Weekly Research Report: CHAOS EVERYWHERE
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Market Recap
Crypto market continued to consolidate with a narrow range despite the chaos from macro economy. Bitcoin was trading at $19k and Ethereum was hovering around $1,300. Crypto market cap dropped 0.1% this week ($965bn). September curse happened again (Sep: BTC -3.1%, ETH -14.5%). With global economic crisis, it is expecting that the macroeconomic and geopolitical factors will lead the crypto market for a foreseeable future. Turning a new page to October, our economic calendar will be quite packed, starting with the upcoming labour market data this week, followed by the crucial September CPI on Oct 13.
Crypto dominance: (BTC 38.1%, ETH 16.1%, USDT 7.1%, USDC 4.9%).
Derivatives Market
General funding rates increased from last week but remained negative (7d avg funding: BTC -2.0%, ETH -7.1%) (Chart 1).
Altcoins’ funding rates (ADA, SOL, XRP, BNB) were averaged at around -7%.
December futures and perpetual contracts continued to trade at discount, indicating a bear market sentiment.
On liquidation side (Chart 2), only $219m worth of crypto positions have been liquidated this week, which was 37% less than last week number, with 1.14 Long/Short liquidation ratio this week following calm price actions.
Altcoins Roundup
Chainlink staking planned to come in December, confirmed by its co-founder Sergey Nazarov. $LINK outperformed the crypto market with a 16.7% increase in September. On the development side, Chainlink Hackathon Fall 2022 will be held during Oct 14 — Nov 18, expecting to have some network upgrades and new protocol releases.
Polkdot founder Rob Habermeier released the new Polkadot roadmap as coming into Q4, covering development topics like parachain scalability, parachain development, relay-chain governance, cross-chain communication, common-good parachains, bridging and staking features. After the announcement, $DOT surged 11.5% from $6.1 to $6.8.
Compound Treasury officially launched the borrowing and lending service for institutions.
Crypto Updates
Circle, $USDC creator, announced the acquisition of payment company Elements at Converge22 event. The firm planned to scale up crypto payment offerings after announcement of expanding its stablecoin network to five new blockchains last week.
CryptoPunk NFT #2924 sold for nearly $4.3m (3,300 eth) despite crypto winter.
Cosmos EVM Layer-1 blockchain network, “Canto” started holding Canto Online Hackathon from Oct 1 to Oct 21.
ApeCoin planned to introduce new staking rewards programme on 31Oct. The staking rewards will be available for ApeCoin and Bored Apes stakers.
Regulatory Updates
Crypto.com continued to expand in the European region after receiving regulatory approval from Cyprus SEC in July. The crypto exchange now received regulatory approval to operate in France as a Digital Asset Service Provider (DASP).
Binance crypto exchange introduced their Global Law Enforcement Training Program which was designed to “help law enforcement detect financial and cyber crimes and assist in the prosecution of bad actors who exploit digital assets”.
The US SEC will decide whether to approve VanEck Bitcoin spot ETF on Oct 11.
Crypto fraud cases were increasing in California reported by the California Department of Financial Protection and Innovation (DFPI), indicating the urgent needs of regulatory policy on digital assets.
Institutional Updates
Meta confirmed that all Facebook and Instagram users in the US can connect crypto wallets and share their NFTs. The tech giant is also holding an online event “Meta Connect” about its upcoming metaverse strategy, streaming on Oct 11.
BlackRock, the world largest asset manager, launched iShare Blockchain ETF for European clients.
Pantera Capital was in the process of launching its second crypto fund of $1.25bn.
Deribit, the largest crypto option exchange, was raising funds from existing investors at $400 valuation (with discounts). The last fundraising happened in August when Deribit raised $100m at $2.1bn valuation.
Strike, a digital payment platform using Bitcoin’s Lightning Network, raised $80m in Series B funding round led by Ten31. The fresh fund will be used for further team expansions and launching new partnerships.
Fasanara Capital, the London-based Asset Manager, established a $350m crypto venture fund which will focus on web3 and fintech investments.
DeFiance Capital, crypto venture capital firm, was seeking $100m to invest in liquid tokens
Uniswap Labs, the largest decentralized crypto exchange, aimed to raise over $100m at $1bn valuation. The team is now engaging with Singaporean sovereign fund and Polychain.
Macro Front
The September Nonfarm Payrolls and Unemployment Rate data on Friday will be the highlight of the week. The labour market activity will hint the degree of impact on economy from the Fed’s aggressive play.
The Fed may continue to raise rate if the impact is minimal. The global economy is in a mess, with currencies crisis, leakage of Nord Stream pipeline, UK decided to cut tax, Bank of England intervened to provide support by purchasing long-dated bonds, CDS spreads spiked and discussions about Credit Suisse and Deutsche Bank continued. US stocks set back to June’s Low (7d: DJI -4.1%, S&P500 -3.8%, NQ -3.3%). Tech stocks continued to suffer from high borrowing cost, with Meta Facebook announced to cut headcounts. Commodities was mixed (GOLD +1.2%, Oil +4.9%, Wheat +6.6%). OPEC considered oil production cut by over 1m barrels per day.
Conclusion
Under global economic crisis, risk assets continued to trade heavy during the difficult times. However, crypto assets were surprisingly outperforming other risk assets like tech stocks and FX market in recent weeks. On the fundraising side, institutions and investors also expressed their interest on web3 and fintech development, we continued to see smart money flowing into the crypto space. When macro easing confirms, SR will continue to accumulate crypto assets.
DYOR, Good Luck!
