🟣 Memecoin Utility?

Vitalik wants more out of the degen memecoin culture.

March 29, 2024

GM, GM. 

Majors have been relatively range bound over the last couple of days, as the market awaits crucial feedback on recent ETH ETF filings. Markets across the board are fairly quiet; however, the memecoin market continues to show strength.

Yesterday DOGE made new highs on the year, reinvigorating conversation about the implications the “BTC of memecoins” could have on the market. Whatever the case, WIF (Solana’s biggest memecoin by FDV)  also made new ATHs. In addition, today Vitalik published an article from his blog addressing the memecoin mania and offers a few angles on how we could use memecoins to do more useful things.

If memecoins didn’t generate attention and debate, they wouldn’t be memecoins. On one hand, polynya (a well-respected anon known for their takes on cryptography) has a cynical take on memecoins. And, on the other hand, Travis Kling (Founder and CIO of Ikigai Asset Management) acknowledges financial nihilism is embedded in culture more broadly–memecoins are just another outlet for it.  

So, while the memecoin market can very legitimately be perceived as simply an arena in which degens can gamble, memecoin developments are worth noting, because at the very least they can shed insight into the sentiment of the market. And, as more money flows into crypto (ICYMI, this is biggest inflow of USDC, ever), maybe they continue to be the area of the market where crypto-natives can extend further on the risk curve and seek higher returns.  

— Hayden (X: magicdhz | Farcaster: magicdhz)

March 18th marked the interim top for BTC ETF holdings, with ~837,000 BTC under management versus the ~831,500 held in ETFs today. BlackRock and Fidelity stand out as the fastest growing BTC investment vehicles, and obviously Grayscale has been in a sharp decline with their 1.50% management fee versus 10-30bps fees for the other providers.

I have good news and bad news for my fellow ETF flow enjoyers: Grayscale holdings are down to ~335,000 BTC from a high of 654,000 in early April 2021, so we are nearly half way through any potential outflows. For the bad news, 335,000 BTC is worth $23.5B thanks to BTC price appreciation, so if you consider the amount of dollar denominated inflows we need to offset further Grayscale outflows, we are in the same spot we started. 

All in all, the BTC spot ETFs are bullish. We expect passive flows into BTC ETFs over the long haul, and believe that the short term flows are more noise than signal.

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The insights, views and outlooks presented in the report are not to be taken as financial advice. Blockworks Research analysts are not registered broker/dealers or financial advisors. Blockworks Research analysts may hold assets mentioned in this report, further outlined in the Firm’s Financial Disclosures.