Bitcoin experienced a steep decline from Thursday onwards, falling from a weekly high of $43,410, to $33,180 on Monday—its lowest price in 7 months
This price point represented more than a 50% fall from November’s record high around $69,000
Bitcoin did show some signs of recovery after Monday, rising more than $5,000 to $38,430 on Wednesday, before retracing slightly after Jerome Powell’s speech
Bitcoin is currently valued at $36,180, representing a 13.8% weekly decline
Ether again matched Bitcoin’s trend, but with additional declines; dropping from a weekly high of $3,253 to a low of $2,183—its worst performance since late July 2021
Ether recovered to $2,654 on Wednesday, and its current price of $2,407 is a 23% weekly decline on last week
Total market capitalisation fell sharply as the majority of altcoins suffered greater percentage losses than Bitcoin and Ethereum. Overall value dropped below $1.5tn on Monday before recovering some losses to $1.71tn on Wednesday, pulling back to a current level of $1.63tn
Total value locked in DeFi dropped to $92.4bn, according to industry analytics platform DeFi Pulse
Digital asset markets faced large sell-offs this week, with many analysts citing the same macroeconomic concerns and tensions that led to similar momentum in traditional markets. However, a sea of red didn’t stop many significant institutions from continuing to chart a course to the brave new world of crypto assets; BlackRock filed for an ETF based on blockchain exposure, Jane Street Capital spoke about rising institutional interest, VC funding continued to grow, and tech giants including Twitter, Meta, and YouTube all expressed enthusiasm for crypto assets and their wider integration.
Companies featured within the iShares Blockchain and Tech ETF would be those involved in the “development, innovation, and utilization of blockchain and crypto technologies”
Perhaps with an eye to the SEC’s recent rejections of spot-based ETFs, the planned fund will not directly purchase digital assets; instead 80% of the fund’s value will be allocated towards stocks of companies with the appropriate digital asset exposure, with the remaining 20% in “futures, options, swap contracts, cash and cash equivalents”
Nadella believes that metaverse presences can however have a variety of applications beyond gaming; “as the digital and physical worlds come together, we are seeing real enterprise metaverse usage, from smart factories to smart buildings to smart cities”
He identifies the metaverse—and the platform-level infrastructure underpinning it—as key to the future development of our digital lives, telling a caller that it “is essentially the next wave of the Internet, right? Just like the first wave of the Internet allowed everybody to build a website, I think the next wave of the Internet will be a more open world where people can build their own metaverse world”
According to reports this week, the Biden administration may release a government-wide digital asset strategy as soon as next month
The move would put the White House front and centre of legislative attempts to define and divide up responsibilities for dealing with the new asset class, potentially reducing the lack of clarity that has hampered adoption in the United States
Sources told Bloomberg that “Senior administration officials have held multiple meetings on the plan, which is being drafted as an executive order”
The directive is believed to be concerned with the challenges posed by digital assets, carving out specific roles for government agencies, and ensuring that the US remains competitive as digital asset adoption continues to grow globally
In other news from Capitol Hill, this week also featured a House Hearing on the energy use of Bitcoin mining, which was characterised by analysts as “constructive”, and featured acknowledgements of decreased carbon emissions in the industry, and its role as a catalyst in renewable energy adoption, due to its potential to make energy usage and integration directly profitable
Jane Street Capital, one of the world’s largest trading firms and market makers, has become the latest Wall Street firm to embrace the rise of digital assets, through the provision of market-making services to traditional trading platforms like RobinHood, as well as DeFi teams
Mina Nguyen, the firm’s head of institutional strategy, told Bloomberg this week that the recent market slide hasn’t deterred interest from institutional investors, especially if increased US regulatory clarity allows them to extend their positions; “In terms of demand, we’re seeing inquiries from a breadth of institutions. Asset managers, endowments, and private wealth institutions do not want to be caught off guard”
Additionally, the idea of direct exposure is increasingly appealing to a variety of institutions; she told Bloomberg “Sovereign wealth funds are asking questions” on the matter
Turner Batty, creator of the company’s crypto trading desk notes that it has been a “clear growth area” for the past 16 months, and that the company now employs more people for digital asset trading than ever before
Bank of America released a report on Monday predicting the United States following in the steps of other nations to develop and release a Digital Dollar CBDC by 2025-2030
An American CBDC was identified as “an inevitable evolution of today’s electronic currencies”, and BofA predicted continued growth of digital currencies issued by private entities in the meantime
Strategists Alkesh Shah and Andrew Moss wrote “We expect stablecoin adoption and use for payments to increase significantly over the next several years as financial institutions explore digital asset custody and trading solutions and as payments companies incorporate blockchain technology into their platforms”
This report marks the Federal Reserve’s biggest step yet into the field of digital assets, one which they characterise as “a highly significant innovation in American money”
The US subsidiary of popular digital asset exchange FTX (operating as a separate entity due to US regulatory requirements on asset listings and trading mechanisms) achieved a valuation of $8bn after their first funding round concluded this week
Participants in the $400m Series A raise included contributions from various heavy hitters, including Paradigm, Temasek, the Ontario Teachers' Pension Plan Board, SoftBank Vision Fund 2, and Lightspeed Venture Partners
The funding will be used “to further grow its user base, bolster its derivatives efforts, and launch new business lines”, alongside “strategic investments and acquisitions in key verticals and expand its network of partnerships”
What happened: NFT News: Beatles, Twitter, YouTube, and record volumes
How is this significant?
Despite significant moves downside in wider digital asset trading, the NFT market showcased surprising strength this week, perhaps indicating an evolving role for this particular subset of digital assets
Julien Lennon, son of John, announced a digital auction of Beatles memorabilia as NFTs, making them perhaps the most significant cultural entity thus far to feature in official NFT issuance
In her annual letter to creators, she declared “We’re always focused on expanding the YouTube ecosystem to help creators capitalise on emerging technologies, including things like NFTs, while continuing to strengthen and enhance the experiences creators and fans have on YouTube”
Venture Capital firm Dragonfly became the latest in the field to earmark large amounts of funding for digital assets, with a filing for its Dragonfly Ventures III Feeder fund revealing a target raise of $500m
This follows in the wake of other large VC digital asset funds, such as Paradigm’s $2.5bn fund, FTX Ventures’ $2bn launch fund, multiple funds by a16z, and heavy investment from the likes of Sequoia
Dragonfly Capital have been involved in digital asset funding for several years, growing from $100m AUM at launch in 2018, to over $2bn AUM now
According to ARK Invest’s new Big Ideas Outlook report, released on Tuesday, the firm headed by investment guru Cathie Wood believes Bitcoin could reach a price of $1 million per coin within the decade
Numerous factors were cited as possible catalysts for such growth, including the potential adoption as legal tender by more countries, and technological improvements like the recent Taproot upgrade and Lightning Network as means to improve the asset’s scalability and transaction speeds
Analysts noted that “bitcoin’s cumulative transfer volume increased by 463% in 2021”, and the network’s annual settlement volume “surpassed Visa’s annual payments volume” with more than $13tn in value settled last year
ARK analyst Yassine Elmandjra also said that environmental concerns around Bitcoin are overblown, and its decentralised nature provides a compelling value proposition; “Our research suggests that Bitcoin has the potential to transform monetary history by providing financial freedom and empowerment in a fair, global, and distributed way”
This hypothesis is an almost linear extension of one by Woods last year, when she predicted that one Bitcoin could hit $500,000 by 2026
Leading Bitcoin fund provider Grayscale revealed in a tweet this week that they are investigating and reviewing 25 new digital assets for addition to future investment products
Grayscale identifies the move as part of their mission to “introduce investors to the diversity in this space”, showcasing the continued growth and evolution of the digital asset sector
Some notable trends being explored by Grayscale according to new assets under consideration are:
Third-generation blockchains (generally-characterised by Ethereum-compatible smart contract at lower transaction costs and higher transaction speed than Ethereum itself) such as Fantom, Elrond, Holo, and Oasis
NFT, blockchain gaming, and/or metaverse projects, such as Enjin, Gala, Axie, and The Sandbox
Decentralised Finance (DeFi) protocols, such as Bancor, Convex, and Stacks
MicroStrategy, the world’s largest corporate Bitcoin holder, appears unfazed by the leading digital asset’s recent slide in value, according to CFO Phong Le
Speaking to the Wall Street Journal this week, he said the company will likely expand rather than reduce their position with the asset; “Our strategy with Bitcoin has been to buy and hold, so to the extent we have excess cash flows or we find other ways to raise money, we continue to put it into Bitcoin”
He confirmed the company will continue to buy Bitcoin, although he didn’t disclose whether they plan to buy more than they did last year
Despite the recent fall in value, Brent Thill, senior analyst at Jefferies LLC calculates that the company has still gained around $750m on their overall Bitcoin investments at current price points