Wednesday, 21 September 2022

Market Summary

Market Summary 21 September 2022

Bitcoin Price: US$18,875.00 (-3.39%)
Ethereum Price: US$ 1,322.93 (-3.86%) 

 

ETH Funding Rate Reverts to Neutral After Successful Merge

  • Wintermute, one of the largest crypto market makers, loses $160m due to a hack. The CEO says the firm remains solvent.
  • Nasdaq announces plans to enter crypto by offering BTC and ETH custody services for institutional investors.
  • Grayscale Investment announces plans to sell ETH-PoW tokens received by its crypto funds. Cash proceeds will be distributed to shareholders.
  • MicroStrategy buys 301 BTC for $6 million. The firm now owns 130k BTC, bought at an average price of $30.6k per BTC.
  • Coin98 launches a fully-backed stablecoin, CUSD.
  • On Sept 14 – one day before the Merge – ETH traders in perpetual futures markets, or perps, were paying a whopping -0.263% in funding rates to keep short positions open.
  • This represented a new all-time low for funding rates, breaking the previous low of -0.157% set during the Mar 2020 sell-off.
  • At the time, the crowded trade was to buy spot ETH and short ETH perps. Traders were buying spot ETH in order to receive the ETH-PoW airdrop.
  • Funding rates change based on the difference in prices between spot and perp markets. Since the ETH rally was largely driven by spot buying pressure, this difference in prices increased, and funding rates moved well into negative territory between August and September.
  • On Sept 15, once the Merge was completed, traders reversed their positions by selling spot ETH and unwinding short ETH perps.
  • Since traders essentially sold spot (negative pressure) and re-bought perps (positive pressure), the difference in prices came back to parity, causing funding rates to compress back to normal levels.
  • Digital land, also known as virtual worlds, has been around for decades and has undergone several hype cycles. More recently, in late 2021, we saw interest build with firms like Citibank valuing virtual worlds at an $8 to $13 trillion market by 2030.
  • What started the hype cycle was when in October 2021, Facebook rebranded to Meta and announced that they were spending $10b on Metaverse development. Around this time, Epic raised $2b with Sony and Lego’s parent firm to build their own virtual worlds and experiences.
  • This collection of bullish announcements caused blockchain-based digital land projects like The Sandbox (TSB), Decentraland (DCL), and NFTWorlds (NFTW) to garner a lot of public and private attention.
  • There have been just over 100k total land sales as of Q2 2022, valued at almost $2b (TSB land sales represent ~17% of this).
  • However, many have likened this boom to the real-world housing bubble in the early 2000s, and maybe they are right. Prices are falling, digital land trading volume has dropped considerably in 2022, and investors are questioning if this was all just a big scam or if this is an opportune time for entry.

 

MicroStrategy Buys 301 More Bitcoins, Now Holds Almost 130K

  • MicroStrategy (MSTR) bought 301 bitcoins (BTC) between Aug. 2 and Sept. 19 for about $6 million, according to a filing with the U.S. Securities and Exchange Commission on Tuesday.
  • The software company that was co-founded by entrepreneur and crypto advocate Michael Saylor bought the world’s largest cryptocurrency at an average price of $19,851 per coin, the filing said.

 

Nasdaq Starts Crypto Custody Service for Institutional Clients

  • Nasdaq (NDAQ), the second-largest U.S. stock market operator, is starting a cryptocurrency custody service as it aims to cash in on the demand from institutional crypto investors, according to a press release on Tuesday.
  • The company has hired Ira Auerbach, who previously ran prime brokerage services at Gemini, as the head of its digital assets unit, the release said.
  • Nasdaq’s move into crypto follows a wider trend across Wall Street. Last month, BlackRock, the world’s largest asset manager, said it will offer cryptocurrencies to its institutional clients, and Depository Trust & Clearing Corp., which processes almost all U.S. stock market trades, released its own blockchain as it looks to speed up the settlement of trades.

 

Treasury official: Sanctions against crypto mixers can deter financial crimes 

  • Cryptocurrency mixers can help users evade Russian sanctions and launder money, a Treasury Department official said during a Senate Banking Committee hearing on Tuesday.
  • Sen. Elizabeth Warren (D-Mass.) ripped cryptocurrency mixers during the hearing, saying the industry has downplayed and lied about negative impacts of the technology.

 

Cumberland: ETH’s correlation to the Nasdaq creates problems for crypto-native traders

  • The correlation has made it difficult for crypto-native participants to extract alpha from their edge, according to Cumberland.
  • The Chicago-based firm has noticed traders tend to trade in U.S. dollars rather than bitcoin and ether pairs, a divergence from this might be the key to surviving the crypto winter the firm noted. 

 

Trading App Robinhood Markets Adds USDC to Its Crypto Lineup

  • Online broker Robinhood Markets (HOOD) added Circle’s USDC stablecoin to its crypto offerings for retail traders Tuesday.
  • The company added in a tweet the offering will also be available on Wednesday for transfer on Polygon and Ethereum networks.
  • “The inclusion of USDC on Robinhood is a clear signal that the platform is setting its sights abroad where the usage of stablecoins is more popular and useful for investors,” Bryan Hernandez, president and co-founder of decentralized-finance (DeFi) app Structure, told CoinDesk.
  • “Theoretically, the addition of USDC could allow Robinhood users to send payments for a wide variety of purposes, just as you’d imagine Venmo or PayPal doing so for their users,” he said.

 

Crypto Exchanges Binance and FTX Have Both Bid Roughly $50M for Voyager’s Assets: Report

  • Binance and FTX have made the top bids of roughly $50 million for the assets of insolvent crypto lender Voyager Digital, according to sources familiar with the matter who spoke to the Wall Street Journal. Neither offer has been accepted yet, according to the report.
  • Binance’s current bid is slightly higher than FTX’s, according to the sources.

 

Glassnode

  • Our latest Video Report is live, covering details about the #Ethereum Merge.
  • We analyze:
    • Suite of new on-chain Proof-of-Stake metrics.
    • Movement and stake distribution of validators.
    • Post-Merge $ETH supply dynamics.

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