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SPIRIT Blockchain – Weekly Wrap-up 10/21/2022

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

The third-quarter earnings season kicked off this week, with major US banks such as JP Morgan, Wells Fargo and Citigroup reporting results. JP Morgan reported higher revenues, higher net interest income but also a 17% drop in net profits year-on-year (yoy) amid a tougher investment banking environment. Similarly, Wells Fargo missed analysts’ earnings estimates, with earnings down 31% yoy while it outperformed on the top line. As for non-financial earnings reports, investors are closely watching to which extent factors such as inflation, the strong US dollar, supply-chain issues and consumer spending will impact results and companies’ earnings outlook. Meanwhile, bond yields continued to move relentlessly higher, with the US benchmark 10-year note surging beyond 4.2%, the highest level since 2008. Elsewhere, the Bitcoin market is currently in a period of historically low volatility as BTC and ETH continue to consolidate into a a tight price range.
 
Despite some weakness on Wednesday and Friday, US equities are poised to end the week higher after a rally on Tuesday which gave stock indices a boost and helped the S&P 500 gain by 4% before the index lost its momentum. While US equities’ realized volatility – a metric that measures the daily changes in stock prices – is still fairly low compared to historic levels, Bitcoin’s 20-day realized volatility has now fallen below both Nasdaq’s and the S&P 500’s level for the first time in two years. According to data by crypto analytics firm Kaiko, the gap between 30-day and 90-day volatility readings for both Bitcoin and equities has been shrinking since the second half of September. 
 
Bitcoin has often been criticized for being too volatile, particularly with respect to becoming an established store of value similar to gold.However, the data suggests that Bitcoin’s volatility is diminishing over time. As its adoption increases, the marginal demand for BTC should become a smaller percentage of its total network value, diminishing the magnitude of price swings. While the Bitcoin market is currently in a period of historically low volatility, a number of key metrics – both on-chain and off-chain – are signaling that a period of elevated volatility is likely ahead. Recent research by Glassnode suggests that historical precedents in bear markets have broken out from low-volatility periods in both directions, with little directional bias evident in futures markets pricing.
 

 

Market Overview
 

The global cryptoasset market capitalization currently amounts to $944 billion –  down from $965 billion since Friday last week, with bitcoin accounting for 38.4%. Among the Top 30 cryptoassets by market cap, Quant (QNT) outperformed again, gaining 8.1% over the week. During the same period, the price of bitcoin (BTC) decreased  by 2.8% to $18,930 while the price of ether (ETH) dropped by 1.5% to $1,276. The total value locked (TVL) in DeFi sits at $51.2 billion – down from the $53.8 billion last week – with Ethereum accounting for about 57.5% of TVL.

 

This Week’s Headlines

  • Mastercard to help banks offer crypto trading, provide compliance and security, CNBC reports

  • Aptos airdrops tokens worth more than $200 million to early testnet users

  • Tether USDT will be available from 24,000 ATMs across Brazil

  • CFTC highlights legal actions against crypto firms in year-end report

  • Fidelity Digital Assets will begin offering ETH to institutions this month

  • German Neobank N26 launches cryptocurrency trading via a partnership with Bitpanda

  • French bank Société Générale has been approved to operate digital asset services through its subsidiary Forge

  • Marathon Digital Holdings reaches $24 million settlement with former CEO

  • Digihost and other Bitcoin miners could face Nasdaq delisting

  • Sam Bankman-Fried’s regulation proposals draws criticism from DeFi proponents

  • Celo DeFi lending protocol Moola Market hit by $8.4 million exploit

  • Japan to further relax token listing rules, Bloomberg reports

  • Warner Bros to release 10,999 Lord of the Rings NFTsas part of web3 movie push

 

Notable Deals and Fundraising

 

Manuel Trojovsky, Head of Crypto Investments & Research

 

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