Nickel News Roundup - Week 44

4th November, 2021 

Market Overview:

• Bitcoin experienced steady growth throughout the week, from lows of $58,300 on Thursday to over $64,100 on Tuesday
• The current price of one Bitcoin is $61,680, up 2% from last week
• Ethereum performed strongly throughout the week, experiencing seven consecutive days of deflationary issuance for the first time since the implementation of EIP 1559
• Since the changes to miner and transaction fees were introduced, nearly 750,000 Ether worth over $3.4bn have been “burned” and permanently removed from circulation
• Ether’s price action saw several new records set, crossing $4,400, $4,500 and $4,600 for the first time, with a new all-time high of $4,665
• Ether is currently priced at $4,502, representing 8.6% weekly growth
• Other major altcoins, such as Solana and DOT also set new records
• The total market capitalisation of all digital assets crossed $2.7tn for the first time this week, reaching a new record of $2.76tn
• In line with Ether’s performance, total value locked in DeFi also reached new highs of $107bn, according to industry analytics platform DeFi Pulse

News:

• According to a report published this week by market intelligence CB Insights, Q3 was another record quarter for digital asset in terms of venture capital investment
• In total, CB Insights recorded $6.5bn of VC funding across 286 deals, surpassing the record $5.2bn from 291 deals in Q2
• The first nine months of 2021 resulted in $15bn of VC investment for digital asset companies; 384% more than the total $3.1bn for all of 2020
• Venture capital interest in digital assets seems likely to continue; this week it was reported that Hong Kong-based CMCC Global is seeking $300m of assets in its new crypto fund, backed by Pacific Century Group billionaire Richard Li, alongside the Winklevoss brothers
• Cameron and Tyler Winklevoss were also involved in Sfermion’s $100m Fund II, aimed at investing in projects active in the metaverse and NFT fields
• Other investors of note in Sfermion’s fund include hedge fund billionaire Alan Howard, Matthew Roszak, Digital Currency Group, and a16z’s Chris Dixon

• The Chicago Mercantile Exchange this week announced the launch of Micro Ether futures
• Since launching Ether futures in February, CME’s head of equity index and alternative investment products Tim McCourt says there’s been growing liquidity and institutional trading volume
• Sized at one tenth of one Ether each, the Micro Ether futures will allow traders more flexibility and access; “the price of Ether has more than doubled since these contracts were introduced, creating demand for a micro-sized contract to make this market even more accessible to a broader range of participants”
• On the same day, Bloomberg reported that analysts currently anticipate the launch of an Ether futures ETFsooner than a Bitcoin spot ETF, possibly as soon as Q1 2022
• In other market news, Volt Equity’s Bitcoin exposure ETF began trading last Thursday, and NYSE Arca filed with the SEC to list the Bitwise Bitcoin ETP Trust

• This week saw a range of articles in the financial press about traditional banks making efforts to recruit for digital assets, with Bloomberg, the FT, and the New York Times all reporting on the phenomenon
• Bloomberg noted that Wall Street’s previously “icy” stance towards digital assets is thawing, with supply and demand creating a premium on recruitment; “growing global acceptance and client interest have eroded their resistance, leading firms to add research teams and trading desks—and, according to recruiters, offering compensation bumps of as much as 50% for comparable roles to lure talent”
• The New York Times noted that big banks are now “racing to catch up”; “their initial skepticism has cost them time. An alternative financial world is springing up around the traditional banking industry. Cryptocurrency start-ups are beginning to offer credit cards and loans. People and businesses around the world are embracing digital currencies at a rapid pace”
• In a reversal of previous attitudes, they note that “banking industry representatives now complain that regulators have not acted quickly enough and that their inaction is costing banks valuable time in their mission to compete”, and particularly cite BNY Mellon, Bank of America, and JP Morgan as key adopters of digital assets
• The Financial Times also reported big wage boosts for blockchain expertise, and wrote about fear of missing out for firms in The City, saying “If you aren’t ready to go on Day One, it will be too late”
• The FT also cited a broad view of all future applications for digital assets; “Bankers… are investing in digital asset expertise for defensive reasons. They do not expect to ever set up operations trading in unregulated cryptos. They do envisage one day trading tokenised stocks and bonds approved by regulators”

• On Wednesday, Commonwealth Bank, the largest of Australia’s “Big 4” banks, announced the introduction of digital asset trading for 6.5 million Australians
• Through a partnership with American digital asset exchange Gemini, users of Commonwealth’s banking app will be able to trade up to ten digital assets, including Bitcoin, Ether, and Litecoin
• Commonwealth’s chief executive Matt Comyn recognised increased customer demand for digital assets, stating “We believe we can play an important role in crypto to address what’s clearly a growing customer need and provide capability, security and confidence in a crypto trading platform...we see this as an opportunity to bring a trusted and secure experience for our customers”
• Analysts in Australia view the move as an attempt to secure first-mover advantage, leaving rival banks to create similar services or risk being left on the sidelines
• Dimitrios Salampasis, a lecturer of fintech leadership and entrepreneurship at Swinburne Business School told the Guardian; “Having this coming from a systemic and the biggest bank in Australia, it’s definitely a move that will change a lot... it will hopefully bring legitimacy, bring further harmonisation, push further regulation and also minimise debanking, which has been a massive pain for all cryptocurrency startups in particular”

• Digital Currency Group (DCG), the parent company of GrayScale Investments ($50bn AUM), as well as media platform Coindesk, and institutional lenders Genesis, secured $700m through a secondary round, led by SoftBank and including CapitalG, a subsidiary of Alphabet Inc.
• Barry Silbert, CEO of DCG, told CNBC that SoftBank’s global footprint, as well as CapitalG’s links to Google, made them prime backers “hopefully… for the next couple of decades”
• Silbert noted the company is profitable, with revenues on track to hit $1bn this year
• Whilst he didn’t completely rule out the possibility of an eventual IPO, he told CNBC it’s “not in the plans and not being discussed right now”
• The secondary sale valued the company at $10bn, with other investors including GIC capital, and Ribbit Capital

• The Monetary Authority of Singapore (MAS) this week outlined a pro-innovation stance regarding digital asset, hoping to attract crypto asset companies from around the world
• Speaking ahead of Singapore’s Fintech Festival, MAS managing director Ravi Menon said that they are taking a stance of strong regulation, but not restriction; “We think the best approach is not to clamp down or ban these things”
• As a global wealth hub and regional financial centre, Singapore is strongly positioned to embrace a global asset class like crypto
• He also outlined that the nation sees digital assets as an opportunity too important to miss out on; “ With crypto-based activities, it is basically an investment in a prospective future, the shape of which is not clear at this point… But not to get into this game, I think risks Singapore being left behind. Getting early into that game means we can have a head start, and better understand its potential benefits as well as its risks”
• Menon also revealed Singapore will be actively working in the field of digital assets, telling Bloomberg that they are “interested in developing crypto technology, understanding blockchain, smart contracts and preparing ourselves for a Web 3.0 world”

• According to industry firm Coinshare’s latest weekly flows report, digital asset investment products for Bitcoin experienced $267m inflows last week, bringing the October total to over $2bn
• Inflows for Bitcoin were strongly boosted in October due to anticipation surrounding the launch of the first Bitcoin ETF
• In particular, the week of the ETF launch witnessed nearly $1.5bn inflows according to Bloomberg and Coinshares data
• Ether’s YTD inflows also hit a landmark last week, bringing the total above $1bn

• This week, Facebook announced a company rebrand to “Meta”, with a focus on the metaverse—shared virtual spaces built for social interaction
• Alongside Facebook, several other major companies revealed plans for the metaverse, including Microsoft, and Nike, who have filed for several trademarks related to virtual depictions of their clothes
• The news had an effect in the digital asset space, with projects focused on building metaverse spaces and creating NFTs in particular gaining attention
• NFTs are seen as a crucial aspect of the metaverse that should be integrated by facebook, as they allow persistent, ownable markers of digital identity and expression
• Metaverse gaming project The Sandbox’s ERC-20 SAND token grew by over 270% in the last week, whilst fellow metaverse project Decentraland’s MANA token, and NFT platform Enjin’s ENJ token also strongly outperformed the market, at 260% and 33% weekly growth respectively

• According to a new Linkedin job posting, Amazon’s New York office is now recruiting for a “Principal Digital Assets Specialist” in their financial services department
• The role requires experience with blockchain, distributed ledger technology, and an understanding of “the overall cryptocurrency and digital asset ecosystem”
• The successful candidate has the remit of approaching global financial institutions and encouraging them to “transform the way they transact digital assets”, including NFTs and upcoming CBDCs alongside more established asset like Bitcoin and Ether
• In July, Amazon confirmed they were “focused on exploring” digital assets, andAmazon Mexico recruited for a role aimed at local payments via crypto assets

• As more and more companies in the digital asset space achieve unicorn valuations, more and more of them are also becoming investors in their own right, boosting their growth and capabilities through acquisitions, mergers, and seed investments
• Institutional Bitcoin company NYDIG acquired Bottlepay—a British startup specialising in scalable payments using Bitcoin’s Lightning Network—for up to $300m in NYDIG shares
• One of Bottlepay’s original seed investors was hedge fund billionaire Alan Howard, who led a February investment round that valued the company at around $70m
• Digital asset lender Celsius also spent nine figures on acquisitions this week, acquiring Israeli cybersecurity company GK8 for $115m
• Techcrunch reported digital asset exchange FTX leading a $150m Series C extension round for African cross-border payments startup Chipper Cash, now valued at $2bn

• Crypto gaming firm Animoca Brands secured a $93m Series B round led by Japanese financial giant SoftBank, concentrated on their metaverse gaming platform The Sandbox
• Siam Commercial Bank (Thailand’s oldest bank) purchased a controlling stake of local crypto asset exchange Bitkub, for around $537m
• DeFi software-as-a-service provider Alchemy Insights achieved a $3.5bn valuation after a $250m funding round led by Andreessen Horowitz (a16z)

• According to a report from Linkedin editor Devin Banerjee, job listings that included digital asset keywords including “crypto” and “blockchain” increased 615% since August 2020 in the United States alone
• Much of this growth was driven by (as cited earlier) banks and financial institutions—Linkedin identified JP Morgan as the most prolific recruiter in the space
• BNY Mellon’s Roman Regelman believes it’s indicative of big finance embracing the emerging technology; “The opportunities in digital assets are plentiful… We can now attract talent in a very different way”
• Regelman also recognised that traditional institutions had to recruit from outside if they wished to take advantage of new opportunities in the ever-evolving field of digital assets, saying “Picture a traditional banker, and then picture an innovator… You have two completely different images in front of you”

• According to a memo published this week by value-oriented investment firm Hayden Capital, US digital asset exchange Coinbase could grow revenues more than five-fold from their 2021 $8.8bn prediction, to $49.2bn within the next four years in their most bullish projection
• Their conservative projection still foresees Coinbase more than doubling revenues in that timeframe, to $21.3bn
• The memo cited several reasons for this growth forecast, including the company’s OTC trading with major corporate entities, and control over a “much larger share of the regulated spot markets in the U.S. than is widely understood, as opposed to looking at the usual trading volume leaderboards”
• The firm also gave several reasons for their belief that the digital asset market as a whole will continue to grow, including increased adoption and actual use-cases for digital assets, increased understanding from market participants and governments, and an increasing “talent shift” into the digital asset ecosystem