BTC rises, DeFi dips

Dear member,

This week, Bitcoin's market optimism surged, indicated by a significant rise in its NUPL ratio, potentially pointing to increased buying pressure and prices. Long-term Bitcoin holders, holding 75% of the circulating supply, further bolstered this sentiment.

However, the DeFi sector saw a downturn with a 7-month low in daily transaction volume and a drop in total value locked. Despite this, institutional interest in crypto is on the rise, with large traders turning to CME's regulated Bitcoin and Ether futures. Additionally, Ethereum staking and Layer-2 networks showed impressive growth, signaling a shift towards scalability.

In the world of NFTs, royalties paid to projects on Ethereum have reached approximately 699,816 ETH. However, despite the high volume of NFT sales in 2023, royalties earned have been significantly less than in 2022. This could be a sign of changing dynamics in the NFT market.

In the realm of Web2 to Web3 immersion, we've seen a flurry of activity. From McDonald's launching "McNuggets Land" in the Sandbox metaverse to Ducati launching a digital collectible on the XRP Ledger, brands are increasingly exploring the potential of blockchain technology. This trend is set to continue, with more brands expected to enter the space in the coming months.

On the regulatory front, countries around the world are taking steps to regulate the crypto market. From Indonesia launching its official crypto exchange and clearing house to Canada proposing new capital rules for crypto holdings, regulators are working to ensure that the market is safe and fair for all participants.

This week in crypto saw Bitcoin optimism and institutional interest rise, despite challenges in the DeFi and NFT sectors. Encouragingly, Ethereum staking and Layer-2 networks continue to grow, and Web2 brands are increasingly embracing Web3, signaling positive industry trends.

Best regards from the Future,
RFTF.ai 

Market Intel

Bitcoin's Net Unrealized Profit/Loss (NUPL) ratio has significantly increased, indicating growing market optimism and potentially an increase in buying pressure and higher prices.

Long-term Bitcoin investors holding 14.52m BTC, about 75% of circulating supply. These holders have held BTC for more than 155 days, indicating a positive sign for the asset in the long term.

DeFi’s daily transaction volume dropped to a 7-month low of $1.12B. The total value locked (TVL) across all DeFi protocols fell from $45.3 billion to $42.9B in July.

Large traders flocked to the Chicago Mercantile Exchange's (CME) regulated Bitcoin and Ether futures, with open interest holders, entities holding at least 25 Bitcoin futures contracts averaged a record 107 in Q2. This increase in institutional interest is attributed to investors seeking regulated venues to hedge against rising market volatility and manage risk and exposure.

Stablecoin total market capitalization fell by 7% in H1 2023 to $128B. Meanwhile, Ethereum staking surged post the Shapella upgrade, with staked Ethereum reaching 23.54M ETH by the end of June, up 48.4%. Layer-2 networks also demonstrated impressive growth, with zkSync, the first ZK-Rollup Layer-2 network, witnessing an 861.89% increase in its TVL.

Funding Trends

Crypto startups raised a total of $201.4m in venture funding last week, with the largest rounds being a $54m raise for metaverse startup Futureverse and a $40m Series A round for RISC Zero, a provider of zero-knowledge proof tools for developers.

Ethena raised $6.5m in its seed round. The funding will be used by the protocol aiming to develop an independent stablecoin to create a banking system independent stablecoin on the Ethereum network.

Superblock raised $8m for the development of Over Protocol, a new Layer-1 blockchain. The funding will be used to enhance the protocol's capabilities and foster its growth.

Radiant Capital secured $10m in funding from Binance Labs. The third-largest lending protocol on Arbitrum will use the funding for tech and product development, including expanding oracle support, collateral expansion, and Ethereum mainnet deployment.

Delabs Games completed a $4.7m seed investment round. The funds will be used by the blockchain game developer (behind Rumble Racing Star and other upcoming games) to boost their game development as well as marketing and community initiatives.

Flashbots raised $60m in a Series B round led by crypto-focused investment firm Paradigm. The Ethereum-centric research and development startup will use the funding for the continued development of its maximum extractable value (MEV) network, SUAVE.

Super app ‘hi’ receives $30m in funding from Animoca Brands. The partnership will create deep integration between Animoca Brands' expansive network and hi’s services, anchored by hi’s Web3 financial “super app” and its Layer-2 Ethereum sidechain hi Protocol.

Web2 → Web3 Immersion

McDonald's "McNuggets Land" set to launch in the Sandbox metaverse, offering users a chance to explore and interact with various elements related to the brand. The company has also released a limited edition of 1888 NFTs, representing virtual McDonald's outlets that users can own and operate in the metaverse.

Sotheby's launched a new program called "Blockchain Gen Art Program" that aims to promote artists over technology and provide artists with the tools and resources to create and sell NFTs, with the goal of making the art world more accessible and inclusive.

"Stan Lee's World of Heroes" NFTs sold out instantly. The collection was a collaboration between POW! Entertainment and Vorto Gaming and featured 8,000 unique NFTs.

Ducati launched a digital collectible on the XRP Ledger. A virtual representation of the Ducati Panigale V4 R, the collection is part of a broader initiative by the company to explore the potential of blockchain technology in enhancing customer engagement.

Lacoste opened a virtual store “Lacoste X” that offers special perks to Ethereum NFT holders like exclusive products, early access to drops, and unique experiences to holders of the "Lacoste X NFT".

BlackRock and Jio Financial Services are exploring opportunities in the digital assets market. BlackRock has been researching the potential of stablecoins, while Jio Financial Services is looking into the use of blockchain technology for remittances.

The royal family of Dubai is entering the crypto space with a $400 million-backed Islamic Coin (ISLM). The coin is set to be implemented as a payment method with 20 major partners in the Middle East North Africa (MENA) region by Q4 2023.

A Bruce Lee avatar will teach martial arts in the metaverse through a tribute event hosted by Byte City in collaboration with Magic Eden. Users can participate in the event by minting avatars on Ethereum and Polygon.

Chainalysis has partnered with Deloitte to help governments with blockchain surveillance. The partnership aims to address challenges in fighting crypto-related crimes, including obfuscation techniques like chain-hopping, mixers, and the use of decentralized finance (DeFi).

The British Museum partnered with the Sandbox metaverse platform to create immersive experiences for users to discover world history. A range of digital collectibles will be generated based on various collections within the museum.

Gucci revealed rewards for holders of the Gucci Material NFTs. Holders can now exchange the tokens for a Gucci bifold wallet or a Gucci x 10KTF co-branded duffle bag. The redeem facility went live on partner platform 10KTF.shop.

Regulatory Round-up

APAC

Singapore officially recognizes cryptocurrency as property, due to a High Court ruling in favor of crypto exchange Bybit and effectively setting a precedent for future cryptocurrency disputes in the nation island.

Indonesia's official crypto exchange and clearing house launched by the country’s regulator, CoFTRA, to regulate its 17 million-user digital asset market. The aim is to manage trading risks with financial institutions and public involvement. In June, crypto transactions in Indonesia hit $600m, a 9% monthly rise.

South Korean banks are considering "synthetic CBDCs" as an alternative to traditional CBDCs, due to concerns about their financial impact. In this model, the central bank issues digital currency to banks for public distribution, maintaining the two-tier system and reducing potential risks.

EU

France’s central bank sees Distributed Ledger Technology (DLT) as a means to boost financial stability and efficiency. After experimenting since 2016, the bank finds DLT beneficial for securities and payment systems, and sees its potential to enhance cross-border payments, cut costs, and speed up transactions.

Italy's central bank is partnering with Polygon and Fireblocks on a DeFi project to facilitate institutional experimentation with tokenized assets. The initiative aims to provide a regulatory-compliant platform for Italian banks to explore DeFi, focusing on asset tokenization and smart contract automation.

International

Russia is set to launch digital ruble transactions with real users in August. Banks participating in the digital ruble pilot will begin testing transactions with actual clients in mid-August.

North America

A landmark crypto legislation in the US has defined the jurisdiction of the SEC and CFTC on digital assets and commodities. The bill aims to provide regulatory clarity and protect consumers, while promoting innovation in the crypto industry.

Ripple is pursuing regulatory approval in the UK to grow its operations. It has proposed a draft to the Financial Conduct Authority (FCA) to define the regulatory status of its native cryptocurrency, XRP. Ripple views the UK's regulatory environment as more favorable than the US, where it's currently engaged in a lawsuit with the SEC.

Canada's OSFI has proposed new capital rules for federally regulated financial institutions' crypto holdings. The proposed rules classify crypto assets as high-risk, requiring institutions to hold capital equivalent to the total value of their crypto assets.

The US Court of Appeals for the District of Columbia Circuit has overturned a ruling by the SEC ordering that SPIKES Index securities should be treated as futures rather than securities futures. The court called the SEC order "arbitrary and capricious."

The Bank Policy Institute (BPI), a banking advocacy group, has backed Senator Elizabeth Warren's stringent crypto bill. The bill aims to extend Bank Secrecy Act (BSA) obligations, such as KYC requirements, to crypto-related entities like wallet providers, miners, and validators.

The Raven Also Spotted

Royalties to Ethereum NFT projects have hit around 699,816 ETH, valued at $1.3B currently and $1.8B at sale time. Despite 2023's high NFT sales volume, royalties were significantly lower than in 2022, making up just 9.4% of total payout. The effective royalty fee rate also dropped from 2.5% in 2022 to 0.6% by July 2023.

Biometric ID protocol Worldcoin officially launched, allowing users to reserve their share of WLD, its official token. The company plans to expand its Orb rollout in more than 35 cities.

BlackRock recommended an optimal portfolio heavily weighted towards Bitcoin, with an allocation of 84.9% BTC, 9.06% stocks, and 6.04% bonds. If all investors followed BlackRock's recommendation, Bitcoin's value could exceed the total value of all equities, real estate, and bonds.

Only 5% of crypto and blockchain firms funded by venture capital in 2021 have achieved significant market traction, according to a Lattice report. Despite substantial funding, 70% remain in development post-mainnet product launch, and about 20% have entirely ceased operations.

The Valkyrie Bitcoin Miners ETF has emerged as the star of 2023, signifying a landmark year for crypto assets.

Two-thirds of the world's largest banks are crypto-friendly, according to recent research.