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Wave Digital Assets Weekly Update - 3/2/2023


Risk assets continued their weakness into the weekend after a series of strong economic data points led to a resurgence of bond yields. Employment numbers, PMI, retail sales, GDP and PCE inflation numbers all came in stronger than expected implying more rate hikes to come (source: Reuters; 2/23/023). Fed Fund futures are now implying a terminal rate of 5.4% out to October with rate cuts priced in 1Q 2024.

Crypto however has bounced back pretty quickly. We have been seeing a steady decline in correlation between crypto and the equity markets as various crypto specific narratives remain supportive. This despite all the regulatory FUD. That is not to say that the possibility of a much more aggressive drawdown in the equity and bond market wouldn't pull crypto markets with it. We have seen a renewed spike in interest rate volatility to a 1 month high, but equity volatility is still surprisingly low by comparison. And this while the S&P is flirting with its 200-day moving average and still trading at a very expensive 18x forward earnings.

We find that the macro uncertainty is a major reason why BTC has failed to break the crucial 25,200 resistance level. The January rally in crypto was supported by short covering liquidations, leveraged longs and large purchases of short dated call options. This led to a spike in volatility from its lows and flat term structure. Liquidity conditions were favorable with the decline in yields and weakness in the US$. With the spike in yields and volatility, this now has all but reversed as sentiment is leaning towards a range bound market and a recoupling with risk assets. Hence, implied volatility has sold off again, term structure has steepened and open interest in futures/perps has steadily declined and we're beginning to see more hedging activity come in.


Clay Nation Announces Partnership With Sand Box

A Cardano-based NFT project, Clay Nation,¹ is set to make history as the first Cardano project to be integrated into The Sandbox Game. The move will help promote Web3 interoperability within the Metaverse. The Sandbox is a virtual world where players can build, own and monetize their gaming experiences on the Ethereum blockchain, using the native token SAND.

This experience will be created in collaboration with Smobler Studios, a Singapore-based metaverse architecture and creative agency funded by The Sandbox Game and Brinc. Clay Nation has seen prominent achievements since its inception, most notable of which are its partnerships and collaborations. Clay Nation has previously released a full-length music video for Lebron James and his son called "Bron and Bronny" as well as a project with prominent rapper Snoop Dogg and his son, Champ Medici.


WELCOME FRIENDS: Hundreds of institutions and prominent individuals have invested directly in crypto, adopted the value thesis, or started building technology to support digital assets since Wave started tracking this metric in late 2020. Now the rise of the Metaverse, Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), and Decentralized Autonomous Organizations (DAOs) is driving mainstream adoption of blockchain technologies everywhere we look. We’re continuing to keep track of it every week here:

  • Microsoft has partnered with decentralized blockchain infrastructure provider Ankr to provide a novel node hosting service on the Microsoft Azure Marketplace. In addition, the partnership will see an integration of technology from both companies, pairing Ankr’s blockchain infrastructure with Microsoft’s cloud solutions.

  • Mastercard and Immersve are set to offer a new option for paying for physical, digital and metaverse purchases using crypto assets. Immersve says the payment solution will enable consumers in New Zealand and Australia to use digital currencies directly from their web3 wallets to pay for goods and services in merchants that support Mastercard.

  • Google's cloud computing operator is to become a validator on the Tezos network. Google Cloud's corporate customers will be able to deploy Tezos nodes – a type of computer that runs a blockchain’s software to validate and store the history of transactions – in order to build Web3 applications on the network. The integration with Tezos marks Google Cloud's latest integration with a blockchain network, the platform having begun running a node-hosting service for Ethereum projects in October, then shortly thereafter becoming a validator on Solana.

REGULATORY ROUNDUP: We're living through the era of regulatory recognition of digital assets. The legislation, litigation, and regulation happening today will dictate the entire future of our industry, and we have a historic chance to shape those changes by staying informed and exerting political influence.

  • The Montana State Senate passed a bill on Thursday protecting crypto miners from a range of possible actions against the industry. The proposed law passed 37-13 in the Senate and next will go to the state's House for its approval. The bill protects at-home mining, prevents discriminatory utility rates for miners and stipulates that crypto used as payment will not be subject to additional taxes. The legislation also takes power from local governments, preventing them from moving against at-home mining or retroactively using zoning laws to shut down active operations.

  • Cryptocurrency companies in Canada and those planning to operate in the country have 30 days to meet updated crypto registration guidelines that were released on Wednesday, or risk losing their Canadian users. The Canadian Securities Administrators (CSA) said in a press release that crypto companies planning to operate in Canada must undertake a pre-registration process within 30 days to initiate their full registration and comply with the guidelines.In the pre-registration process, crypto asset trading platforms will have to conform to custody rules, which include segregating crypto assets held for local clients, restricting margin and leveraged trading, and ceasing the sale of stablecoins without the CSA’s permission.


The opinions expressed herein are those of the author alone and do not represent Wave Digital Assets, LLC or any of its affiliates. The author may hold investment positions in some of the assets discussed.

Nothing in this email or linked information should be interpreted as an offer or recommendation to buy, sell or hold any security or other financial product. Wave is federally regulated by the US Securities & Exchange Commission as an investment adviser. Registration with a federal or state authority does not imply a certain level of skill or training. Additional information including important disclosures about Wave Digital Assets LLC also is available on the SEC’s website at Or, learn more information about Wave Financial at

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