Weekly Research Report: SOARING BLACK GOLD
Market Recap
Crypto market went slightly lower after strong labour market data. However, Bitcoin kept the first week of October green ($BTC +1.5%) and outperformed other traditional asset classes this week. Bitcoin dropped below 50dma ($19.9k) and hovered around $19.3k. Total crypto market cap increased 2.3% to $988bn. The September CPI (13 Oct) will be the centre this week, with 8.1% expectation and 6.5% core inflation.
Crypto dominance: (BTC 37.8%, ETH 16.2%, USDT 6.9%, USDC 4.7%).
Derivatives Market
General funding rates remained negative (7d avg funding: BTC -2.5%, ETH -7.2%) (Chart 1).
Perpetual contracts continued to trade at discount, indicating a bear market sentiment (ADA-PERP 0.32% discount)
On liquidation side (Chart 2), only $116m worth of bitcoin positions have been liquidated this week, which was 47% less than last week number, with 0.96 Long/Short liquidation ratio this week following calm price actions. At Non-Farm Payroll announcement, over $12m bitcoin long positions were liquidated in an hour.
Altcoins Roundup
Ripple broadly outperformed the crypto market as there was mitigation of legal dispute between Ripple and US SEC. ($XRP +18.0%)
Sushi ($SUSHI) soared 13% after GoldenTree, global asset management firm, announced to stake $5.3m worth of Sushi tokens on SushiSwap.
MakerDAO decided to allocate 500 million $DAI tokens into US short-term treasuries (80%) and investment-grade corporate bonds (20%) to lower its risk profile.
XEN Crypto, created by Jack Levin, is a protocol that allows users to mint $XEN only by paying Ethereum gas fee. This initiated an Ethereum gas war over the weekend and the burn rate of Ethereum was doubled to nearly 3100 ETH per day.
Crypto Updates
BNB Chain was back in operation after last week $100m exploit. A series of on-chain governance votes will decide whether the hacked funds should be frozen and also a vote for future bug bounty reward system.
Bitwise launched web3 ETF (BWEB) for institutional and retail investors.
Mount Gox bitcoin repayment pushed back to Jan 2023.
DefiLlama borrowing/lending optimizer and yield dashboard went live.
X2Y2, NFT marketplace, launched peer-to-peer NFT loan functionality for users to free up liquidity in NFT assets.
BitMEX will be launching their token by the end of 2022.
Dapper Labs set launch date as 27 Oct for “LaLiga Golazos”, an NFT platform about Spanish football league.
Regulatory Updates
Fumio Kishida, Japan Prime Minister, planned to invest in web3.0, including metaverse and NFT technology.
Russia blocked the crypto exchange OKX website, accusing it of unreliable information.
MasterCard used data from CipherTrace to track where and how its cardholders purchase cryptos.
Institutional Updates
Fidelity launched their Fidelity Ethereum Index Fund on 4 Oct as they continued to see clients’ demand for digital asset exposures beyond bitcoin.
Visa confirmed a long-term global partnership with FTX to offer the FTX-branded Visa debit cards to FTX customers globally. The debit cards will link to cardholders’ FTX accounts so that they can pay directly with their crypto balance. Cardholders do not need to pay administrative or processing fees for using the card.
Cboe Global Markets dived into Defi space by creating real-time market pricing data available on Solana-based Pyth network. The firm also rebranded ErisX, a digital asset exchange it acquired earlier this year, to Cboe Digital, hinting further expansion on web3 industry later.
NYDIG, the investment management firm, raised nearly $720m for its Institutional Bitcoin Fund, and the fundraise was reportedly not over yet. The firm also appointed its global head of trading, Tejas Shah, as new CEO.
Horizon Blockchain Games, developer of “Skyweaver”, raised $40m funding in Series A led by Brevan Howard Digital and Morgan Creek Digital.
Golden, web3 data protocol that uses token to incentivize users to submit accurate information, raised $40m funding in Series B led by a16z. Ali Yahya, a16z partner, will also join the Golden’s board.
Exponential, defi discovery and risk assessment platform, closed a $14m seed funding round led by Paradigm. Big names including FTX Ventures, Haun Ventures, Solana Ventures, Polygon, Circle Ventures and more also participated in this round.
Xalts, a digital asset management startup for institutional access, raised $6m funding, co-led by Citi Ventures and Accel venture capital firm. The platform will build institutional-grade investment products with high compliance and control standards for institutional investors.
Macro Front
The labour market data were strong on Friday, with September Non-Farm Payrolls higher than expected (263k vs 250k) and a lower-than-expected unemployment rate (3.5% vs 3.7%).
The strong numbers supported the Fed to be aggressive in November meeting. The probability of the Fed to increase interest rate by 75bps went higher from 59.5% to 76.2%. US stocks also trimmed almost all the gains from earlier this week (7d: DJI +0.6%, S&P500 +0.2%, NQ +0.1%). Credit Suisse soared 13% after the surprising $3bn bond buyback, easing liquidity crisis. Commodities was mixed (GOLD +1.3%, Oil +6.0%, Wheat -1.8%). Oil price surged following the supply cut from OPEC+, indicating a rising inflation concern. The White House blamed OPEC’s oil cut decision. CPI this week was expected to be 8.1%, a higher-than-expected number may push the market lower.
Conclusion
Crypto assets continued to outperform other asset classes under inflation concerns. Positive labour market numbers continued to support the Fed to raise interest rates further in coming meetings. Institutions expressed their interests on crypto space and find ways to enter the industry. SR believes crypto assets to be one of the best asset classes to combat inflation and will continue the accumulation process.
DYOR, Good Luck!
