Let's Get Physical - Is DePIN Crypto's Next Big Investment Theme?

Good morning my tasty friends. I hope you all have a wonderful Labor Day weekend. If you don't reside in the US, well, I hope you have a wonderful weekend.

These letters can be difficult to write to you at times. No, not because I'm suffering from writer's block or any other literary ailment for that matter, no… I'm suffering from a crippling bout of crypto boredom.

Crypto has been drunkenly meandering down the street for a 133 days since the halving. We were promised the moon, why is it we're still here on the ground?

While we annoyingly wait for "blast off mode" we've got another edition of the tastycrypto email. This week we're taking a look at the theme of DePIN aka decentralized physical infrastructure, using fundamental analysis to put perspective around potential investments, and we highlight some of the positive developments in the market we're excited about.

Performance, Momentum, Ranges

I am traveling this weekend and won't be able to provide updated price data at the time of writing, but please find expected moves and implied trading ranges below.

Solana now on tastycrypto

See the forest for the trees

While we started strong, this past week has seen a reversal of the Jerome Powell Jackson Hole sugar high, which keeps us in negative territory on the month.

There are a few bullish trees in the forest.

1. Nasdaq files with the SEC to list Bitcoin Index Options

The Nasdaq continues to expand into crypto, this week filing with the SEC to list and trade a new product: Nasdaq Bitcoin Index Options (XBTX).

If approved, these options will be cash settled, track the CME CF Bitcoin Real-Time Index (BRTI) and will be European-style, meaning they can only be exercised at expiration.

As options trading aficionados here at tasty, we couldn't be more excited about the prospect of trading that sweet vol on listed crypto options.

2. Exchanges experienced the third-largest daily outflow of 2024 last week

Away from the short-term headlines, a bullish sign has emerged on-chain with about 45,000 BTC moving off-exchange this past Tuesday. This marks the third-largest outflow of 2024, with only July 5th and July 16th seeing bigger moves.

Why does this matter? According to some analysts, large withdrawals are often viewed as a sign of bullish sentiment as investors moving their coins off exchanges means they're likely to hold for the long-term, versus coins flowing to exchanges, which in the past has often preceded selling pressure.

3. Publicly traded companies are loading the boat on BTC

The adoption of Bitcoin by publicly listed companies is accelerating at a remarkable pace. According to a report from investment manager Nickel Digital Asset Management and data from Bitbo, the total Bitcoin holdings of publicly traded firms have skyrocketed from $7.2 billion to $20 billion over the past year - an increase of nearly 200%.

Publicly traded companies now hold 335,249 BTC on their balance sheets, representing 1.6% of bitcoin's total supply, with MicroStrategy owning the lion's share, counting 226,500 BTC as part of its corporate treasury holdings.

Is DePIN Crypto's Next "Big Thing"

As crypto investors look for narratives to place their bets on, decentralized physical infrastructure or DePIN is emerging as prominent theme this cycle.

At its core, DePIN represents the intersection of physical infrastructure and blockchain technology, where networks of physical assets and services are managed in a decentralized way. In DePIN networks, users contribute physical resources (like bandwidth, storage, or processing power) and are then rewarded with tokens or other incentives for participating in and maintaining the network's operations and services.

Combine this concept with the Internet of Things (IoT) and add a layer of AI, and the potential applications across industries like logistics and public utilities become incredibly compelling.

An early example of this is Helium, a decentralized wireless network that enables low-power Internet of Things (IoT) devices to connect to the internet. Users of the network deploy wireless hotspots in their homes or businesses. These hotspots provide wireless coverage for IoT devices, such as sensors and trackers, within a specific range. Participants deploying and maintaining Helium hotspots are then rewarded with HNT, Helium's native cryptocurrency. By tokenizing participation, Helium incentivizes the growth of the network and ensures widespread coverage as more users set up hotspots.

The beauty of DePIN lies in its tokenized incentive structure. Tokens serve as a medium of exchange within the DePIN ecosystem and can be used to pay for services, access additional network features, or trade with other participants. This in turn fosters increased utility which can lead to further growth and network sustainability over time.

Helium is just one example of a budding DePIN project with real-world potential. For more ideas on our radar, watch this week's episode of the tastycrypto show where we discuss potential opportunities across GPU rendering, decentralized file storage, and more.

Watch here or click below

tastycrypto on Youtube

What tokens do I buy?

If you Google "how many tokens are there in crypto" the now AI generated response will tell you as of this month, there are over 9,000 cryptocurrencies in existence. However, by some estimates there may be as many as 25,000.

Compared to the roughly 5,000 publicly traded companies listed on the NYSE and NASDAQ, the task of finding investment opportunities becomes quite daunting.

Which token do I buy? What are the good cryptos?

While our compliance team won't let me tell you… I can give you some advice on how to think about crypto investment fundamentals and the tools you can use for analysis. There's insane edge in simply participating in the paradigm shift today. We're not going to get every trade right, but contrary to the proponents of efficient market hypothesis (they're wrong), a fundamental perspective can go a long way in these early crypto days.

Given the transparency of blockchains, it's fairly straightforward to understand how many users a project has, its daily revenue, or even how many developers are committing to the codebase. And, we don't have to wait for the accountants to massage the numbers each quarter, it's all real-time.

During another installment of tastycrypto this week, Glen and I discussed some of the metrics you can use to better understand a project's fundamentals. We also take a look at a couple of our favorite tools in the form of Defi Llama and Token Terminal.

Watch here or click below.