Digital assets rallied from last week’s declines, helped by news of “non-transitory” inflation from Federal Reserve chairman Jerome Powell.
Bitcoin plummeted to lows of around $54,000 over the weekend as the 24/7/365 nature of digital asset trading left the market more exposed to concerns and news around the new Omicron Covid variant—but the leading digital asset began a strong recovery on Monday as Jerome Powell forecast high inflation could remain until mid-2022
Bitcoin reached weekly highs of $59,350, but was unable to sustain above $59,000 and currently trades at $57,130; a flat weekly performance
Ethereum strongly outpaced Bitcoin this week, approaching the $4,800 mark with a weekly high of $4,780
Ether is currently trading at $4,599; equating to 7.6% weekly growth
Overall market capitalisation recovered, with a current value of $2.62tn
Total value locked in DeFi recovered thanks to Ether’s price appreciation, reaching $111.5bn according to industry analytics platform DeFi Pulse
Digital assets rallied this week as a weekend dip over Omicron concerns was counteracted by additional inflation fears stemming from the new Covid variant. In the market, more big names launched and argued for more exchange products, more firms established crypto-specific investment funds, a slew of crypto asset firms secured major investments, leading corporate holder MicroStrategy increased their Bitcoin exposure, and Adidas became the latest major consumer brand to embrace digital assets.
Although the SEC remains hesitant to approve a spot-price Bitcoin in the United States, across the border in Canada fidelity Investments launched just such a product this week
Fidelity (more than $4tn AUM) is a key supporter of digital assets amongst established investment institutions, having told the Financial Times they are “keeping close to the evolution of cryptocurrencies [ . . . ] as part of a wider exploration of the potential for digital assets… As you would expect, Fidelity International is exploring the potential of this technology for the benefit of clients”
Now, within weeks of launching Canada’s first institutional Bitcoin custody service, Fidelity have launched a Bitcoin spot ETF there, under the ticker FBTC
Global sportswear brand Adidas announced their entry into digital assets this week through both an exchange partnership and a metaverse presence
Adidas Originals revealed their Coinbase partnership in a tweet, shortly after confirming their entry into the metaverse field via creation of the “Adi-Verse” on blockchain metaverse project The Sandbox
An Adidas spokesperson confirmed the company’s belief in digital-asset driven online spaces, saying “The Metaverse is currently one of the most exciting developments in digital, making it an interesting platform for Adidas”
The news also had a significant effect on the value of The Sandbox project as a whole, with their proprietary SAND token rallying more than 50% in value after the announcement
Invesco launched a physically-backed Bitcoin ETP on Deutsche Börse Xetra, the German equity and ETF stock market
In an interview with ETF Stream announcing the news, Invesco’s EMEA ETF head Gary Buxton outlined several reasons why they decided to go with a physically-backed product rather than the American futures ETF approach, noting “physical Bitcoin is a more observable marketplace. One of our concerns was the depth of synthetic liquidity as well as what that may do to valuations over time and that is something we were not wholly comfortable with”
He also revealed the product was created due to demand from institutional investors; “We have been pushed over the last couple of years by institutional clients and had to look at how we can access this space well… In the last two to three years, we have been trying to structure a product that looked, from an institutional point of view, as close as possible to a traditional ETF”
Revealed in a Linkedin post by division head Christine Kang, the practice will “back and empower the very best entrepreneurs in Web3/crypto, SaaS [Software as a Service], and fintech”
Kang stated that she was particularly enthusiastic about the growth potential of the digital asset field, writing “Web3/crypto and software are *the* most exciting sectors of innovation in today’s global economy, and we’re still in the very early days”
Crypto.com, a leading digital asset exchange, have recently made headlines by elevating their brand through a combination of $100m marketing campaigns and naming rights purchases—now they can add “traditional exchange acquisitions” to that list
On Wednesday, it was reported that Crypto.com successfully purchased the North American Derivatives Exchange (Nadex) and a 40% stake in Chicago-based Small Exchange Inc. from IG Holdings for over $200m in cash
Small Exchange recently added various digital asset futures to its product list, and according to Bloomberg “counts Citadel Securities, Jump Capital, Interactive Brokers Group Inc. and Peak6 Investments among its investors”, putting Crypto.com in esteemed company with their 40% stake
Crypto.com CEO Kris Marszalek identified diversification of products and services as a motivator for the deal, stating in a press release that the acquisition “will give our customers access to an entirely new set of financial tools”
Ex-Citigroup executive Matt Zhang and Goldman Sachs alum Sam Puerifoy announced a new digital asset investment firm this week, with $1.5bn dedicated to digital asset investments aligned with four key strategic pillars
These strategies include both regular VC and digital asset trading, alongside use of DeFi protocols for staking and yield generation, and tapping into the rise of blockchain-based games with “play to earn” reward mechanisms (a division to be led by Puerifoy)
Named “Hivemind Capital Partners”, Zhang told Bloomberg in an interview that the New York-based firm has already attracted interest from “qualified institutional investors including pensions, endowments, sovereign wealth funds and family offices”
Zhang acknowledged the possibility of a future “crypto winter” like the 2018-2019 bear market that could drive asset prices down, but remains bullish on the industry’s long-term potential; “In the two years, three years horizon, there’s going to be a big trading business opportunity—the market volatility will come up and down”
Investment continues to flow into the growing digital asset industry, with analysts noting that China’s recent crackdown has had the corollary of more investment into American companies
Bloomberg noted that the number of investment deals struck in the US is already more than double the figure from 2020, whilst the total value of funding has “climbed more than sevenfold to $10.9 billion”
Bloomberg also reported that generalist firms like Bain are currently creating dedicated crypto funds, whilst institutions more specialised in digital assets are looking to specialise further; Lightspeed Venture Partners Amy Wu told the publication “In the next few years every partner at Lightspeed will become fluent in crypto… It’s going to be the internet of our generation”
Digital asset lender Celsius Network increased their Series B funding round from $400m to $750m due to oversubscription, bringing their valuation to $3.5bn—a figure which their CEO estimates “could double or triple” next year
The Winklevoss brothers’ Gemini exchange achieved a $7.1bn valuation after securing $400m of growth capital in a funding round “led by Morgan Creek Digital with participation from 10T, ParaFi, Newflow Partners, Marcy Venture Partners, and the Commonwealth Bank of Australia, among others”
According to tech publication The Information, leading NFT exchange platform Opensea was offered unsolicited investment that could take their valuation to $10bn, driven by the explosive growth in NFT trading volumes this year
This balance has been acquired for a total of $3.57bn, and is now worth approximately $7bn—roughly doubling in value since the company began investing in August 2020
In the same timeframe, MicroStrategy’s share price has risen by 450%, as the company is increasingly identified with their corporate Bitcoin holdings
Grayscale, part of the Digital Currency Group and custodians of the world’s largest Bitcoin fund (GBTC) challenged the SEC on their recent rejection of a Bitcoin spot ETF this week
In conjunction with NYSE Arca, they aim to convert their GBTC fund into physical Bitcoin ETFs, arguing that rejection of VanEck’s spot Bitcoin ETF was flawed, as “The Commission has no basis for the position that investing in the derivatives market for an asset is acceptable for investors while investing in the asset itself is not”
Their 15-page letter to the SEC Secretary noted that the decision against a physical ETF was “arbitrary and capricious” and could violate the Administrative Procedure Act (APA); “Bitcoin futures ETPs registered under the 1940 Act and spot Bitcoin ETPs that are not required or eligible to be so registered are the same in all relevant respects, but based on the analysis in the November 12, 2021 disapproval order, the Commission is treating them differently”
Also this week, Grayscale published a 19-page report on the rise of the metaverse and its impact on digital assets, highlighting the breadth of it potential; “the Metaverse opportunity extends far beyond gaming. The Metaverse is estimated to be a trillion-dollar revenue opportunity across advertising, social commerce, digital events, hardware, and developer/creator monetization”
Kevin Kelly, CEO of Kelly Intelligence, announced the creation of an actively managed Ether futures fund this week; called the Kelly Ethereum Strategy ETF (EX)
He told industry publication Blockworks that Ethereum’s role in the future of finance is simply too important to ignore; “interest in Ether is predicated on the fact that we are at the start of the fourth industrial revolution—what we call the intelligence revolution—where the Ethereum network will be an integral part of our lives going forward”
According to Seeking Alpha, “EX will achieve its investment objective by capitalizing on standardized cash-settled Ether Futures contracts”, and will avoid any physically-backed investments until SEC approval for such exposure is granted
However, Bloomberg ETF analyst Eric Balchunas is skeptical on “if the SEC is ready for this next step”, estimating their current odds of approval at around 20%
US-based Bitcoin mining firm Griid announced plans to become a publicly listed company this week, through an SPAC merger with blank-cheque firm Adit EdTech Acquisition Corp
The new company will have a valuation of $3.3bn, with Griid receiving $246m in cash from Adit’s trust account after contracts are finalised