Nickel Research Centre

Nickel News Roundup - Week 12

24th March, 2022 

Market Overview:

Digital assets continued last week’s recovery, including Bitcoin and Ethereum reaching landmark figures once more.

  • Bitcoin displayed upward trajectory throughout the week, topping out at $43,220 early on Thursday, from a weekly low of $40,700 on Monday
  • Bitcoin’s current price of $43,080 marks a 5.7% increase on last week
  • Ether overcame a mid-week dip and breached the $3,000 mark several times throughout the week, but was unable to sustain a lengthy run above that mark, reaching a 7-day high of $3,068 on Thursday
  • Ether managed double-digit growth this week, with current prices of $3,038 representing a 10.2% weekly rise
  • Total market capitalisation moved back towards the $2tn mark, with a current value of $1.96tn
  • Total value locked in DeFi grew alongside Ether, to $80.1bn, according to industry analytics platform DeFi Pulse

Digital assets performed strongly throughout the week, seemingly buoyed by the Biden administration’s positively-received executive order last week. Institutional adoption was at the forefront this week, featuring Goldman Sachs, the world’s largest hedge fund, a century-old Wall Street boutique investment bank, and more major raises in the VC sphere.


What happened: Goldman Sachs executes first OTC crypto options trade by Wall Street bank

How is this significant?
  • This week, Goldman Sachs became the first major Wall Street institution to execute an over-the-counter crypto options trade, in a move Bloomberg analysts called “a notable step in the development of the crypto market for institutional investors”
  • Due to current regulatory uncertainty, the options were cash-settled, but the move nonetheless represented an expansion of digital asset trading choices for Wall Street investors
  • The trade was facilitated by Galaxy Digital, the digital asset investment firm founded by former Goldman Sachs partner Michael Novogratz
  • A Galaxy Digital representative said they anticipate the move will “open the door for other banks considering OTC as a conduit for trading digital assets”
  • Damien Vanderwilt, Galaxy’s co-president of global markets said that the trade should help reinforce the legitimacy of the asset class in the eyes of institutions and legislatures; “What helps is for regulators and government to see that firms like Goldman that they know and trust for decades are also going to be participants”

What happened: Haun Ventures successfully raises $1.5bn for two crypto industry VC funds

How is this significant?
  • Haun Ventures—founded by former Andreessen Horowitz (a16z) general partner Katie Haun last year—successfully concluded $1.5bn worth of fundraising this week, in a continuation of the venture capital industry’s commitment to digital assets
  • The total is spread across two funds; $500m for early-stage startups, and $1bn for more mature businesses operating in the digital asset field
  • According to Pitchbook data, this represents the largest ever debut fund by a female-founded VC
  • Haun noted the historical significance of the launch, but signalled it could pave the way for more diverse investor participation in the crypto sphere; “It feels, honestly, like a lot of pressure. But I think that motivates everyone on the team…Web3 is the new era of the internet and it deserves a new era of investors”
  • Haun Ventures will invest via both start-up equity, and direct token allocations, depending on the project

What happened: World’s largest hedge fund believed to be backing crypto fund

How is this significant?
  • Ray Dalio’s Bridgewater Associates—the world’s largest hedge fund—are in the process of investing in a crypto fund for the first time, according to numerous press reports this week
  • Sources told industry publication Coinbase that the firm is interested in the industry, but will begin with only a small amount of their AUM deployed into crypto assets; “Bridgewater is in a first-half plan this year… planning on having a small slug of their fund deployed directly into digital assets”
  • Investment would likely be done through “an external vehicle”, rather than direct purchase of digital assets, as the US-based company seeks to remain fully compliant
  • Although the hedge fund itself hasn’t had any exposure to the digital asset industry thus far, founder Ray Dalio has been a public advocate of digital assets—especially Bitcoin—saying that “a 1% to 2% portfolio allocation is reasonable”, and that he himself holds Bitcoin
  • In other news of high-profile financiers this week, Pimco co-founder Bill Gross revealed his conversion from prominent Bitcoin sceptic, to somebody who has “invested to a small extent in Bitcoin”

What happened: Boutique Wall Street investment bank offers crypto spot trading

How is this significant?
  • Although not one of the largest firms on Wall Street, 104-year old boutique investment bank Cowens appear to have placed themselves at the vanguard of institutional digital asset adoption, through their new crypto-focused unit Cowen Digital
  • Cowen Digital will provide clients with direct access to spot trading for digital assets, rather than seeking indirect exposure through investment vehicles
  • The new unit will aim to leverage the bank’s family office, hedge fund, and mutual fund clients, allowing them to trade 16 different digital assets on launch, including Bitcoin, Ether, and rising smart contract platform Solana
  • Co-president Dan Charney believes their willingness to try new approaches puts them at a significant advantage compared to some larger Wall Street institutions; “We have a big first mover advantage in this space… Because of our culture, we’re able to work with our legal and compliance and our regulators in a way that maybe our bigger competitors aren’t, and we’re just able to get to solutions faster”

What happened: Florida governor proposes digital assets for tax payments

How is this significant?
  • Florida governor Ron DeSantis affirmed plans this week to allow residents of the state to pay their tax bills using digital assets, as part of a wider push to make the state a leading hub for the digital asset industry in America
  • Speaking at a press conference, he declared “I’ve told state agencies to figure out a way that if a business wants to pay tax in cryptocurrency to Florida, we should be willing to accept that… So we’re working through that”
  • He also spoke about his personal preference for decentralised digital assets like Bitcoin or Ether, compared to CBDCs, due to concerns that the latter could have spending decisions blocked or dictated by central entities
  • Miami mayor Francis Suarez is another prominent supporter of digital assets in Florida, taking paycheques entirely in Bitcoin as a show of support for the asset class
  • In other news of regional adoption, Malaysia’s Communication Ministry this week proposed the adoption of Bitcoin and other digital assets as legal tender, putting them on the path to be the next nation after El Salvador to adopt such a policy
  • Deputy minister Zahidi Zainul Abidin told the Malaysian government that the move would help the nation’s younger demographics; “We hope the government can allow this… We are trying to see how we can legalise this so that we can develop youth participation in crypto and assist them”

What happened: NFT creators Yuga raise $450m in venture capital

How is this significant?
  • Yuga Labs, creators of the highly-successful BAYC NFT collection (turned lifestyle brand), confirmed a $450m funding round and $4bn valuation this week
  • Investment came from a variety of sources, including Andreessen Horowitz (a16z), Animoca Brands, and the venture capital arm of digital asset exchange FTX
  • The funding will be used to help Yuga build out their BAYC metaverse project, expand its development team, and foster partnerships and collaborations
  • BAYC recently attracted attention in the digital asset space by launching their own Ethereum-based ERC-20 token for utility within their metaverse and collections, which quickly listed across several major exchanges, and currently sits at a market capitalisation of over $3.5bn
  • In other VC news this week, a16z also participated in a $150m Series B round for Ethereum scaling solution Optimism, valuing the company at $1.65bn
  • Leading crypto VC Paradigm co-led the Series B round with a16z

What happened: Jefferies executives depart to join digital asset space

How is this significant?
  • Following recent news of C-suite departures from e-Bank Revolut and Citigroup in favour of roles in crypto asset startups, Jefferies became the latest financial institutions to lose executives to the digital asset space
  • FX prime brokerage head Brandon Mulvihill, and FX prime distribution lead Anthony Mazzarese both announced their departures in separate Linkedin posts this week, leaving the company on Friday to form a new crypto industry venture
  • Mazzarese commented that “After 18 years of working in FX, I am excited to enter crypto as I fully believe cryptocurrencies and blockchain technology will transform traditional financial markets”
  • Mulvihill was similarly bullish, stating “We are incredibly excited and passionate to announce the launch of our entrance into digital assets… Anthony and I have been overwhelmingly inspired by the innovation and growth within the industry, as well as the challenges the industry faces due to such growth”

What happened: secures FIFA World Cup sponsorship

How is this significant?
  • Digital asset exchange has used sports as a marketing platform since last year, including a record purchase of naming rights for the former Staples Centre in Los Angeles
  • This week, the company confirmed a position as a lead sponsor for the 2022 FIFA World Cup in Qatar—perhaps the world’s most prominent and widely-viewed sporting event
  • The announcement of the sponsorship didn’t specify details regarding financial commitments or duration of the deal, but it puts in a prominent position amongst other official partners, such as Adidas, Coca-Cola, and Visa
  • The last FIFA World Cup broke viewership records, with more than half of the global population watching at least some of the tournament (including 655 million viewers from China, who didn’t even qualify for the 2018 tournament)
News Roundups