September Alpha Dump

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Upcoming Events - September 2023

• Traders are pushing back the timeline of spot Bitcoin ETF approvals following Friday’s delays.

• $APE, $ID, $DYDX, $YGG, and $OP have significant unlocks scheduled through the month of September.

• $DYDX is set to launch its anticipated V2 upgrade, with a move to the $ATOM ecosystem.

• $XLM is due to release an announcement on September 12th.

• The $ASTR team has pre-announced news to be released at Token 2049 on September 13th.

With traders set to return after the summer break, September may well see increased volatility with several strong themes and narratives on the horizon. Here’s our pick of upcoming events to watch this month.

Spot ETF Deadline Updates

Last week, the U.S. Court of Appeals for the District of Columbia ruled in favor of Grayscale Investments in its lawsuit against the Securities and Exchange Commission (SEC). The court found that the SEC had not adequately justified its decision to deny Grayscale's application to convert its $16.2 billion Bitcoin Trust into an ETF.

The news initially sent the cryptocurrency market rallying, as traders saw it as a step closer to the approval of spot Bitcoin ETFs. JP Morgan analysts even predicted that the SEC would be "forced" to approve multiple spot Bitcoin ETFs in the wake of the ruling.

However, the rally was short-lived. On Friday, the SEC announced that it would delay its decision on whether to approve spot Bitcoin ETFs from iShares, Bitwise, VanEck, Wisdomtree, and Investco. This news has pushed back the timeline for any imminent approval, with some commentators now predicting that decisions will not be made until later this year or even early next year.

The ETF approval narrative has been key to understanding short-term price action, so monitoring newsflow surrounding this should continue to be a significant focus of any analysis.

Unlocks

Given the weak price action, tokens with significant unlocks have traded heavily throughout 2023 due to the imbalance between supply and demand being accentuated. These environments are characterized by the lack of a "next marginal buyer," and therefore the increased supply offered by unlocks tends to have a large relative impact on prices.

There are several large unlocks coming up this month which could bring traders to specific markets. In order of event, $APE, $ID, $DYDX, $YGG, and $OP will all release a significant amount of tokens from mid-month. This is likely to increase volatility and action within these names. The market has begun pricing in this increased token supply, punishing these names on a relative basis.

17th September - 01:00UTC

Apecoin ($APE) unlocks 11.02% of the circulating supply, equal to $54.41m. The last major unlock saw 4.23% of circulating supply hit on 17th August, and since then, $APE has sold off against the market over 14%.

22nd September - 01:00UTC

Space ID ($ID) unlocks 6.45% of the circulating supply, equal to $3.92m. The last major unlock also saw 6.45% of circulating supply hit on 22nd August, and since then, $ID has traded slightly higher, as open interest showed large holders had hedged prior to the event.

27th September - 15:00UTC

Yield Guild Games ($YGG) unlocks 6.71% of the circulating supply, equal to $2.76m. The last major unlock saw 6.6% of circulating supply hit on 27th August, and since then $YGG has held up so far and remains characterized by healthy volatility.

30th September - 05:00UTC

Optimism ($OP) unlocks 3.03% of the circulating supply, equal to $32.37m. The last major unlock also saw 3.03% of circulating supply hit on 30th August, and since then $OP has traded heavily, currently trading down over 4%.

Following an explosion of activity on Optimism post-mainnet launch of BASE, and the subsequent popularity of Friendtech, $OP has shown massive strength versus other Layer-2 tokens such as $ARB. Current spread prices have deviated from their natural average true ranges (ATRs), which is bringing lots of volume to these tokens on a relative basis.

As we approach these unlock events, we will break down positioning, activity, and large holder behavior ahead of time.

DYDX Upgrade

DYDX is set to release its anticipated v2 upgrade towards the end of this month. There are several interesting proposals going on in the background that drastically overhaul the tokenomics and value accrual mechanisms, making it a key market to watch this month.

Today’s news that the DAO approved the $DYDX token to become the native asset of the upcoming dYdX chain shines a spotlight on the narrative, and traders are watching for an announcement of a launch date to begin positioning for the event.

Given that the v2 upgrade includes a move from ERC20 to its own app chain on Cosmos, $ATOM could also experience increased volatility, as it did initially when the $DYDX team announced plans to move to a new model.

Over the last month, $DYDX has shown strong relative performance. However, $ATOM has yet to begin pricing in the launch of the v2 upgrade.

Here are some additional thoughts on the potential impact of the DYDX v2 upgrade on the price of $ATOM:

• The move to Cosmos could make DYDX more attractive to institutional investors, who are increasingly interested in blockchains that are interoperable and scalable.

• The new tokenomics could make DYDX more valuable to users, as they will be able to earn more rewards for staking and participating in the protocol.

• The overall upgrade could improve the user experience of DYDX, making it more appealing to a wider range of users.

If these factors play out as expected, it could lead to a strong rally in the price of $ATOM. However, it is important to note that there are also some risks to consider. For example, the upgrade could be delayed or not live up to expectations. Additionally, the overall market conditions could remain bearish, which could weigh on risk sentiment.

XLM Announcement

Stellar (XLM) has seen significant relative strength against the wider market. Since Judge Torres’s XRP vs SEC ruling, the market has outperformed, as the team used renewed attention to release several updates, such as a partnership with MoneyGram and a new product called Stellar Quest. This has raised XLM's profile and made it an attractive market for traders.

Further adding to the strength, the Stellar team pre-announced news to be released on September 12th. Given how recent ‘announcements-of-announcements’ have traded, for example, Shibarium’s launch, this event will likely lead to significant volatility and trading in the lead-up to, and after the announcement.

ASTR

We published our $ASTR thesis last month, outlining the token as a good proxy for traders to gain exposure to the Japan theme ahead of Binance’s re-entry into the market. To recap, Astar is a scalable platform used by dApp developers to lower costs and improve interoperability, including via the use of Layer 2 features such as Plasma and zero-knowledge rollups.

One of the key things setting it apart from other ‘Japanese tokens’, is the partnerships they have secured. Notably, ASTR partnered with the fourth-largest company in Japan - NTT Docomo, which happens to be the country's most important telecommunications company. Over the years, TT Docomo is set to invest $4 billion in Web3 and sees Astar Network as a key player in the development of the Japanese Web3 ecosystem.

Furthermore, ASTR’s founder - Sota Watanabe helped the Japanese government design their blockchain strategy and co-authored a national Web3 white paper.

This solidified their position within the Japanese crypto ecosystem, which has resulted in significant relative strength since the announcement.

Importantly, the Astar team has set high expectations for an upcoming announcement at Token 2049. Scheduled for September 13th, the market is likely to see increased volume and volatility as traders position for the event.

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