store for us this week with $500M worth of token unlocks, $OP bouncing back with a late-month recovery and recording breaking movement from BlackRock’s Bitcoin ETF.

Ready to catch up on all the crazy? Let’s see what we have in store!

🪨 RUNE IT BACK TURBO

Runes activity has seen a robust recovery with trading volume and unique transactions doing a 3x and 4x respectively since August. Lows are accounting for ~60% of Bitcoin’s daily on-chain transactions which has pushed average transaction fees up by 32%, boosting miner earnings from Runes transactions by as much 5 BTC daily in the process.

A large part of this resurgence can be attributed to Magic Eden which has solidified its position as not only the go-to Runes trading platform, but also the leading marketplace for the Bitcoin ecosystem. Over the past month Magic Eden acquired at least 90% of users and volume allowing them to capture significant liquidity to facilitate more transactions for Runes and Ordinals.

Since its launch in April, Runes have enhanced Bitcoin’s functionality by introducing true fungibility for on-chain assets, allowing users to etch, mint and trade tokens with ease. This has resulted in a proliferation of memes, something that’s been lacking for a long while due to Bitcoin’s barriers to entry. These include a lack of cross-chain bridges, high transaction costs and slow speed.

Along with increasing interoperable solutions and innovation of the mother chain (i.e. OP_CAT, roll-ups and sidechains), Runes has enabled stronger communities and fostered collective sentiments which are essential to attracting mass retail liquidity, as seen on Solana’s “memecoin supercycle”.

While $DOG remains among the top 10 Runes over the past 30 days, following its airdrop to Runestone holders, current attention has shifted to $PUPS (which also has its own derivative on Solana), as well as $GIZMO and $BDC, both of which are cat-themed tokens, which could be catalyzed by the release of OP_CAT in the near future.

BTC memecoins are currently valued at ~$2B, which is a mere 0.11% of Bitcoin's $1.9T market cap. In comparison, ETH memecoins hold a market cap of more than $20B, representing 7% of ETH’s $300B market cap, while SOL memecoins stand at around $12B, accounting for 15% of SOL’s $80B market cap.

This stark disparity indicates a significant growth opportunity for BTC memecoins as adoption increases. With imminent listings among top CEXs, early investments could yield substantial returns before prices soar as retail interest surges, spurred on by the introduction of platforms like Moonshot. Valuations of $PUPS, $GIZMO and $BDC are still a far cry as compared to this cycle’s blue-chip memes which suggests attractive entries for a higher risk-reward ratio.

🔍️ MARKET WATCH

PROJECT UPDATES

TOKEN UNLOCKS

Key Takeaways:

• $PORTAL showing classic crypto volatility with some wild 10% swings 📈

• $TIA is taking a nosedive (-21%) ahead of its massive unlock 📉

• $OP and $SUI are both showing surprising resilience, climbing back to near-neutral territory 💪

🟢 Resilient Performers:

• $OP: Bouncing back with a late-month recovery

• $SUI: Showing strength despite upcoming $145M unlock

🔴 Under Pressure:

• $TIA: Down 21% (yikes!) as market prices in the $923M unlock

• $MAV: Struggling to find support after a mid-month peak

$TIA UNLOCK SPOTLIGHT

Potentially one of the most significant token events we've seen this year.

The circulating supply is rising by a massive 92.3M TIA (a real circulating supply increase of 41.8%).

Much of the potential selling pressure may already be hedged through perpetual contracts, with many OTC buyers having already secured positions over the past months.

Hedging shorts are unwinding, and funding rates are decreasing, so add them to your watchlist. Open interest is close to a record high, at $314 million, close to the historical high of $342 million.

What's Different This Time? 🤔 Unlike September's unlocks, where we saw that crazy 30%+ upside, October has been teaching us a different lesson. Instead, we're seeing more calculated moves and some severe pre-unlock jitters.

What’s wilder is that despite this unlock and poor price performance, investors are up bigly.

• Seed Investors: 526x

• Series A: 50x

• Series B: 5x

Would you believe these returns?

SECTOR PERFORMANCE

Fan tokens leading whilst new listing struggle.

BLACKROCK BITCOIN ETF BREAKING RECORDS

Let's talk about the absolute UNIT, BlackRock's Bitcoin ETF! The numbers we see are ridiculous, and we have the receipts!

These Numbers Are INSANE:

• $30B AUM in under a year

• Fastest growing ETF... EVER

• Consistent positive inflows

• Peak daily inflow: $1B+ (March 2024)

Market Implications:

• Institutional money flowing steadily

• Reduced sales pressure

• Growing mainstream acceptance

Pro Tip 💡 With these inflows showing no signs of slowing, we might be watching the early stages of a significant institutional adoption wave. Keep your eyes on those daily flows - they tell us something big is brewing!

POLYMARKET POLITICS

Trump's lead has hit a massive 34% gap this week!

The probability of Trump winning the US presidential election on the prediction market Polymarket rose to 67.1%, while the likelihood of Harris winning fell back to 33.1%, a difference of 34 percentage points.

The platform's trading volume on predicting the US presidential election reached US$2.68 billion!

📈 PRICE ACTION

Gm frens!

As predicted BTC continues to consolidate in the expected range, and therefore we have seen clues as to the direction we can expect next.

What we can say:

• HTF bullish market

• Trending above 50 EMA

• Consolidating around previous ATH

• Expectation is bullish

Bullish scenarios remain the same; we either we break out now and continue the bullish run, or we break down lower and expect an accumulation before the continuation upwards.

Alternatively, the bearish scenario would be a break down followed by the expected accumulation also breaking down to become a re-distribution instead. At that point I would call for a bear market - but we’re far from that.

So let’s have a peek at another chart today - TIA. So this scenario is as about obvious as it gets. TIA has been in a downtrend ever since reaching its ATH (all-time-high) at around 20$ and now finds itself going sideways for a prolonged period of time.

This sideways price action indicates indecision in the market and will continue until enough of the underlying asset has been accumulated and/or distributed. This is achieved via fakeouts, where price liquidates the extremes of the range over and over - I call this phenomenon ‘range shenanigans’ and the best thing to do during a range shenanigan is simple, stay out!

What we can say:

• HTF downtrend

• Sideways price action

• No direction cue

The plan here is to wait for a clear directional cue - a breakout to either side and then follow it. Until that happens…trade responsibly and I’ll see y’all next time!

🔑 KEY NEWS

MAJOR HEADLINES

• Nigerian prosecutors withdraw money laundering charges against jailed Binance exec

• Coinbase partners with Golden State Warriors

• Sotheby’s VP insider trading on $BAN exposed

• Introducing Project Mandala (collaboration of financial institutions)

• Hong Kong Stock Exchange to introduce price indices for BTC & ETH next month

• DWF Labs partner exposed for spiking drinks

PROJECT UPDATES

• MakerDAO rugged for $1.5M on RWAs

• $CHI $TKN $ZEN depeg galore on Scroll, Essence Fi rugged

• Ethena Labs statement on team earning Ethereal rewards via sENA

• $COOK by Mantle, Chasm Network, Grass TGEd

• Kraken plans to launch L2 next year

• Binance listed $GOAT perps

• Infera Network introduces Kira

• Gitcoin introduces $ALLO & Allo Protocol

• Solayer Labs introduces sUSD

• Stacks activates Nakamoto upgrade

INTERESTING PROJECTS

• Ink: Kraken’s L2

• Daos.fun: Memecoin hedge fund

• Twine: Multichain settlement layer

• Society Library: AI based infra

OUR ECOSYSTEM ALIGNMENT

⚔️ A CALL TO ARMS

Think you have what it takes to enter the Castle and contribute to research and writing in the collective, or maybe you want to invest in and advise projects?

We are always looking for well-connected, talented, or simply hungry contributors who can get involved across a range of activities.

Fill out an application form!

Here’s to another unpredictable week where massive ETF moves and volatile unlocks have kept us very much on our toes.

Thanks for reading and from the knights and noble steeds at Castle Capital, stay sharp and get ready for whatever surprises the market has in store next.

In our newsletter, we may discuss projects or tokens in which we hold positions. While we aim to provide informative content, our views are not financial advice. Please conduct your research and consult professionals before making investment decisions. Crypto markets are volatile, and past performance doesn't guarantee future results. Invest responsibly, and be aware of the risks. Your capital is at risk, and we do not accept liability for any losses.