Analysts' Insights
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Matrixport on BIT - Weekly Round-up
- by Markus Thielen
Liquid Staking is the fastest TVL category
This crypto bull market is broadening out beyond ‘Bitcoin being a new pillar in TradFi investment portfolios’. The downtrend in Bitcoin’s dominance reveals that DeFi is making a comeback (see our notes from the last two weeks) – despite being an underperformer for most of 2023. Total Value Locked (TVL) has increased over the last 4-6 weeks, with ‘Liquid Staking’ driving the use cases.
![](https://mban.matrixtechfin.com/d60181ca-0c76-4840-869b-4d97227359c5.jpeg)
The week around October 16-24 was key for DeFi’s reawakening: what happened?
A false tweet from a crypto news website on October 16 claimed that the SEC had approved BlackRock’s Bitcoin spot ETF. Subsequent news items reminded investors that a US-listed Bitcoin ETF was likely and potentially imminent. The Deposit Corporation listed BlackRock’s Bitcoin ETF, a judge ordered the SEC to re-review Grayscale’s ETF bid. This altered the crypto market with Bitcoin rallying +40%.
![](https://mban.matrixtechfin.com/2684122b-fde9-4558-a6a6-acdc9eab535f.jpeg)
Lido TVL back to pre-UST depeg at $20bn
Since October 20, Lido’s TVL has increased from $13.9bn to $19.4bn (+39.5%) in just 1 month. The fragmentation of the DeFi market has favored liquid staking protocols this year, as we expected, and wrote in our January 6, 2023 report. Back then, only 14% of ETH was stacked vs. 23.2% today, and while Lido had a TVL of $6.14bn, today TVL is back to the 2022 high of $20bn. Our analysis pointed out that the average Layer 1 staking ratio was 58%.
![](https://mban.matrixtechfin.com/0b98fb29-7cbd-4f86-909e-cfb91802b625.jpeg)
Lido DAO token accrues value through the 5% staking rewards – steady wins the race
While the LDO-USD token rallied above $3.0 and finished on a monthly basis at $2.7, the price dropped back to $1.7 despite revenues becoming ‘predictably’ stable with a potential upward trajectory if the trend in staking continues – as we expect with 22% of Ethereum being staked vs. 58% of Layer 1 (based on our January 2023 analysis). This stable revenue could set a floor under the LDO-USD token at $1.7 with the upside being the all-time high with TVL reclaiming this level.
![](https://mban.matrixtechfin.com/6b062604-3ea4-4ad9-b70e-10cd14218f17.jpeg)
Lido’s token could be undervalued – a large breakout looms
While TVL increased by +228% for Lido this year, the LDO-USD token has only increased by +80% - underperforming Bitcoin, which is up +125%. As LDO is breaking out of a large triangle formation and with the amount of ETH being staked continues to increase, Lido itself should continue to be key beneficiary of the trend in staking.
![](https://mban.matrixtechfin.com/2687ee26-820a-4cd6-9d52-7e50a5b34786.jpeg)
Written by Markus Thielen, Head of Research & Strategy at Matrixport. Author of Crypto Titans.
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Industry views and information shared do not represent Matrixport's position and do not constitute any investment advice.