The bulls are back (for now)

Dear member,

A decisive wave of optimism is rolling through Web3, signaling a potential resurgence. Institutional investors are in high spirits and holding more Bitcoin than ever before. While the incoming entrance of tradfi giants into crypto like BlackRock may have provided a brief rally in the crypto market, there is a bigger picture at play here.

The further erosion of trust in centralized systems, be it due to the recent banking crisis (SVB, Silvergate, Credit Suisse) or collapse of CEXs (FTX, Celcius, BlockFi), may be a key catalyst to the reawakening of DeFi. Liquid staking is taking center stage, now DeFi’s largest sector with over 10 million Ethereum (valued at $20 billion) secured within ETH-based liquid staking derivatives platforms. It’s a clear signal of increasing trust in decentralization.

In tandem, stocks of major Bitcoin-related companies such as Coinbase and MicroStrategy are experiencing notable gains, drawing attention to the interlaced performance of these firms and Bitcoin's price. This synchronicity presents a ripple effect that could buoy both the crypto assets and companies that embrace them.

Despite recent regulatory turmoils and a global macro bearish environment, Web2 companies’ foray into Web3 hasn’t shown signs of slowing down, particularly in entertainment, fashion, and gaming. While investments into Web3 have tapered, particularly among North American venture capital firms, sizeable rounds of fund raises were recorded last week:

The chairman of Web3 behemoth Animoca Brands, Yat Siu, noted that the setback faced by U.S. crypto companies is a localized issue. Asia has remained largely unaffected, with marked increase in large Bitcoin holders in the region echoing this sentiment.

Large clusters of banks and financial governing bodies across key markets like India, Europe and the U.S. are making big moves into facilitating the adoption of CBDCs and putting in place protective measures for crypto investors. The transition of Web2 into Web3 cannot happen without proper regulatory frameworks, and these latest moves are a positive indication of governments playing a more active role.

BlackRock recently refiled its Bitcoin spot ETF application to the SEC. What happens next is anybody’s guess, but whether or not the news will be positive, builders should keep shipping. We are still in a macro bearish environment and startups and funds alike should take heed of potential headwinds that may blow back, despite this current wave of optimism in Web3.

Best regards from the Future,
RFTF.ai 

Market Intel

Over 10m Ethereum is now secured within ETH-based liquid staking derivatives platforms. This significant amount of Ethereum is worth close to $20B, indicating a substantial level of trust and investment in these DeFi platforms.

Over 60% of institutional investors are optimistic about cryptocurrencies for the next 12 months and 88% had a positive outlook for the next decade, according to a survey which included 208 global institutional clients and VIP users. The respondents believe that improvements in regulatory clarity and more real-world use cases will fuel crypto adoption.

Bitcoin's realized price reached a new peak this year. Historically, when Bitcoin's value dips below the realized price. it has consistently indicated a market bottom. This metric indicates an average acquisition cost of the total coin supply on-chain.

Large Bitcoin holders in Asia are holding their long positions, indicating investors are willing to accumulate and hold, despite the volatility and regulatory uncertainty. Bitcoin's supply "last active" indicator is at an all-time high, reflecting bullish sentiment about the asset.

Bitcoin-adjacent stocks surges alongside Bitcoin while US equities remain flat, indicating a strong correlation between the them. Stocks of companies related to Bitcoin include Grayscale Bitcoin Trust (GBTC), Coinbase, and MicroStrategy, among others.

Institutional investors holding more Bitcoin than ever before, according to a report by ARK Invest. The balance of Bitcoin held on over-the-counter (OTC) desks, which ARK uses as a proxy for institutional activity, has hit an all-time high with nearly 8,000 Bitcoin, marking a 60% increase this quarter.

Funding Trends

43% of Web3 investments went to metaverse projects in 2023. Despite a downturn in metaverse projects, venture capitalists have invested $707m into the sector, highlighting growing interest and investment in the metaverse and Web3 technologies.

Mind Network secured $2.5m in initial funding, including contributions from Binance Labs and other prominent venture capitalists. This investment will support Mind Network's mission to provide a secure and private data infrastructure for the Web3 ecosystem.

Bipa raised $1.4m in a seed funding round to expand the operations and develop new products for the Brazilian Bitcoin startup.

Veloce Media Group received $50m from GEM Digital Limited, a digital asset investment firm, shortly after Veloce’s announcement of a new blockchain utility and governance token, VEXT.

Bluesky raised $8m in a seed funding round led by Neo. The decentralized Twitter alternative plans to expand its team and enhance the decentralized AT Protocol that powers the Bluesky app with aims to provide an open commons for public conversation not beholden to the decisions of a single company.

Team Blackbird raised $6.5m in a Series A funding round led by South Korea-based Atinum Investment, bringing its total capital raised to $9m, with previous investments. The parent company of data analytics platform CryptoQuant plans to use the funds to recruit for its South Korea and international operations.

Web2 → Web3 Immersion

OKX signs a $70m sponsorship deal with Manchester City Football Club. The partnership comes after the club's concerns related to FTX, another crypto exchange, were allayed. The deal is expected to boost the world’s second largest crypto exchange’s brand visibility and adoption.

Harry Styles' concert app gifts fans with blockchain rewards. The app, called Pleasing, uses NFTs to offer fans unique experiences and merchandise. The move is seen as an innovative way to engage fans and monetize concerts in the digital age.

Mastercard launches a blockchain app store in beta as part of its foray into the crypto space. The app store will host a variety of blockchain applications and is seen as a significant move by the payments giant into the blockchain and crypto industry.

Dior embraces tokenized fashion but has refrained from using the term 'NFT'. The luxury fashion brand has been active to capitalize on the growing trend of digital fashion and virtual goods in the metaverse.

Vodafone Germany to launch Cardano-based NFTs. The telecom giant's move into the NFT space is a significant endorsement of the Cardano blockchain.

Warner Music Group and Polygon Labs launched a music accelerator program to back developers releasing music-related projects and DApps on the Polygon network. The program will provide funding and partnership assistance to selected projects.

Polygon formed its second significant partnership with the Indian government, aiming to develop a blockchain-based land ownership system, with the goal of bringing transparency and trust into land ownership transactions. The collaboration aligns with the Indian government's vision of a Digital India.

Ubisoft and SEGA are investing heavily in blockchain gaming with original titles Champions Tactics: Grimoria Chronicles and Battle of Three Kingdoms. The games will be built on the Oasys blockchain, marking a significant move by major gaming companies into the blockchain space.

Cristiano Ronaldo launched his second NFT collection on Binance. The collection, titled "Forever CR7: The GOAT", focuses on Ronaldo's career achievements and is expected to attract significant interest from fans and collectors.

NFT collection of Hollywood legend Steve McQueen will be released on ThetaDrop platform, granting holders access to future token-gated content, events and games. This collection celebrates his love of motorcycles and his reputation as the "king of cool.”

Regulatory Round-up

AF

South Africa imposes licensing requirements on cryptocurrency exchanges. The new rules aim to regulate the crypto industry, protect investors, and prevent money laundering and other illicit activities.

APAC

Hong Kong establishes a Web3 task force to expedite the development of the industry, with the goal of becoming a global leader in the field. The task force will focus on areas such as DeFi, NFTs, and metaverse.

Reserve Bank of India (RBI) is in talks with over 18 global central banks to promote the use of the digital rupee for cross-border payments. This is part of India's efforts to adopt a CBDC and reduce dependence on the US dollar.

Chinese city of Jinan implements digital yuan payments for public transportation fares. The move is part of China's broader push to promote the use of its CBDC, the digital yuan.

Thailand introduces new regulations to protect investors and regulate customer usage of cryptocurrencies, requiring crypto businesses to register with the Ministry of Finance and comply with anti-money laundering (AML) regulations.

Singapore implements new cryptocurrency regulations targeting custody, lending, and staking, aiming to protect investors and ensure the stability of the financial system, requiring crypto businesses to obtain a license and comply with AML rules.

DBS Bank introduces a digital yuan merchant collection solution in China. The biggest bank in Southeast Asia will provide solutions enabling businesses to accept payments in China's CBDC, the e-CNY, and settle funds directly into their bank accounts.

EU

The European Central Bank plans to launch a prototype of a digital euro by October. The digital euro is part of the ECB's efforts to modernize Europe's financial infrastructure and keep pace with global developments in digital currencies.

The European Commission is set to examine privacy, competition, and rights in its upcoming metaverse strategy. The policy paper will discuss these issues rather than proposing a formal bill, but it could point towards stronger action in the future.

UK passes a new law recognizing cryptocurrency trading as a regulated financial activity. The law aims to provide a clear regulatory framework for the crypto industry, promoting transparency and protecting investors.

International

Over 130 countries are racing towards CBDCs, with most already in advanced phases and seen as a response to the growing influence of cryptocurrencies.

US

BlackRock refiles its Bitcoin spot ETF with the SEC, naming Coinbase as its custodian. The move signals BlackRock's continued interest in providing its clients with exposure to Bitcoin.

JPMorgan Chase and 40 other US banks conduct FedNow trial runs, an instant payment system set to launch soon. The system aims to provide real-time payment services 24/7, enhancing the efficiency of transactions.

Celsius Network’s ex-CEO Alex Mashinsky is under investigation by the CFTC for alleged rule violations. The probe alleges that Celsius deceived investors before filing for bankruptcy and failed to register with the regulator.

The Raven Also Spotted

Crypto venture capital struggle is mainly a North American problem, said Animoca Brands CEO Yat Siu. While Web3 startups flourish in the Middle East and Asia, North American crypto entrepreneurs face challenges due to tough macroeconomic and regulatory conditions.

Yat Siu remains optimistic about the blockchain gaming sector and anticipates the launch of several 'AAA' blockchain games by the end of 2023 or early 2024. Siu also provided an update on Animoca's anticipated metaverse fund, which is still awaiting a license before it can begin to invest.

Gaming is the “killer app” for crypto, claims former Activision Vice President Michael Lee, now the SVP of Growth at Matter Labs. In a discussion at the 3XP gaming conference, Lee shared his predictions for the crypto gaming industry, emphasizing the potential of this intersection between gaming and blockchain technology.

49% of German crypto investors view digital currencies as a long-term wealth accumulation strategy, based on a KuCoin research. The survey shows that Millennials make up 51% of the total number of cryptocurrency investors in Germany, followed by Generation X at 30%.

DeFi salaries remain highly competitive despite the market turmoil and scandals in the final quarter of 2022, according to a study by talent advisory firm Durlston Partners. The scarcity of DeFi developers and engineers, coupled with their specialized skill set, allows them to command impressive remuneration packages.