Nickel Research Centre

Nickel News Roundup - Week 16

21st April, 2022 

Market Overview:

Digital assets performed steadily this week, as Bitcoin’s 30-day volatility dropped to its lowest rate in nearly a year and a half.

  • Bitcoin spent the majority of the week ranging between $40,000 and $41,600, with a low of $38,800 on Monday and high of $42,130 on Wednesday
  • A key contributing factor to reduced volatility could be the amount of Bitcoin held on digital asset exchanges, which declined to a 3.5 year low—moving digital assets from exchange wallets to privately-held wallets is often viewed as an intention to hold them for the longer term
  • Current Bitcoin prices of $41,840 equate to 1.3% weekly growth
  • Ether mirrored Bitcoin’s movements, spending the majority of the week in the $3,010 to $3,080 range, with a weekly low of $2,893 on Monday, before rising to $3,157 on Wednesday
  • Ether’s current value of $3,099 represents a 0.4% weekly decline
  • Total market capitalisation remained steady, at $1.92tn
  • Total value locked in DeFi likewise showed minimal movement at $77bn, according to industry analytics platform DeFi Pulse

Digital assets halted the last fortnight’s declines, as Bitcoin volatility dropped and more traders appeared to move into long-term holding mode. Adoption continues to roll on, with spot ETFs launched in Australia, private equity enthusiasm for blockchain technology, Fortune 500 partnerships, new funding rounds and VC activity, and adoption across a variety of high-end retailers in Singapore.


What happened: FIS forms partnership with digital asset custody firm Fireblocks

How is this significant?
  • Fortune 500 payment giant Fidelity National Information Services (FIS) is forming a partnership with multi-billion crypto custody firm Fireblocks to help reassure institutional clients with concerns over regulation and security
  • The partnership allows more than 6,000 capital markets clients of FIS to “move, store and issue digital assets through the Fireblocks platform”
  • John Avery, head of digital assets at FIS, said that “The demand [for cryptocurrency exposure] cuts across all of the segments of the market that we support today in institutional capital markets—buy side, sell side, and corporate treasury”
  • This marks one of the most significant collaborations announced by Fireblocks since the successful conclusion of a $550m Series D funding round in January, backed by BNY Mellon, Sequoia, and Paradigm

What happened: Digital asset VC Framework Ventures launches new $400m fund

How is this significant?
  • Framework Ventures became the latest VC to commit significant capital to the crypto asset industry this week, with a new $400m fund concentrating on early-stage startups
  • This marks its third fund since launching two years ago, with a cumulative $1.4bn in assets under management
  • Positioning itself as one of the new wave of “crypto-native” VCs—from and dedicated entirely to the digital asset sector—the new fund adopts investment policies particular to crypto, such as limiting equity purchases (via the tokens of projects they invest in) to around 5%, arguing that anything approaching 10% undermines the decentralisation that provides a key value proposition for the asset class
  • Around half of the new fund will be allocated towards projects integrating digital assets into the video gaming industry, with founder Vance Spencer saying that “This is going to be the vertical that brings everyone in”

What happened: Australia launches Bitcoin and Ether ETFs

How is this significant?
  • The Australian Financial Review this week reported the launch of several digital asset ETFs, providing traditional investors with exposure to both Bitcoin and Ether
  • The paper speculated that up to one billion Australian Dollars could flow into the first Bitcoin ETF listed on the Cboe equities trading platform, provided by Cosmos Asset Management
  • One day later, news emerged that ETF provider 21Shares is also launching ETFs in Australia, which will go live on the same day as the Cosmos offering, April 27th
  • Whilst Cosmos’ ETF provides indirect exposure by investing in the Purpose Bitcoin ETF listed on the Toronto stock exchange, the Bitcoin and Ether ETFs from 21Shares will be spot ETFs, investing directly in the underlying asset—custodied by Coinbase and tracked in AUD
  • Graham Tuckwell, executive chairman of ETF Securities Australia said in a statement that the 21Shares products provide a “way of trading crypto in a tightly-regulated environment without having to maintain their wallet and manage risk”, whilst VanEck director Gabor Gurbacs used the news as an opportunity to criticise the SEC, labelling the move a coup for Australian investors, and “a big loss to investors” in the USA

What happened: Indian digital asset exchange doubles valuation with new funding round

How is this significant?
  • CoinCDX, the first Indian digital asset exchange to achieve unicorn status last year, more than doubled its valuation to $2.15bn within 8 months, following the conclusion of a Series D round
  • The funding round secured $135m of fresh financing, and included participation from Pantera Capital, Steadview, Coinbase Ventures, Kingsway, DraperDragon, Republic Capital and Kindred Ventures
  • The company currently claims 10 million users, and plans to grow its workforce from a current headcount of 400 to 1,000 by the end of the year
  • CoinCDX CEO Sumit Gupta says that the company continues to see user growth, although the rate of increase has declined since new taxation rules went into effect a few weeks ago deducting 1% at source from every trade—impacting high-frequency traders reliant on tiny profit margins

What happened: Apollo Global Management CEO praises blockchain and fintech

How is this significant?
  • Marc Rowan, CEO of $455bn AUM private equity firm Apollo Global Management, spoke glowingly about blockchain technology in a recent Bloomberg interview, outlining the ways his company aims to leverage the technology and embrace the asset class
  • Apollo—in the news recently as prospective purchasers of social media platform Twitter—have already developed digitised mortgage loans and used blockchain to transfer ownership, and are moving more securitisations onto the blockchain
  • Although Rowan believes “the jury’s still out” on directly investing in digital assets and that they wouldn’t directly invest in them at this stage, he lauded the technology that they’re built on, and its transformative potential in securing titles and proof of ownership
  • Rowan told Bloomberg’s David Rubenstein “The ecosystem that’s being built around crypto is nothing short of amazing… Many of the rails or the technology or the platforms or the systems that support what’s happening in NFT are actually the precursor to changes in our financial system and we ignore them at our peril”

What happened: Ethereum Foundation confirms $1.6bn of treasury assets 

How is this significant?
  • The Ethereum Foundation—a non-profit dedicated to the funding of research and development within the Ethereum blockchain ecosystem—published a report on Monday, detailing their treasury value
  • Currently, the foundation holds $1.6bn in assets overall, of which $1.29bn is in Ether, with the remainder spread across undisclosed non-crypto investments
  • This accounts for approximately 0.29% of all Ether in circulation
  • Last year, the foundation spent just under $50m funding various research teams, developers, and bounties 
  • According to the report, the foundation plans to diversify its treasury portfolio in future, taking advantage of market growth over the last few years; “We also increase our non-crypto savings in response to rising ETH prices... [This] provides a greater safety margin for our core budget and would enable us to continue funding non-core but high leverage projects through a market downturn”

What happened: Metaverse platform The Sandbox seeks $4bn valuation in funding round

How is this significant?
  • Bloomberg reported this week that popular NFT-driven metaverse platform The Sandbox is looking for $400m in funding at a $4bn valuation
  • The funding round will be open to both new and existing investors, according to sources with knowledge of the matter, although valuation and total funding size could apparently change depending on market sentiment
  • Recent corporate entrants into the virtual world of the Sandbox (via purchases of plots of digital land issued as NFTs) include HSBC, Adidas, Warner Music Group, and French retail giant Carrefour
  • Sandbox COO and co-founder Sebastian Borget recently stated that the company has “aggressive” expansion plans
  • The company’s previous funding round in November was worth $93m, led by SoftBank

What happened: Singaporean luxury retailers begin accepting digital assets as payment

How is this significant?
  • In crypto-friendly Singapore, more merchants are accepting crypto assets as payment, even though they aren’t officially legal-tender in the city-state
  • Such retailers include luxury car dealerships, vintage watch sellers, and luxury goods marketplaces
  • Bitcoin and Ether are the favoured assets for transactions, accounting for about 45% of the first digital asset purchases in the country, according to local exchange Luno
  • EuroSports Global, an importer of Italian supercars, noted that their move was done to “address the growing demand for flexible and easy-to-use cryptocurrency payments”, as well as citing reduced transaction fees, and simplified cross-border payments as additional benefits of crypto payment adoption

What happened: Crypto bank Silvergate outperforms earnings forecasts by 75%

How is this significant?
  • Silvergate Bank, a federally-licensed bank best known for its ties to the digital asset industry, saw shares rise 13% in one day as first quarter earnings-per-share came in 75% above consensus forecasts
  • The bank also reported a 36% annual growth in the number of customers dealing with digital assets, with average deposits increasing, and overall deposits worth $14.7bn
  • Wall Street analyst Michael Petrilo said their connections to digital assets gave them an important revenue stream compared to other banks; “The combination of higher rates plus Silvergate’s ability to put cash to work in higher yielding assets should have a dramatic impact on the bank’s earnings power moving forward as shown in the first quarter”
  • One of Silvergate’s significant product offerings is the Silvergate Exchange Network Leverage program (SEN), which provides customers (including top corporate Bitcoin holders MicroStrategy) dollar loans collateralised by Bitcoin
  • Since the end of 2021, the amount of capital committed to SEN has doubled, to $1.1bn (including 
  • In other banking news, USDC stablecoin issuers Circle confirmed this week that they plan to apply for a federal banking charter in the near future

What happened: Franklin Templeton poaches talent from Citi to lead digital asset push

How is this significant?
  • Industry publication TheBlock this week reported on another in a recent spate of traditional finance executives moving to digital asset jobs—but this time rather than moving into a startup, it was a leap from one finance powerhouse to another
  • In a Linkedin post, former Citi global head of business advisory services Sandy Kaul announced her new role as senior vice president at Franklin Templeton, with a remit that includes “a special focus on digital assets and models”
  • A press release concerning the hire noted that Kaul was crucial to Citi’s “embrace of digital assets and tokenisation”, and Kaul provided a bullish on the potential of the technology, saying “We are in a singular position today to define how we are going to respond to the transformative changes taking place across our industry, to position for the next decade and beyond”
  • Kaul’s move means that more than 15 top Citi employees have now left the bank for roles in the digital asset field
News Roundups