Will crypto surge if U.S. defaults on $31T debt?

Dear member,

As concerns over a potential US debt default grow, risk assets such as Bitcoin may find themselves at a crossroads. This could prompt policymakers to find solutions, offering the market a potential boost.

Despite the uncertainty, there has been a rise in Bitcoin wallets, with over a million now holding at least one Bitcoin, and investment in Bitcoin-based NFTs surges, even as daily unique Bitcoin addresses experience a dip. Digital asset investment products have seen outflows, yet the commitment of long-term holders remains solid.

In the venture funding landscape, notable investments have been made in various Web3 initiatives, including:

The transition from Web2 to Web3 continues to accelerate. Samsung is exploring the offline capabilities of South Korea's CBDC, while China lays a strong foundation with the National Blockchain Technology Innovation Center in Beijing. In parallel, the US-based BNY Mellon is deepening its commitment to digital assets, and Mattel is joining the NFT bandwagon with its Hot Wheels Garage Series.

Regulatory developments globally echo the importance of developing comprehensive guidelines for the emerging digital economy. From Hong Kong's e-HKD pilot program, Australia's eAUD CBDC transaction, to the EU's MiCA regulation, nations are actively exploring and regulating digital currencies.

Shifts in traditional investment landscapes are clear. Goldman Sachs reports that 26% of family offices now invest in cryptocurrencies, a significant increase from last year. Meanwhile, the potential for Ethereum to drive the next crypto cycle and the growing interest from influential investors like Paul Tudor Jones underlines the optimistic outlook for the cryptocurrency industry.

Best regards from the Future,
RFTF.ai 

Market Intel

US debt default may harm crypto and stocks, Bloomberg analyst warns. Threat may prompt policymakers to find a solution, potentially boosting risk assets.

Over 1 million Bitcoin wallets now hold at least 1 whole Bitcoin, with 190,000 new addresses since Feb 2022. The rise aligns with a price drop, indicating buyers acquiring more at lower rates.

$200m in digital asset investment product outflows seen for the 4th consecutive week, according to data from CoinShares. This trend suggests that investors are currently focusing more on Bitcoin.

Bitcoin's daily unique addresses fell below 800,000, the lowest since July. The decline aligns with a market correction, but long-term investors hold their coins, reducing active trading.

NFT sales rose by 31.22% to $208.17m, driven by Bitcoin-based NFTs. Ethereum remains the top seller with $111.26m, while Bitcoin NFTs saw a 187.54% increase to $53.43m.

Funding Trends

OpenAI CEO Sam Altman raises close to $100m for Worldcoin, a global crypto ID project using iris-scanning technology. Privacy concerns exist, but over a million signups have been claimed.

HashKey Group in talks to raise $100-200m at $1b valuation as Hong Kong finalizes digital asset licensing. Funds will be directed towards Web3 initiatives to expand crypto exposure.

Red Beard Ventures secures $25m funding round led by Animoca Brands and other investors for tokenomics accelerator, Denarii Labs. The program offers advisory services and launch support for token projects.

Story Protocol raises $29.3m seed funding to develop Web3 infrastructure platform for creating, governing, and licensing narrative universes. Investors include Andreessen Horowitz and Samsung Next Fund.

River raises $35m in Series B funding led by Kingsway Capital, with participation from Peter Thiel and other notable investors. The funds will be used to expand products, marketing, and team for Bitcoin services.

Super League Gaming raises $23.8m in convertible preferred stock to settle debt, support operations, and fuel growth. The company operates metaverse games across various platforms.

Web2 → Web3 Immersion

Samsung partners with Bank of Korea to research offline capabilities of South Korea's CBDC, enabling remittances and payments via NFC on Samsung mobile devices, leveraging high-level security technology.

China establishes National Blockchain Technology Innovation Center in Beijing to train 500,000 blockchain experts, develop key technologies, and connect existing blockchains for a comprehensive network.

BNY Mellon expands digital asset initiatives to include custody, clearing, infrastructure modernization, and exploring tokenization for democratizing investments, reaffirming long-term commitment to digital assets.

Conflux Network and China Telecom launch world's first blockchain SIM card, enhancing security with larger storage and computing power, and generating/storing public and private keys within the card.

Mattel's Hot Wheels NFT Garage Series will feature Fast & Furious cars on the Flow blockchain, offering NFT holders a chance to own physical die-cast versions of the cars.

BitMEX partners with Astrobotic Technology and Bitcoin Magazine to send the first physical Bitcoin to the moon, integrating it into the Moon lander Peregrine-1 for future generations to interact with.

Regulatory Round-up

APAC

Hong Kong Monetary Authority (HKMA) launches e-HKD pilot program with 16 firms to explore digital currency use cases in payments, deposits, Web3 transactions, and tokenized assets, aligning with potential future retail CBDC implementation.

Australia conducts its first FX transaction using eAUD CBDC, trading for a USD stablecoin on Ethereum layer 2. This highlights CBDC's progress in facilitating international transactions.

EU

EU finance ministers unanimously approve MiCA regulation, providing clear guidelines for cryptocurrencies, digital assets, utility tokens, and stablecoins. It includes registration, authorization, and anti-market abuse measures for issuers, exchanges, and wallet providers.

International

G7 finance ministers and central bank governors agree to develop international standards for CBDCs and address cryptocurrency risks. They emphasize the importance of CBDCs' potential benefits and commit to mitigating risks.

IMF assesses Nigeria's eNaira, highlighting progress but suggesting areas for improvement. IMF recommends expanding use cases and enhancing accessibility. Nigerian authorities committed to addressing recommendations and improving the eNaira.

US

SEC lists 37 cryptocurrencies as securities, warns of action against unregistered crypto token offerings and sales. Enforcement actions have been taken against companies violating securities laws, with potential civil and criminal penalties for offenders.

The Raven Also Spotted

26% of family offices invest in cryptocurrencies, Goldman Sachs survey shows, up from 16% in 2021. Family offices show increasing interest in DeFi and NFTs, signifying growing legitimacy of the asset class.

NFTs going through rapid financialization, Reflexivity Research report finds, with increased complexity in trading, lending, and borrowing. Challenges remain, including reputational and environmental issues.

U.S. Secret Service holds crypto, praises blockchain's potential to revolutionize financial transactions during Reddit AMA. Commits to collaborating with the cryptocurrency industry to combat financial crime.

Next crypto cycle driven by Ethereum yields, Bernstein analysts predict. DeFi and NFT growth to increase ETH demand and price. Ethereum's move to proof-of-stake will enhance efficiency and security.

Billionaire Paul Tudor Jones maintains "small" Bitcoin exposure, citing its fixed supply. Predicts Fed's shift in interest rate policy will benefit the cryptocurrency industry and BTC's price.