As we approach the 2024 U.S. Presidential Election, market positioning suggests a cautiously optimistic outlook among investors. The Price-Earnings (PE) Ratio Premium of defensive stocks like Walmart, Costco, and McDonald's over growth-focused tech giants such as Alphabet, Microsoft, Meta, and Apple has significantly narrowed, dropping below double digits. Historically, a higher PE premium for defensive stocks indicates investor wariness, as they flock to stable assets during uncertain times. The current contraction in this premium implies a shift toward riskier assets, reflecting confidence in future market growth despite recession fears.
In the venture capital landscape, 2024 has seen a notable decline in crypto investments, with Q3 funding down 20% quarter-over-quarter, marking one of the lowest levels since 2020. The emergence of Bitcoin ETFs has diverted significant capital that previously funnelled into crypto via venture capital. Despite the overall decrease, early-stage investments dominate at 85%, with a median pre-money valuation of $23.8 million. Later-stage funding has waned due to inflated valuations and underwhelming performances of recent listings. However, the upcoming quarters may witness a resurgence in funding activity, especially if post-election regulatory clarity in the U.S. materializes.
On the international front, China's central government is navigating a delicate balance between fostering economic growth and maintaining regulatory oversight. Local governments, burdened by unsustainable debts and a faltering property market, are less inclined to offer incentives to private businesses. In response, Beijing has introduced a draft law aimed at improving the investment climate, supporting technological innovation, and protecting the private sector. This initiative is part of a larger stimulus plan that includes a debt swap to stabilize local finances. The challenge for China mirrors that of other economies, including the crypto sector: too much regulation risks stifling growth, while too little could lead to market instability.
Total Crypto Market Cap: $2.455T (+5.24%)
ETH DeFi TVL: $122.87B (+26.44%)
Stablecoins: $172.41B (+1.66%)
Uniswap has long stood as a beacon in DeFi, reshaping how users interact with digital assets. Since its inception in 2018, it has become the largest DEX, processing over $2.36 trillion in trading volume and serving more than 25 million unique addresses through nearly half a billion trades. With a commanding 37% share of the total DEX market and daily active users (DAU) consistently around 70,000, Uniswap's influence is undeniable.
Figure 1 - Uniswap statistics across multiple chains and versions.
Built on the innovative concept of Automated Market Makers (AMMs) using the constant product formula $(x \times y =k )$ , Uniswap eliminated the need for traditional order books, enabling permissionless token swaps. The protocol's successive versions have introduced industry-standard features: V2 brought any-to-any token liquidity pools, flash swaps, and price oracles, while V3 introduced concentrated liquidity for greater capital efficiency, generating over $2.4 billion in fees for liquidity providers since launch.