Bitcoin was sideways during February, failing to break through a big level at $25k. As seen below, a sharp change in risk sentiment preceded the choppy market. The options market went from an aggressive bearish position to an aggressive bullish position in the span of two weeks in January. The market needed time to cool off.

While Bitcoin cooled, a host of new crypto narratives popped up. These included artificial intelligence, NFT marketplaces, zero-knowledge systems, Bitcoin ordinals, and China coins, among others. Since the start of the year, ACH (China narrative), STX (Ordinals narrative), and RNDR (AI narrative) have outperformed. As the month progressed the narratives became increasingly flimsy, potentially a signal of an overheated altcoin market.

The biggest concern for crypto continues to be the macro environment but for now, the trend appears to have changed for Bitcoin against the S&P500. This indicates that we may have a constructive environment for Bitcoin relative to equities in the coming months.

Bitcoin ordinals

This month something new called Ordinals came to the Bitcoin network. The Ordinal protocol allows users to inscribe data to specific satoshis (the smallest denomination) to create NFTs on Bitcoin. The idea caused controversy in the community with some Bitcoin fundamentalists arguing this new idea would spam the network. However, given that Bitcoin has been suffering from a lack of demand and as a result, a lack of transaction fees, the increased usage is likely a welcome change, especially for Bitcoin miners. This has also led traders to think about ways to take advantage of any narrative associated with Bitcoin. Stacks, a sidechain built off Bitcoin, saw a surge during February as the market constructed a narrative that it was the best way to benefit from the renewed interest in Bitcoin.

NFT Marketplaces

Bur, the leading NFT aggregator, dropped their token to over 100,000 addresses creating a huge amount of wealth for the NFT ecosystem and drumming up a lot of attention for the exchange. After the initial airdrop, new incentives were released causing thousands of ETH to join the Blur bidding pool. Blur quickly became the dominant NFT marketplace but when filtering for wash trading the stats look a bit different. The phenomenon is reminiscent of DeFi summer of 2020 when token farming first burst on the scene with the likes of SNX, COMP, and YFI, among others. Farming is a great user acquisition strategy but not necessarily a great retention strategy. Blur has a great product but it’s worth considering what dynamics are behind the current growth in volume.

Coinbase L2 launch on Optimism

Coinbase launched its own L2, Base, built using the Optimism tech stack. Coinbase is looking to purpose-build an entire onchain ecosystem for its 100 million users. If executed correctly, this could be the most powerful onboarding experience we’ve had in crypto. Additionally, Coinbase has been planning to roll out an MPC wallet that would allow users to interact directly onchain without needing to withdraw their assets to a fully self-custodial wallet. Key management is one of the biggest hurdles to adoption and this would be a huge step toward making onchain transacting easier and safer for a large swath of users.

Enterprise Adoption

NFTs continue to be a big money maker for enterprises. Nike brought in $185 million in revenue last year through primary sales and royalties of NFTs. Continuing the trend, Adidas is talking about potentially token-gating sneaker drops for certain NFT communities, and Puma launched an NFT collection called Super Puma. NFTs are the gateway for consumers to learn more about crypto.


Staked ETH is expected to begin to unlock near the end of March or early April with the Shanghai upgrade on Ethereum. The SEC crackdown on the Kraken staking product may push more users to decentralized solutions like Lido and RocketPool.

There are two competing market dynamics. On the one hand, previously locked ETH with now become available to sell. On the other hand, staking for a 4% yield will become more attractive since users will be able to unlock their tokens more readily. Most users who have staked through a staking service like Lido would likely have already sold their staked ETH derivative tokens if they were desperate for liquidity. But staking that has happened through exchanges or by individual users is more likely to come to market. This thread does a good job of digging into likely scenarios. Anywhere between $2-$4 billion ETH may come to market, which is a non-trivial amount. For context that’s 10-20x the daily ETH volume on Coinbase. We expect the event to cause volatility for ETH.