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SPIRIT Blockchain – Weekly Wrap-up 9/30/2022

Here’s what happened in blockchain and crypto this week.

Equity markets had another choppy week, with U.S. stocks dropping to the lowest level since November 2020 amid the hawkish tone by Federal Reserve officials. In Europe, geopolitical events, weak eurozone PMI data and an expansionary Bank of England (BoE) triggered sharp losses in FX markets resulting in new multi-year lows of both the euro and the British pound vs. the U.S. dollar. After hitting a fresh 20-year high on Wednesday, the dollar index (DXY) has since cooled off somewhat, dropping from 114.8 to 112.2 on Friday. In the US, mortgage rates hit 16-year highs this week while house prices fell in July at the fastest rate in the history of the S&P CoreLogic Case-Shiller Index. In crypto markets, most assets posted small gains, with Bitcoin hovering below $20,000. Elsewhere, Fed Chair Jerome Powell said that the US central bank will not pursue a Central Bank Digital Currency (CBDC) for the time being. 
 
Importantly, the BoE’s emergency bond purchase program may have prevented a collapse in UK pension funds. The UK central bank intervened in bond markets launching an emergency bond purchasing program to the equivalent of $70 billion in long-dated UK Gilts. Previously, elevated inflation, interest rate shocks and a weak pound had led investors to dump sterling and gilts after UK Prime Minister Liz Truss announced a tax-cut program despite rampant inflation. As a result, UK gilt yields soared, with the 30-year gilt yields hitting 5.09% – its highest level since 2002.
 

In a speech this week, Fed Chair Jerome Powell said that the US central bank will not go ahead with a CBDC for the time being. Powell stressed that “we do not see ourselves making that decision for some time”. Instead, the Fed will be working in collaboration with Congress and the executive branch to evaluate the policy and the technological issues. Powell added that the Fed would focus on “building public confidence in our analysis and ultimate conclusions, which we certainly haven’t reached yet.” Nine out of 10 central banks around the world are exploring CBDCs, according to the results of a survey by the Bank for International Settlements (BIS). published earlier this year. The crypto community has raised concerns on CBDC privacy and data protection. 

Regarding crypto markets, Powell also said that the market downturn gives regulators more time to pass “appropriate” regulations. He also said that the overlap between traditional finance and decentralized finance (DeFi) is limited, which the Fed Chair argued is good news for regulators. “Crypto winter did not have a significant effect on the broader banking system and financial stability” Powell said. 

 

Market Overview

The global cryptoasset market capitalization currently amounts to $992 billion –  up from $956 billion since Friday last week, with bitcoin accounting for 38.2%. Among the Top 30 cryptoassets by market cap, Uniswap (UNI) outperformed, gaining 12.7% over the week. During the same period, the price of bitcoin (BTC) increased by 1.5% to $19,765 while the price of ether (ETH) also rose by 1.5% to $1,351. The total value locked (TVL) in DeFi sits at $55.3 billion – up from $54.2 billion last week – with Ethereum accounting for about 57.5% of TVL.

This Week’s Headlines

  • FTX wins auction for bankrupt lender Voyager Digital’s assets
  • Interpol issues red notice for Terra’s Do Kwon, Bloomberg reports
  • Spain’s Telefónica allows purchases with crypto, invests in local exchange Bit2Me
  • Resignations: FTX.US president Brett Harrisonand Celsius founder and CEO Alex Mashinskyare stepping down
  • BlackRock plans crypto ETF targeting metaverse companies, Bloomberg reports
  • Grayscale Bitcoin Trust (GBTC) discount hits all-time low at more than 35%
  • Bitcoin mining represents 0.1% of global greenhouse gas emissions, Cambridge Centre for Alternative Finance study finds
  • SWIFT and Chainlink Labs reveal work on cross-chain proof-of-concept
  • Brazilian digital bank Nubank attracts more than 1.8 million users to its crypto platform
  • Crypto.com wins regulatory approval to operate in France
  • Disney hiring transaction lawyer for “aggressive” NFT and DeFi plans
  • A CryptoPunk sold for roughly $4.4 million (3,300 ETH) in one of the biggest NFT transactions in months

 

Notable Deals and Fundraising

  • Bitcoin miner Rhodium to go public via reverse merger deal

  • Uniswap Labs reportedly plans to raise over $100 million in new funding

  • Deribit raises funds from existing investors at $400 million valuation

  • Circle acquires payment services firm Elements, announces a strategic partnership with Robinhood

  • Bitcoin payments firm Strike raises $80 million from Ten31, U.S. universities and others

  • Coral raises a $20 million round led by FTX Ventures and Jump Crypto
  • Hong Kong-based crypto hardware wallet maker OneKey raises $20 million in Series A funding
  • Decentralized insurance protocol Re raises $14 million in a seed round
  • Microsoft’s M12 leads Space and Time’s $20 million raise to bring SQL to web3
  • Web3 firewall provider Blowfish raises $11.8 million in a round led by Paradigm
  • Multi-chain onboarding platform Aikon raises $10 million
  • Decentralized exchange Krypton raises $7 million in a seed round
  • Smart Token Labs‘ TokenScript raises $6 million at a $200 million valuation
  • On-chain firewall provider Harpie raises $4.5 million to prevent crypto theft 
  • Former Revolut employees raise $3.5 million to build crypto investment app
  • Japanese bank Nomura invests in blockchain payments firm Fnality
  • Pantera reportedly seeks $1.25 billion for its second blockchain fund
  • DeFiance Capital’s Arthur Cheong to raise $100 million for a new fund

 

Manuel Trojovsky, Head of Crypto Investments & Research

 

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