Crypto Volatility: There’s plenty of reasons why crypto is often referred to as the ‘Wild West’ of finance, and the past seven days haven’t given us a reason to think any differently. Each day brought investors and enthusiasts a host of new reasons to be both excited and maybe even a little nervous for the future of the blockchain industry.
Governments from around the world converged on new regulations for the digital asset industry as a whole, meanwhile central banks went certifiably nuts on developing CBDCs. The NFT sector witnessed some pretty substantial industry growth, with luxury auction house Christie’s bringing all the benefits of fine art to the blockchain.
Before we get into the nitty gritty of this week’s wrap up, let’s kick things off with a look at the good news: where the biggest slices of funding went in Web3.
Crypto Volatility: Show me the money!
Much like last week, the crypto economy has witnessed a remarkable amount of fundraising and merger and acquisition activities, Crypto Winter notwithstanding.
For those keen to get a sense of who’s building in the depths of a bear market, these are the movers and shakers making the biggest splash:
- Bitcoin miner Iris Energy inked a deal to sell up to US$100 million in equity to investment bank B. Riley over the next two years;
- Kwil, a decentralised database infrastructure provider, raised US$9.6 million led by FTX and Digital Currency Group;
- Metaverse infrastructure firm Hadean raised US$30 million from the developer of Fortnite;
- Crypto data analytics firm Messari closed a US$35 million Series B funding round led by Brevan Howard Digital;
- Decentralised data platform Space and Time secured US$20 million in a funding round led by Microsoft’s venture capital arm M12;
- Re, a blockchain-powered reinsurance company, raised US$14 million in seed-round funding to build a decentralised insurance market;
- UK-based asset manager Fasanara Capital established a new US$350 million venture capital fund focused on fintech and Web3;
- Solana developer Coral raised US$20 million in a funding round co-led by FTX and Jump Crypto to build a crypto wallet for executable NFTs;
- Institutional DeFi lending platform dAMM Finance completed a private token sale round of US$2 million;
- Krypton, a new DEX, announced a seed round raise of US$7 million led by venture firm Framework Ventures;
- Web3 accounting tool Tactic raised US$11 million to “simplify business operations”;
- Crypto venture-capital investment firm Pantera Capital is looking to raise US$1.25 billion for its second blockchain fund;
- Bitcoin payments company Strike raised $80 million in a Series B funding round; and
- During Voyager Digital’s bankruptcy auction, FTX scooped up the crypto broker’s remaining assets for a whopping US$1.4 billion.
All in all, a busy week in the world of crypto despite widespread market volatility and fear.
CBDCs got some serious airtime
Here in Australia, the CBDC conversation was reignited with the Reserve Bank (RBA) unveiling a CBDC white paper, calling upon members from the domestic industry to get involved and work on forging practical use cases for the eAUD.
In an interview with The Chainsaw, legal expert Liam Hennessy praised the pilot program for its “limited scope” and saw steps towards cheaper payments infrastructure and improved financial access to unbanked Autralians as major benefits of the Aussie CBDC.
On the flip side of this was Finder co-founder Fred Schebesta, saying that the RBA’s narrow scope didn’t prioritise cross-border payments, something he believes to be the superior use case.
“Only having Australian entities and residents in the pilot will limit its use cases and value to consumers. International settlement is probably one of the best use cases,” he said.
Zooming out, the Bank for International Settlements (BIS) wrapped up a multi-jurisdictional CBDC trial which saw central banks from China, Hong Kong, Thailand and the United Arab Emirates facilitate more than 160 cross-border payments totalling more than US$22 million in settlements. The trial was declared a success and marked a significant step forward for the use of CBDCs in international payments.
The US didn’t want to be part of the CBDC movement at all, with US Federal Reserve Chair Jerome Powell saying that America is years away from developing a digital dollar.
“At the end of the day, we will need approval from both the Executive branch and Congress to move ahead with a central bank digital currency,” he said. “We see this as a process of at least a couple of years.”
Markets held their ground (but only just)
Despite widespread chaos in foreign exchange markets, which saw the British pound
behave like a “rugged shitcoin” against USD, the price of cryptocurrencies mostly held their ground.
While the Taro upgrade saw the development community get excited about the possibility of DeFi on the Bitcoin network, it did very little to move the asset’s price, with BTC currently trading down just 0.1% from this time last week. Bitcoin is currently changing hands for roughly US$19,400.
Bitcoin also outperformed most of its peers over the course of the last seven days. This is particularly true when contrasted against Ethereum (ETH) which has fallen nearly 20% since The Merge was finalised, validating the bears in the great ‘up vs. down’ post-Merge debate.
BTC held stronger than Cardano (ADA), Ripple (XRP), and Polygon (MATIC), suggesting that most crypto investors still see Bitcoin as the primary asset through which to gain exposure.
Winners & Losers
If you were holding large amounts of Cosmos (ATOM), Algrorand (ALGO), Ripple (XRP) or Stellar (XLM) then you may not want to check the portfolio just yet, with each of these tokens dropping more than 10%.
Unfortunately for degens, there really weren’t many massive gains to be had this week, unless you were invested in the blockchain solutions token, Quant (QNT) which grew an impressive 25%. Following QNT on the gain train was Chainlink (LINK) and Uniswap (UNI) which grew 8.4% and 6.2% respectively.
Crypto Volatility: Impact Corner
Now, adding the impact corner to your weekly wrap-up! There’s much to be excited about this week.
- A blockchain development agency Labrys and Web3 accelerator Metarise finalised a seven week incubation program to find and fund the best and brightest project in the Aussie landscape. With mentors like Animoca Brands, The Sandbox and BlockTower Capital, one of the finalists included MetaTrees: a regeneration project to enable investors to mint a tree NFT connected IRL to a real tree being planted on NSW land.
- A tokenised carbon credit project between exchange 1GCX and trading firm T3 Trading raised $US2 billion (yes, you read that correctly) this week as the teams set up a US$100 million liquidity pool in a move to attract institutional interest and assist them in their expectations to reach environmental, social and corporate governance (ESG) goals.
- A UNICEF-led project Giga — which has a goal to connect 500 million children and 2.8 million schools to the internet by 2030 — announced new developments of their successful NFT fundraising mechanism at the Blockchain Expo in Amsterdam. The project uses an open-source map and machine learning to identify schools without the internet and uses NFTs as a fundraising channel for investors to directly accelerate the initiative.
And that’s all of the important crypto volatility news for this week folks. Enjoy your weekend from the crew here at The Chainsaw.