Nickel Research Centre

Nickel News Roundup - Week 5

3rd February, 2022 

Market Overview:

Digital assets traded in a tight range this week, with a slight upward trend of recovery from last week’s significant drop.

  • Bitcoin recovered from lows of $35,670 last Thursday to a weekly high of $39,070 on Wednesday, spending most of the week trading between $36,800 and $38,400
  • Bitcoin is currently valued at $37,090, representing 2.6% weekly growth
  • Ether grew from a weekly low of $2,334 on Thursday to a high of $2,801 on Wednesday, but failed to decisively break through the $2,800 level despite numerous attempts
  • Ether currently trades at $2,676 for a 11.2% weekly increase
  • Total market capitalisation reached a weekly high of $1.78tn on Wednesday, before a sharp drop following Bitcoin’s rejection at $39,000 led to a current overall market value of $1.71
  • Total value locked in DeFi dropped to $79.1bn, according to industry analytics platform DeFi Pulse

Digital asset markets had a steady week of recovery, although rejection at key price levels on Wednesday afternoon halted upward momentum. The week’s news proved however the growing global appeal of digital assets; Japanese regulators seek to streamline access to their $1tn trading market, India and Russia both made positive regulatory moves, a former Chancellor of the Exchequer urged the UK to embrace the digital asset sphere for the nation’s economy, and leading Singaporean and Canadian institutions were among investors in a new $400m funding round for digital asset exchange FTX.


What happened: Japan seeks to open up $1tn digital asset market

How is this significant?
  • According to Bloomberg sources this week, Japanese regulators are in the process of easing access to local digital asset exchanges, potentially allowing a far greater range of crypto assets to be traded
  • The Japanese digital asset sector is largely self-regulating, with stringent listing requirements across all of Japan’s exchanges
  • As an example, Coinbase in Japan only offers 5 coins for trading, compared with over 100 on other localised versions of the platform
  • Now, the Japan Virtual and Crypto assets Exchange Association (JVCEA) appears poised to streamline listing requirements for local exchanges, allowing them to list up to a dozen assets in one batch
  • The streamlining is believed to contain some provisos in order to maintain high standards of assets, including a minimum of six months since initial release
  • Digital asset trading increased 51% in the first 11 months of 2021, reaching approximately $1tn for the year, according to JVCEA data

What happened: Brevan Howard crypto arm grows to $250m

How is this significant?
  • Macro hedge fund Brevan Howard (co-founded by billionaire and digital asset advocate Alan Howard) has committed capital and staff to its new crypto asset arm, to the tune of $250m
  • BH Digital will open to funds from clients later this year, and has expanded to over 40 full-time staff since launching in September
  • The company have bolstered their expertise in the field with recent hires from both Jump Capital and the Winklevoss-owned digital asset exchange Gemini
  • The move mirrors other hedge fund titans such as Paul Tudor Jones and Marc Lasry moving into digital assets, whilst Bloomberg also reported Man Group Plc (the world’s biggest publicly traded hedge fund firm) could be entering the space

What happened: Sony makes $3.6bn acquisition in metaverse push

How is this significant?
  • After Microsoft’s recent acquisition of Activision Blizzard, Japanese tech giant Sony became the latest mega-corporation to spend big in order to bolster their metaverse capabilities
  • Since Facebook announced their rebranding as Meta, the topic has gained interest and attention amongst businesses, especially in Silicon Valley
  • The manufacturers of the PlayStation series of consoles have agreed to pay $3.6bn for the game developer Bungie, best known as creators of popular gaming franchises Halo and Destiny
  • With the potential future value of the metaverse (or individual metaverses) estimated in the trillions of dollars, established tech giants have begun positioning themselves to get in on the ground floor—with content powered partly by persistent, decentralised, blockchain-based assets such as NFTs
  • The role of digital assets securing the metaverse has seen growth for company’s building decentralised virtual spaces or NFT solutions, such as Decentraland, Sandbox, or Enjin

What happened: Digital asset exchange FTX achieves $32bn valuation in latest raise

How is this significant?
  • Despite recent bearish market momentum, leading digital asset exchange FTX achieved a $32bn valuation on a new $400m funding round, just one week after their US subsidiary achieved an $8bn valuation on a similar raise 
  • In an interview with Bloomberg, CEO Sam Bankman-Fried confirmed that the company would use funds raised for mergers and acquisitions in order to boost their platform offerings and capabilities
  • On Wednesday they made the first such acquisition, announcing a deal to buy Japan’s Liquid Group
  • This raise featured all the same investors as that of FTX.US, including Paradigm, Temasek, the Ontario Teachers' Pension Plan Board, SoftBank Vision Fund 2, and Lightspeed Venture Partners
  • FTX has now raised approximately $2bn of venture funding in total, and when questioned Bankman-Fried remained non-committal on the idea of the company going public as Coinbase did; “I’m not sure whether we will. I could see it happening, I could see it not happening. We don’t feel like we have any particular need to do it”

What happened: Regulatory roundup—Russia and India signal digital asset approval

How is this significant?

What happened: Reddit founder Alexis Ohanian raises $510m for crypto VC fund

How is this significant?

What happened: Digital asset firm Fireblocks valued at $8bn after Series E raise

How is this significant?
  • Following a $550m Series E round, digital asset custodian Fireblock achieved an $8bn valuation this week
  • CEO Michael Shaulov spoke about the scale of their growth as a reflection of wider growth throughout the asset class; “Over the last 18 months we’ve seen exponential growth… We had about 100 clients at the start of 2021 and we finished the year with 800. We’ve transferred over $2tn worth of assets”
  • Fireblocks operates a SWIFT-like transfer network for digital assets, transacting about 15% of institutional trade volume
  • Fireblocks said they will use the funding for expansion into new growth markets, including South East Asia and Africa

What happened: ETF News—Fidelity and Grayscale file for new products

How is this significant?
  • Fidelity appears to be betting on the growth of Metaverse value, having filed with the SEC for a “Fidelity Metaverse Index ETF”
  • The proposed product seeks exposure to companies that “develop, manufacture, distribute or sell products and services relating to enabling the metaverse”
  • This filing comes after the SEC rejected Fidelity’s application for a spot-based ETF
  • Grayscale meanwhile filed this week for an ETF offering a basket of companies with high Bitcoin exposure or involvement—the list of 22 companies includes Coinbase, PayPal, payments processors Block (formerly Square), and Silvergate

What happened: Facebook sells Diem assets to Silvergate Bank

How is this significant?
  • Facebook finally wound down its involvement with their Diem (formerly Libra) stablecoin project this week, selling the project’s assets to federally-licensed digital asset bank Silvergate
  • After being announced in 2019 as Libra, the project had difficulty actually releasing a stablecoin due to intense regulatory scrutiny and monopoly concerns in the US
  • Stuart Levey, the US chief executive of Diem Networks released a statement saying "Despite giving us positive substantive feedback on the design of the network, it nevertheless became clear from our dialogue with federal regulators that the project could not move ahead… As a result, the best path forward was to sell the Diem Group's assets, as we have done today to Silvergate"
  • Silvergate confirmed the deal includes “proprietary software elements critical to running a regulatory-compliant stablecoin network”, indicating that they aim to release it where Facebook failed

What happened: NYDIG releases paycheque via Bitcoin functionality

How is this significant?
  • Institutional Bitcoin company NYDIG released a service this week allowing companies and institutions to pay their employees in Bitcoin if they so choose
  • The “Bitcoin Savings Plan” program allows employees to convert some of their paycheque into Bitcoin, custodied by NYDIG
  • This program has been adopted by several existing NYDIG partners at launch, and appears to be inspired by a recent survey which found 36% of employees under the age of 30 were interested in converting part of their salary to Bitcoin, and 1 in 3 employees would favour employers who offer a Bitcoin option over those that don’t
News Roundups