Wednesday, 6 October 2021

Market Summary

Market Summary 6 October 2021

Huobi Basis Deviates, Options Skew Signals Positive Outlook, OpenSea Hits ATHs

  • This week started off with positive price action across crypto. BTC broke $50k again, signaling some optimism. However, today DeFi and L1 tokens saw a small sell-off. Meanwhile, SHIB is outperforming everything else, up over 70% in the last 24H.
  • As BTC began to rally into October, basis didn’t rise as aggressively as one would’ve imagined. BTC has become a perpetuals and futures-dominated market. The lack of aggression in futures indicates that sentiment may still be fragile and traders aren’t too comfortable upping their leverage right now.
  • Notably, basis on Huobi detached from the rest of the market. Huobi is a Chinese exchange, with a presumably large concentration of volume in mainland China. The Chinese government’s efforts to further clamp down on crypto in the country is no doubt causing Huobi’s futures pricing to deviate from other exchanges. OKEx seems to have fared well in this regard, which could possibly indicate that their user base isn’t as tied to China, or perhaps there is another underlying reason.
  • Open interest for BTC options is on the rise again, increasing by over $2B following last month’s $3.2B expiry. The uptick coincided with BTC’s rally into the beginning of October.
  • OpenSea volume hit a local maximum at the end of August, with activity peaking and then quickly cratering. However, transaction volume and count started reverting higher over the back half of September.
  • The daily transaction count on OpenSea hit an all-time high of nearly 90k txs yesterday, despite lower trading volume in dollar terms relative to August. Smaller-cap NFTs have been the main catalyst for more trading activity as floor prices for select collections soar relative to higher market cap NFT collections.


Fifth-Largest Bank in U.S. Now Offering Bitcoin Custody Services

  • U.S. Bank, the fifth-largest banking institution in the United States, today announced that it has launched custodial services for Bitcoin. Institutional investment managers with private funds in the U.S. or the Cayman Islands can now tap the bank’s service to store their private keys.
  • The bank is working with financial services and technology firm New York Digital Investment Group, or NYDIG, as its first sub-custodian for the service. U.S. Bank previously signed on to administer NYDIG’s planned Bitcoin ETF, or exchange traded fund, which is still awaiting approval from the United States Securities and Exchange Commission (SEC).
  • According to CNBC, U.S. Bank is also currently offering custody services for Litecoin and Bitcoin Cash, with plans to add Ethereum and further additional coins “over time,” said Gunjan Kedia, Vice Chair of Wealth Management and Investment Services.


Crypto analytics startup Chainalysis acquires cybercrime forensics firm Excygent

  • The blockchain analysis firm Chainalysis announced Tuesday that it acquired Excygent, a cybercrime forensics company.
  • Exycgent is a highly specialized technology firm that services both public and private clients, even assisting U.S. governmental agencies with cybercrime investigations. 
  • In a blog post, Chainalysis CEO Michael Gronager wrote that Chainalysis and Excygent had collaborated in past projects involving terrorism financing campaigns, the seizure of cryptocurrencies used in darknet marketplaces, and other illicit activity. The terms of the deal were not disclosed.


Arca closes $30 million venture fund as it crosses $500 million in AuM

  • Arca, the cryptocurrency investment firm, announced Tuesday the close of a new venture fund, making it the latest entrant to an ever-growing corner of the market.
  • Dubbed Endeavor, the fund will back companies in the non-fungible token market as well as companies operating in blockchain-based gaming and Web 3.0. According to Arca’s David Nage, the firm was able to raise capital for the fund in a matter of weeks and it is oversubscribed above its cap of $30 million. Nage, who is a member of Arca’s founding team, will serve as the portfolio manager for the new fund. 
  • Galaxy Digital’s Vision Hill unit is backing the fund as an anchor investor. The new fund joins Arca’s flagship hedge fund, Digital Assets Fund and Digital Yield Fund. The firm manages more than $500 million. 


MetaMask pushes institutional offering with BitGo integration

  • Decentralized finance (DeFi) wallet and browser extension MetaMask has partnered with three crypto-focused custodians as part of a broader effort to attract more institutional capital to the digital asset market. 
  • On Tuesday, the company announced new partnerships with BitGo, Qredo and Cactus Custody centered around MetaMask Institutional — a new product offering that gives institutional investors access to the large sums of collateral in the DeFi market.
  • ConsenSys, the Ethereum developer behind MetaMask, introduced MetaMask Institutional in May.


Axie Infinity creator announces $152 million in Series B funding led by a16z

  • Sky Mavis, the creator of blockchain-enabled, play-to-earn game Axie Infinity, announced on Tuesday a $152 million Series B round led by Andreessen Horowitz (a16z).
  • The announcement comes a day after The Information reported that Sky Mavis is raising around $150 million in Series B funding at a valuation near $3 billion. Accel and Paradigm also participated in the round, said Sky Mavis.
  • With fresh capital at hand, Sky Mavis plans to expand its team, scale infrastructure, and build its own distribution platform to support game developers to create blockchain-enabled games.


USDC Stablecoin Issuer Circle ‘Cooperating’ With SEC Investigation

  • Circle, the company behind the USDC stablecoin, has been under investigation by the U.S. Securities and Exchange Commission (SEC) since July 2021, according to the company’s regulatory filings. 
  • “In July 2021, we received an investigative subpoena from the SEC Enforcement Division requesting documents and information regarding certain of our holdings, customer programs, and operations,” the company said. 
  • “We are cooperating fully with their investigation,” Circle added. 

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