Nickel Research Centre

Nickel News Roundup - Week 22

2nd June, 2022

Market Overview:

Digital assets performed steadily, with Bitcoin rising as markets reacted positively to Chinese lockdowns easing.

  • Bitcoin hit $32,190 on Tuesday, before cooling off and dropping to around $30,200 on Wednesday evening
  • Bitcoin declined sharply on the Thursday 26th May, dropping to a weekly low of $28,290, trading mainly in the $28,900 to $29,500 range over the weekend, before breaking above $30,000 on Monday and maintaining a 3 day run over that key pricepoint 
  • Bitcoin’s current price of $30,290 represents a 2.4% increase from last week
  • Ether was outperformed by Bitcoin this week, with a low of $1,722, and an extremely brief rise above $2,000 for a weekly high of $2,004 on Tuesday
  • Ether’s current $1,854 price is a 6.3% decrease from last week
  • Overall market capitalisation remained steady at $1.25tn, as Bitcoin’s gains were counteracted by losses across altcoins
  • Total value locked (TVL) in DeFi was largely unchanged at $54.8bn according to industry monitor DeFi Pulse


The digital asset market featured mixed performances this week, as Bitcoin grew but Ether slid. Big names from the finance realm continued to declare long-term support for the asset class despite year-to-date declines; JP Morgan, Fidelity, SoftBank, Soros Fund Management, Moneygram, DBS, and several VC funds all spoke or acted in favour of crypto assets and the firms developing them. 


What happened: Fidelity to double digital asset division headcount


How is this significant?

  • The Wall Street Journal reported this week that finance giant Fidelity aims to double the number of employees in their digital asset division this year, as they aim to support more crypto assets for clients
  • This hiring spree will involve over 200 new additions, with technical staff accounting for a slightly larger share than customer service representatives
  • Tom Jessop, Fidelity Digital Assets’ CEO told the WSJ that client demand remained strong despite this year’s market dip; “We’re trying not to focus on the downturns and focus on some of the long-term indicators… We are trying to build infrastructure for the future because we measure success over years and decades, not weeks and months”
  • He sounded enthusiastic on the future of the sector; “The incredible energy around digital assets as an emerging asset class makes this an interesting time for anyone looking to move into a career in the space, including those working in more traditional areas within financial services”
  • The division currently has around 400 clients, “including registered investment advisers, hedge funds and asset managers”
  • Jessop cited the development of infrastructural support for digital assets beyond Bitcoin as a key motivator for the recruitment push; meaning that assets like Ether will be integrated alongside Bitcoin in the future


What happened: Soros CIO Dawn Fitzpatrick declares crypto “here to stay”


How is this significant?

  • In a Bloomberg Wealth interview this week, $28bn Soros Fund Management’s CEO and chief investment officer Dawn Fitzpatrick spoke glowingly about the status of digital assets in the investment landscape
  • When asked her view on crypto, she declared it is “here to stay”, citing recent developments such as Fidelity’s support for Bitcoin in 401(k) accounts
  • Due to concerns over climate impact, she also predicted Ether could gain additional traction over Bitcoin in the future, as the Ethereum blockchain moves to a more environmentally sustainable (and scalable) consensus model
  • She also acknowledged some possible near-term vulnerability due to companies often holding large portions of their treasury in their own tokens, but remained optimistic overall
  • Fitzpatrick identified democratisation of access, through mechanisms like fractionalised ownership and distributed risk in insurance products as “really, really exciting” potential benefits and application of the technology


What happened: Binance Labs raises new $500m investment fund


How is this significant?

  • Binance Labs—the investment arm of leading digital asset exchange Binance—closed a new venture capital fund this week, including outside involvement for the first time
  • The total fund size is $500m, to be allocated “across three stages of pre-seed or incubation, early-stage venture and late-stage growth”
  • Ken Li, the fund’s executive director of investments, told TechCrunch “We really see the fund as another step in terms of us being able to build our mission statement, which is to help advance adoption of web3 technologies, across all stages”
  • Outside contributions to the fund came from family offices, corporations, alongside Breyer Capital and DST Global Partners
  • Binance Labs have already funded 170 projects in 25 countries, with Li supporting a broader geographic spread in future investments; “We’d like to partner with more founders across more geographies and sectors and support them with the fund but also support them through the broader Binance ecosystem… Ultimately, all the adoption that comes in crypto will come from great founders”
  • According to data cited by TechCrunch, 2022 is currently outperforming 2021 in VC deals, despite the market currently being down year-to-date; $15bn has been raised thus far, compared to $12bn at the same stage last year


What happened: Digital asset exchange FTX holds “billions” of dollars for acquisitions


How is this significant?

  • Sam Bankman-Fried, the CEO and founder of FTX, outlined the firm’s plans for growth in an interview this week
  • He said “FTX is a profitable company… You can look at the amount that we’ve raised over the last year or two -- it’s a few billion dollars. That gives maybe a sense of where we are in terms of cash that was explicitly viewed from a potential acquisition angle”
  • Part of the FTX’s ambition is to become a one-stop trading and investment solution, through the development and acquisition of new platforms and products, including the potential ability to trade stocks
  • One such move was the recent disclosure that Bankman-Fried had taken advantage of a recent 90% decline in investment platform Robinhood’s share prices, taking a 7.6% stake in the company
  • He also outlined the growing push for regulation, and moves by the crypto industry to stay on the right side of such legislation; he’s been visiting the US Capitol “almost every other week”, and declared plans to “donate between $100m and $1bn” in the next US presidential cycle, as well as favouring the CFTC as the federal oversight body for crypto 


What happened: Singapore pushes to increase competitiveness in digital asset scene


How is this significant?

  • The Monetary Authority of Singapore (MAS) announced a new collaboration with the finance industry, as the city-state seeks to maintain its competitiveness as a blockchain hub in the face of several business leaving for the more laissez-faire regulatory and taxation environment of Dubai
  • “Project Guardian” seeks to test the feasibility of institutional-grade DeFi and asset tokenisation whilst mitigating risks to financial stability and integrity, according to Singapore’s Deputy Prime Minister Heng Swee Keat
  • Other areas of focus include the development of interoperable networks, and trust anchors for digital assets
  • The project is run in collaboration with JP Morgan, DBS Bank, and Marketnode Pte., and “involves the creation of a permissioned liquidity pool comprising tokenized bonds and deposits”
  • Sopnendu Mohanty, MAS chief fintech officer, commented “Through practical experimentation with the financial industry and the broader ecosystem, we seek to sharpen our understanding in this rapidly transforming digital assets ecosystem. The learnings from Project Guardian will serve to inform policy markets on the regulatory guardrails that are needed to harness the benefits of DeFi, while mitigating its risks”

What happened: Babel Finance valued at $2bn after new investment round


How is this significant?

  • Babel Finance, a Hong Kong-based wholesale crypto services provider, achieved a $2bn valuation following a successful $80m Series B round
  • The firm previously completed a $40m Series A round a year ago, during which time the firm has grown from 50 to 170 employees
  • Babel is focused on institutional investors and ultra-high net worth accredited investors in the Asia-Pacific region, providing lending and trading services for a limited selection of digital assets; Bitcoin, Ether, and stablecoins
  • Investors in the Series B round included family offices, Circle Ventures, Dragonfly Capital, 10T Holdings, and Jeneration Capital
  • Alongside the recent $8bn valuation for StarkWare, the raise showcases continued VC appetite for digital asset investment despite current market downturns


What happened: Stablecoin news—remittances and consumer protection


How is this significant?

  • Stablecoins continue to face increased public scrutiny in the week of the Terra blockchain’s UST collapse, but there were several positive pieces of news for digital assets pegged to the value of fiat currencies
  • Moneygram CEO Alex Holmes said in a Bloomberg interview that stablecoins could play an important role in the global remittances market, partnering with the Stellar blockchain for remittances issued in the asset-backed USDC stablecoin
  • Holmes believes crypto “is obviously here to stay and it’s going to be here for a long time despite recent selloffs and volatility… I think adopting it, bringing it into the mainstream is important”
  • He also believes remittance companies could move beyond stablecoins to feature other digital assets; “If a country like El Salvador is going to make Bitcoin seamless with US dollars in country, I think that consumers, through MoneyGram, should be able to transfer Bitcoin to El Salvador or transfer dollars and convert them to Bitcoin… If that’s where the world is going, let’s participate in that world and let’s see how we can help fulfil that opportunity”
  • On the topic of remittances, Tether, the issuers of the USDT stablecoin, launched a Tether token pegged to the value of the Mexican Peso this week
  • In a press release, Tether officials explained that “The multibillion-dollar flow of remittances into Mexico and the difficulties involved with money transfers, have created a unique opportunity for stablecoin usage and adoption. The creation of MXN₮ puts Mexican Peso on the blockchains and provides a faster, less costly option for asset transfers”
  • UK legislators proposed safeguards in the event of future stablecoin collapses
  • A new consultation paper could give the Bank of England powers to prioritise continuity of stablecoin firms ahead of claims by creditors, meaning that “stablecoin projects could access bespoke insolvency arrangements if their collapse is judged to impact financial stability”
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