Bitcoin briefly breached $50,000 on several occasions this week, but couldn’t sustain above those levels, mainly trading in a range between $47,000 and $49,500
Bitcoin currently trades at $48,770, down 1% from last week
Ether dropped below $4,000, falling further than Bitcoin after outperforming it last week
Ether declined steadily throughout the week, twice bouncing off lows around $3,690, before recovering to a current value of $4,029
Total market capitalisation remains above last week’s flash crash, but declined to around $2.25tn
Total value locked in DeFi declined in line with the rest of the market, to $96.6bn according to industry analytics platform DeFi Pulse
Digital assets experienced another tough week in terms of price performance, with uncertainty surrounding Wednesday’s FOMC meeting in the United States keeping markets on edge. American lawmakers sounded a more critical note on stablecoins than the previous week’s digital asset hearing, but this week also witnessed a record-equalling funding round for a digital asset company, Germany’s largest banking group declaring interest in crypto services for clients, Nike joining Adidas in the NFT and Metaverse space, and both SoftBank and a UAE sovereign wealth fund declaring their bullishness on this new asset class.
Founded as a subsidiary of Stone Ridge Asset Management, NYDIG will use the funding for increased client onboarding and further development of their Bitcoin platform
NYDIG’s Patrick Sells told Bloomberg he expects over 1,000 banks and financial firms to use their institutional Bitcoin services by the end of 2022
On Wednesday, news emerged in the German press that the largest group of public banks in Germany—known as Sparkasse—is planning a pilot scheme allowing customers to directly hold and invest in digital assets through their bank accounts
The Sparkasse group currently holds over $1tn in assets across than more than 50 million bank accounts in Germany
According to reports, many banks are eager to add these services for customers: “A corresponding pilot project should start first with individual savings banks. In the end, each of the around 370 institutes independently decides whether to introduce crypto trading or not. This is a consequence of the regional principle of the savings banks. However, it was said that the banks were already showing interest"
Due to the trust and breadth of the Sparkassen banks, integration into their infrastructure could widely increase access to digital assets within Europe’s largest economy
Following on from last week’s session with executives from digital asset exchanges and firms, the Senate Banking Committee this week held a hearing on stablecoins, with a notable partisan split in the narratives
Whilst Republican politicians looked towards the potential benefits of stablecoin usage, their Democrat counterparts were more likely to raise concerns over issuance methodologies or possible challenges to the US dollar
Leading Republican digital asset advocate Pat Toomey of Pennsylvania proposed that “to promote innovation in the rapidly evolving global digital economy”, stablecoin issuers should “have the ability to choose from three different regulatory models, including operating under a bank charter”
The Bank of England’s Financial Policy Committee advocated a cautious approach to digital assets this week, noting that they have experienced rapid growth, but still lack regulatory clarity
Although the Committee noted that crypto assets are becoming more interconnected with established financial infrastructure, their financial stability report for December recommended a “cautious and prudent approach” until a specific regulatory framework has been devised
On Monday, BoE deputy governor Jon Cunliffe urged patience for the new asset class, saying in a press conference that “It takes time to develop regulatory standards… We’ll need to make sure we have regulation in place before it becomes a problem”
Publicly-listed American digital asset exchange Coinbase announced the launch of DeFi products allowing customers to earn yield on their digital assets in over 70 territories—but US customers remain excluded as the SEC hasn’t yet produced any clear guidelines for crypto assets
Coinbase customers will be able to deposit the algorithmically-secured stablecoin DAI, earning between 2.8% and 5.4% APY
The offering is notably different from their proposed Coinbase Lend product, which was cancelled before launch after SEC objections. Instead of lending their assets directly to Coinbase, they will be lent to popular DeFi protocol Compound, providing a more variable APY, but freeing Coinbase from suspicions of controlling the return and offering securities
Terms of the acquisition were not disclosed, but Nike CEO sounded a bullish note on the importance of a persistent digital presence; “This acquisition is another step that accelerates Nike’s digital transformation… Our plan is to invest in the RTFKT brand, serve and grow their innovative and creative community and extend Nike’s digital footprint and capabilities”
Ethereum blockchain scaling solution Polygon made another major move towards promoting the mainstream adoption of the world’s leading smart contract platform with a half-billion dollar acquisition
The move to acquire the Mir blockchain protocol (and its developer Predicate Labs), bolsters Polygon’s expertise in the field of zero-knowledge rollups, which effectively reduce transaction pressure and costs on the Ethereum blockchain by collating and compressing much of the data involved in transactions
Polygon have committed $1bn to improving Ethereum’s scaling capabilities, and according to Bloomberg the new acquisition will be deployed alongside previous strategic purchases, “Mir will be integrated into the Polygon ecosystem under its new name, Polygon Zero, alongside existing solutions including Polygon PoS, Polygon Hermez and Polygon Miden”
On Wednesday it was reported that S&P Dow Jones partnered with digital asset firm Securitize to launch tokenised funds tracking S&P crypto indices
The two funds tracked will be S&P’s Cryptocurrency Large Cap Ex-MegaCap Index, and the Kensho New Economies Composite Index
Both funds will charge 0.5% management fees, with the former giving accredited investors exposure to 30 different digital assets
In a press release, Securitize Capital’s Wilfred Daye said they were built for convenience with institutional investors in mind; “The new tokenized funds provide investors exposure to a diverse blend of cryptocurrencies and emerging technologies… In particular, they are a new, efficient option for family offices, institutions and accredited investors looking for exposure to promising cryptocurrencies”
In a webcast last Wednesday, SoftBank’s Latin America fund MD Paulo Passoni announced that the $5bn fund held $500m of digital asset exposure, and that it is currently the most compelling investment opportunity for the company
Whilst acknowledging that the digital asset market does have “some froth” and token overvaluation, he nevertheless stated “I do believe it’s the most relevant thing going on around the globe right now”
Passoni noted SoftBank’s recent push into digital assets; “There’s an old saying in investing—follow the talent—and the most talented people around the globe are going into crypto-related projects… I’d say we’re running a crypto school for our team here, because we sense that there’s a big discrepancy in knowledge—even within our team”
Noted hedge fund manager Robert Citrone, co-founder of Discovery Capital Management became the latest major money manager to move into Bitcoin, following the likes of Alan Howard, Paul Tudor Jones, Steven Cohen, and Ray Dalio
At an event this week, Citrone told investors that he sold Bitcoin at $45,000 earlier this year after an initial purchase at $15,000, before buying back at around $30,000 following the major market dip in July
Even with Bitcoin’s recent drop from a new all-time high in November, Citrone has still gained more than 50% on his most recent Bitcoin investment within less than half a year
Khaldoon Al Mubarak, CEO of the United Arab Emirates Mubadala sovereign wealth fund, gave an interview to CNBC this week where he declared himself fundamentally bullish on digital assets
Mubadala is one of the largest sovereign wealth funds in the world, with a current $243bn in assets under management
Al Mubarak told CNBC “This is a business [the digital asset industry] that had $200 billion worth of value two years ago, and is $2.5 trillion value today and growing. So while many people are skeptics, I do not fall in that category”
He didn’t provide details on specific investments, but confirmed Mubadala was betting on the “ecosystem” around crypto assets; “From our perspective, I think we look at the ecosystem around crypto. And I think we are investing in that ecosystem. That could be that's in the block-chain technology, energy usage, etc”