Crypto market heats up despite tightening U.S. regulatory environment

Dear member,

Now that the dust has settled from the recent banking crisis, the spotlight is on the crypto market rally. Bitcoin bounced back to retest the previous price of $28,000, hot off the heels of Silicon Valley Bank’s acquisition.

Just last week, institutional capital inflows turned positive, to the tune of $160m into Bitcoin, Solana, and XRP. It seems the cloud of fear still looms among investors in what looks to be growing risks in TradFi, leading many to digital assets instead.

While the recent $200m Bitcoin purchase by MicroStrategy further signifies bullish sentiment among smart money in Web3, U.S. regulators are ramping up their clampdown on crypto. Binance supremo CZ was sued by CFTC, spooking investors and leading to over $1.6b in withdrawals from Binance. Prominent U.S. Senator Elizabeth Warren has also joined the fray, vowing to create an “anti-crypto army” as a key part of her re-election campaign.

Despite a pessimistic crypto regulatory environment in the U.S., Jan van Eck, CEO of investment management firm Vaneck, expects the Fed tightening to end soon and usher in a bull cycle for Bitcoin and gold. And in light of the current financial climate and bank failures, prominent VC Tim Draper has advised startups to hold Bitcoin as a hedge.

Riding on the growing AI trend, Fetch.ai raised $40m to prepare and build the infrastructure needed to scale in the space. Prominent investors like 1kx, ConsenSys, and SeedClub invested $10m into HydraDAO Ventures. Other funding rounds recently completed included Irene Zhao’s So-Col and Coadjute at $4.5m and $5m, respectively.

Several notable partnerships were formed over this past week, notably XCMG - the world’s third-largest construction machinery manufacturer - with Conflux and Gucci with Yuga Labs. The largest e-commerce platform in Latin America, Mercado Libre, will enable cryptocurrency purchases via its app for users in Chile. Meanwhile, ticketing giant Ticketmaster will pilot NFTs for an upcoming Avenged Sevenfold concert.

Nasdaq has recently announced plans to provide crypto custody services, starting with Bitcoin and Ethereum before adding other cryptocurrencies. This could mark a significant step forward for not just the Web3 space but also provide yet another safe avenue for TradFi investors to gain exposure to digital assets.

When one door in TradFi closes, another in Web3 will open. With over 190 banks in the U.S. alone that place $300b of insured deposits at risk, more regulated and safe pathways into Web3 will be needed. Judging by how things have been shaping, more will come in due time.

Best regards from the Future,
RFTF.ai 

Market Intel

Over 190 U.S. banks could be at risk of impacting insured depositors, potentially putting $300b of insured deposits at risk. This sheds an alarming light on the fragility of the traditional financial system.

BTC bounces back to test $28,000 with its highest dominance since June 2022, coincidentally happening at the back of the news of Silicon Valley Bank’s acquisition and resumption of operations.

$160m institutional capital inflows into digital assets like Bitcoin, Solana, and XRP - the highest since July 2022 - comes after 6 weeks of outflows totaling $408m. The late inflows are likely due to investor fears for stability in TradFi.

MicroStrategy buys $200m worth of Bitcoin after repaying its Silvergate Bank loan at a 22% discount, putting its total Bitcoin holdings at $4.14b.

Funding Trends

Fetch.ai, a blockchain AI startup, raised a substantial $40m in funding to offer monetization features and other tools for AI-generated information.

Hydra Ventures DAO raised $10m from prominent investors like 1kx, ConsenSys, and Seed Club to create a DAO that will support other investment DAOs.

Coadjute announced a $5m funding raised led by Praetura Ventures. This real estate blockchain startup’s GTM approach involves partnering with leading UK proptech firms, proving to be a successful strategy.

Irene Zhao’s web3 social platform So-Col raised $4.5m in two funding rounds, pushing its total funding to date to $6.25 million.

Web2 → Web3 Immersion

XCMG, the world’s third-largest construction machinery manufacturer, partners with Conflux to launch an NFT collection and leverage web3 technologies.

Gucci partners with BAYC creator Yuga Labs in a multi-year deal, beginning with the luxury brand’s participation in the Ape Coin-powered metaverse platform Otherside.

Burger King in Paris now accepts Bitcoin, Ethereum, and other cryptocurrencies through a collaboration between Alchemy Pay and Binance Pay, which provide crypto payment services.

Ticketmaster to pilot NFTs for upcoming Avenged Sevenfold tour, providing exclusive access to ‘Deathbats Club’ members with perks like priority access and allocated seating without queues.

Mercado Libre, the Amazon.com of Latin America, enables crypto trading in Chile, allowing users to buy crypto directly from the Mercado Pago app.

UNICEF lays out plans for a prototype DAO as part of the organization’s larger immersion in crypto via its UNICEF CryptoFund launched in 2019.

Nasdaq announces plans to launch its crypto custody services in the second quarter of 2023, starting with providing custody for Bitcoin and Ethereum.

Regulatory Round-up

APAC

A number of Chinese state-owned banks are showing interest in offering crypto services to Hong Kong web3 firms.

Australian senator proposes a bill for crypto exchanges in Australia to promote consumer protection and investment in digital assets.

EU

EU lawmakers impose €1,000 limit on unverified crypto users as part of

new measures of anti-money laundering (AML) and terrorist financing regulation.

International

G7 leaders to collaborate for tighter crypto regulation to improve transparency, consumer protections, and address potential risks to the global financial system.

US

CFTC sues Binance founder Changpeng Zhao for operating an exchange illegally and circumventing compliance laws.

SEC charges crypto trading platform Beaxy for “failing to register as a national securities exchange, broker, and clearing agency”

Senator Elizabeth Warren shares re-election campaign that leans heavily on building an anti-crypto army.

The Raven Also Spotted

Veteran VC and early Bitcoin investor Tim Draper advises startups to keep Bitcoin as a hedge against potential bank runs.

Crypto had no “direct role” in recent SVB and Signature Bank failures, top U.S. Treasury official told House lawmakers recently.

$1.6b withdrawn by investors from Binance after CFTC lawsuit hit the news, according to Nansen.

Jan van Eck, CEO of investment management firm Vaneck, predicts incoming bull market for Bitcoin and gold, catalyzed by an expected end to Fed tightening.