Bitget Hot Takes (June 27 - July 03)
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BGB was the only token to have generated profits when compared to BTC, ETH and other exchange tokens.
Bitget adds 5 new USDC trading pairs, including BNB/USDC, TRX/USDC, LUNA/USDC, FITFI/USDC, and NEAR/USDC
BTC has seen the worst quarterly performance in the last decade with Q2 2022. Trusts tracking BTC price remain popular.
Hacks and bankruptcies made the headlines.
BGB Performance Outpaced The Market
Over the last 7 days, Bitget Token (BGB) was the only token to have a positive cumulative return (as shown in the charts below), while major cryptocurrencies (BTC and ETH) and exchange tokens suffered greatly from market tumult, ending the week in loss.
Bitcoin’s worst quarterly performance in 10 years
Bitcoin price has been on a downward spiral for the last few weeks but this week was definitely the worst in June where Bitcoin ended up losing more than 10% of its value in just 7 days.
Data from Skew Analytics shows that Q2 2022 is undoubtedly Bitcoin’s worst quarter of the last decade, where Bitcoin lost 56% of its value.
Source: Skew Analytics
As Bitcoin started to cave in, extreme fear is spreading across the market, urging investors to unload their Bitcoin bag: Around 1.43 million BTC (equivalent to 7.5% of the circulating supply) changed hands between the recent low of US$17,800 and US$21,300. Each bar in the chart represents the amount of existing Bitcoin last trading within the specified price range.
That also means the majority of investors have capitulated, especially below the US$27,000 mark.
Bitcoin’s poor performance means that it can no longer track the stock market efficiently. After a high of 0.8-0.9 in April and May 2022, Bitcoin’s correlation with the tech-focused NASDAQ 100 has declined in June, or, Bitcoin has tended to move in the same direction with NASDAQ 100 for only 50% of the time.
It is self-explanatory, then, that the institutional sentiment on Bitcoin is currently bearish. The net inflows to ProShares’ Short Bitcoin Strategy ETF (BITI) since June 21 are six times the inflows to its long sibling, ProShares’ Bitcoin Strategy ETF (BITO). On the 29th of June only, BITI's net short exposure has doubled after the daily inflow of 1,684 Bitcoin.
Bitcoin’s declining prices turn out to be a megadeal for whales (investors owning more than 1,000 Bitcoin). Data shows they are buying Bitcoin aggressively from exchanges, at the rate of 140,000 Bitcoin/month. The NASDAQ-listed MicroStrategy has purchased an additional 480 Bitcoins for US$10 million (average price of US$20,817 per BTC), and El Salvador acquired 80 additional BTC at $19,000 each.
When combined, their Bitcoin balance now stands at 8.69 million BTC (45.6% supply).
Institutional need for Bitcoin exposure
The institutional investors do not necessarily see this decline in Bitcoin price as a bad omen. While the Bank of International Settlements (BIS) now allows member banks to hold 1% of their reserves in Bitcoin, many crypto-friendly companies have been fighting for the legitimacy of Bitcoin Spot ETFs. BITI and BITO, for example, are Bitcoin Futures ETFs, which obtain indirect Bitcoin exposure via their investments in Bitcoin Futures. To learn more about Futures Trading, click here. A Bitcoin Spot ETF requires direct purchasing of Bitcoin at its spot price, thus it’s supposed to make Bitcoin a real asset. Last week, the U.S. Securities and Exchange Commission (SEC) rejected Grayscale and Bitwise Spot Bitcoin ETF applications, but VanEck has filed a new application for Spot Bitcoin ETF.
The Zurich-based 21Shares has recently launched another Bitcoin ETP, which is specifically tailored to the bear market.
Ethereum Developer Team has officially announced the delay of the “difficulty bomb” to September after the Gray Glacier hard fork last week. A new Ethereum token standard, ERC-4907, was also introduced for the sake of rentable NFTs. It is unclear if ERC-4907 is put into effect, but when it is, the NFT sector can expect another boom thanks to the elevated utility. On July 1, Facebook officially began their pilot integration plan, which allows a select group of US creators to showcase their Ethereum or Polygon-based NFT profile.
Investment Trends: Web3, Data Infrastructure
Several crypto projects have received over US$163 million in funding last week, with the key theme revolving around Web3 applications, Data and Infrastructure. The sole DeFi investment belongs to the lending protocol MoHash, which received US$6 million in seed round led by Sequoia and Quona.
Weather XM has raised a US$5 million seed round led by Placeholder VC. Investors in the round included Metaplanet, ConsenSys Mesh, Protocol Labs and Border Capital. Weather XM is designed to create personal weather stations, allowing owners to become weather station operators and earn rewards for collecting and validating data.
Startup building web3 authentication and authorisation tools for developers, Dynamic, has raised US$7.5 million in a seed funding round led by Andreessen Horowitz (a16z). Other investors in the round included Castle Island Ventures, Solana Ventures, Circle Ventures, Breyer Capital, Hypersphere and Chapter One.
Web3 network Peaq has raised $6 million in a round led by blockchain venture capital firm Fundamental Labs. The valuation has not been disclosed. Peaq is a network that empowers individuals to build dApps for vehicles, robots and devices including sharing, charging and parking functionalities.
Kyve Network, a decentralised data storage solution, has raised $9 million in a round led by Distributed Global, marking its value at US$100 million. Kyve, which operates as a DAO, is a protocol that allows providers to standardise, validate and permanently store blockchain data streams.
Crypto data firm Kaiko, which focuses on institutional investors and DeFi data, raised US$53 million in its Series B funding round amid venture contraction. The funding was led by Eight Roads, with Revaia, Alven, Point9, Anthemis and Underscore being the biggest participants.
Zigazoo, a TikTok-like platform for children, announced it has raised $17 million in a Series A fundraise led by Liberty City Ventures. The company rolled out a non-fungible token (NFT) platform, with collections from children-focused brands in early April, and the funding will help expand the company’s presence in web3 “while building towards becoming the leading social network for kids to interact directly with creators and brands in the kids’ media space.”
Ethereum scaling project AltLayer has raised $7.2 million in seed funding round. The startup shared on Friday with The Block that Polychain Capital, Jump Crypto and Breyer Capital co-led the round. Among the investors in this round are Gavin Wood, Ethereum co-founder and Polkadot founder; Balaji Srinivasan, a former Coinbase CTO and a former a16z general partner; Sean Neville, co-founder of Circle; and Kain Warwick and Jordan Momtazi, co-founders of Synthetix and Bodhi Ventures.
PolySign, a crypto startup that offers custody, trading and administration infrastructure for institutions, has raised $53 million in a Series C funding round. Among investors in this round are Brevan Howard Digital, the digital assets unit of the hedge fund co-founded by British billionaire Alan Howard; Cowen Digital, the crypto division of the investment bank Cowen; and GSR, a crypto trading firm and market maker. PolySign has also received a credit facility worth $25 million from private equity firm Boathouse Capital.
Attacks On The Rise
The NFT sector was hit hard as the biggest NFT Marketplace, OpenSea, announced data breach due to email delivery partner’s negligence. Afterwards, its co-founder and CTO Alex Atallah confirmed his leaving at the end of July. Another victim of hackers was the Ankr, who provides gateways to Polygon and Fantom blockchains. The exploited vulnerability could allow hackers to collect seed phrases and eventually funds from many users. The Solana-based concentrated liquidity provider Crema Finance has experienced a probe hack and is now working with the audit firm OtterSec to examine the issue.
The Baller Ape is the largest NFT fraudulent scheme up to date. The Department of Justice (DOJ) has charged the developer behind this US$2.6 million rugpull for fraud on June 30.
The Brink Of Bankruptcy
The tales of Celsius, Three Arrows Capital (3AC) and Babel Finance haven’t come to an end yet. 3AC, after much effort to find a remedy for its situation, has finally filed for Chapter 15 bankruptcy on July 01, which should protect its U.S. assets from creditors in the U.S. Earlier this week, Voyager, now temporarily suspends trading, deposits, withdrawals, and loyalty rewards, has finally issued a notice of default to 3AC. Other affected institutions include Deribit, which initiated 3AC liquidation application in British Virgin Islands (BVI)’s court and Genesis, who is said to face ‘hundreds of millions’ in losses because of its 3AC exposure. BVI has ordered the liquidation of the Singapore-based 3AC, then Singapore authorities reprimand Three Arrows Capital for providing false information.
Celsius’ lawyers have been trying to convince the crypto lender to file for Chapter 11 bankruptcy, which asks for the help of a court for the restructuring of debts and obligations. Under Chapter 11, the firm can continue its operations, but has to pay hefty fees for this bankruptcy proceedings. Some of Celsius’ attempts to fight against its lawyers is to cut back a quarter of its employees, together with asking its retail clients to show their agreement by switching to HODL Mode in their accounts. The Wall Street Journal (WSJ) has assessed Celsius’ documents and provided a report on the firm’s risk profile: As of October 2021 (around the time when Celsius started their fundraising campaign), its asset-to-equity ratio stood at 19:1 (US$19 billion in assets and US$1 billion in equity). The average asset-to-equity ratio of North American banks in the SP500 Composite Index is 9:1, meaning that Celsius is exposed to twice the risk of an average bank.
Similar to Celsius, Babel Finance is also facing a decline in human capital, but not because it chose to. Concerns regarding this firm’s solvency continue to rise as client funds remain frozen, and several key employees have decided to walk away from the mess: Yulong Liu and Xavier Xiang, heads of global partnerships, Sean Yang, director of global partnerships; Yuchen Jiang, who worked in an unspecified partnership role; Jacynth Wang, director of communications; and Yiwei Wang, global PR lead. Some top executives deleted their LinkedIn profiles instead. Rumours say Babel Finance is about to tap the U.S.-based Houlihan Lokey, a specialist in restructuring and distressed mergers and acquisitions, to solve its liquidity problems.
Considering the recent market situation, the issuer of DAI stablecoin, MakerDAO, has proposed to invest 500 million DAI (equivalent to US$500 million) in U.S. Treasury Bills and Bonds to reduce counterparty and credit risk. Decentral Bank, another DAO with its own stablecoin USN, has temporarily paused the use of NEAR tokens in minting USN, citing “shaky crypto market conditions”. Meanwhile, the community behind Lido Finance is showing their disapproval of the protocol’s plan to reduce its staking dominance on Ethereum 2.0’s Beacon Chain, meaning an uncertain future for staked ETH (stETH).
Tether has cut down its commercial paper holdings by almost 60% in response to the quality concerns. Their biggest competitor, Circle (USDC) has publicly confirmed its viability after tapping New York Community Bank for asset custodian.
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