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SPIRIT Blockchain – Weekly Wrap-up 11/04/2022

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

It has been another volatile week in financial markets. The US Fed hiked US interest rates by 75 basis points in line with expectations on Wednesday. More importantly, markets reacted to Jerome Powell’s speech which suggested that the central bank could raise the fed funds rate to a high of 5% or above before ending its current rate hiking cycle. The Fed chair clearly took a more hawkish approach in the news conference, stating that expectations regarding a potential pause would be “very premature” and that previous terminal rate projections were likely too low. After gaining initially during the Fed statement, stocks sold off while 2-year US Treasury Notes rose to above 4.7%. This morning, government bonds, equities and cryptoassets rebounded on the back of the release of the US October’s jobs report which showed ongoing resilience despite a slightly higher jobless rate. 
Despite the choppy Wednesday session, cryptoassets registered strong gainsacross the board this week amid a slew of crypto-related earnings and bullish industry news. A number of stories that point to an accelerating pace of crypto adoption and product integration by large companies made headlines this week, including promising stories by Fidelity, Meta (Instagram) and Goldman Sachs (see This Week’s Headlines section below).
While cryptoasset prices have recovered, trading volumes on crypto exchangeshit a 23-month low in October. Last month’s volume totaled only $543 billion – down from $733 billion in September, according to data by The Block. The last time exchange levels were this low was in December 2020 at about $385 billion, when Bitcoin hit a new all-time high, reaching $28,000 at the time. Similarly, Coinbase’s earnings report this week showed that 3Q trading volume came in below expectations at $159 billion vs. estimates of $191 billion. Interestingly, institutional investors accounted for $133 billion of the crypto exchange while retail investors made up just $26 billion of volumes.

Meanwhile, we continue to see financial woes in the Bitcoin mining industry on the back off a relentlessly rising hashrate, the subdued bitcoin price and higher electricity costs, among other things. Publicly listed miners increasingly have trouble servicing their debt obligations. Last week, Core Scientific released a statement that it could run out of money by the end of the year. This week, it was Iris Energy and Argo Blockchain that warned about potential financial difficulties going forward. Iris Energy said that some of its mining equipment (ASICs) is not producing enough cash to meet financing obligations at current bitcoin prices. What’s more, it stated that the market value of some of the ASICs backing the company’s debt is currently “well below the principal amount of the relevant loans”. 

Market Overview

The global cryptoasset market capitalization currently amounts to $1.09 trillion –  up from $1.05 billion since Friday last week, with bitcoin accounting for 36.7%. Among the Top 30 cryptoassets by market cap, Dogecoin (DOGE) outperformed once again, gaining another 60.2% over the week. During the same period, the price of bitcoin (BTC) increased  by 2.6% to $20,796 while the price of ether (ETH) rose by 7.5% to $1,627. The total value locked (TVL) in DeFi sits at $55.3 billion – up from the $54.9 billion last week – with Ethereum accounting for about 58% of TVL.


This Week’s Headlines


Notable Deals and Fundraising

  • Bakkt to acquire Apex Crypto for up to $200 million
  • South Korean Web3 gaming firm Wemade raises $46 million from Microsoftand others
  • Evmos developer Tharsis raises $27 million in a token sale led by Polychain
  • WalletConnect raises $12.5 million in an “ecosystem round”
  • Braavos raises $10 million to simplify crypto wallets on StarkNet
  • State-chartered bank Custodia (formerly Avanti) raises $7 million
  • Solana DeFi yield manager Texture raises $5 million
  • NFT-backed lender NiftyApes raises $4.2 million in a seed funding round
  • Berlin-based DeFi protocol Centrifuge raises $4 million in a strategic round
  • Nomura’s Laser Digital invests in DeFi infrastructure protocol Orderly Network
  • NFT project Art Gobblers rakes in $13 million two hours after launch
  • New York-based Web3 venture capital firm CoinFund to raise $250 million for seed investments
  • New fund LIF raises $20 million to invest in Web3 startups
  • US crypto fund-of-funds Protocol Ventures is shutting down, Bloomberg reports


Manuel Trojovsky, Head of Crypto Investments & Research


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