Lbank Labs Weekly Market Digest #1723

Author: LBank Labs Research team — Hanze, Johnny

 

1 Macro Market Overview

U.S. Stocks rebounded to close higher across the board. According to WSJ, stocks started the week with steady gains, slumped on Wednesday, then recovered to finish higher across the board. The S&P 500 closed out its eighth consecutive week of gains Friday, logging its longest winning streak in six years. Fresh data offered additional signs that the Federal Reserve is winning its fight to curb prices. The personal-consumption expenditures price index, the central bank’s preferred measure of inflation, fell 0.1% in November from the previous month, the first decline since April 2020. Excluding food and energy prices, the index was up 0.1% on the month, same as in October. Recent data has emboldened bets that the Fed could start cutting interest rates by spring. Investors in interest-rate futures markets now see a nearly 90% chance that the Fed will cut rates by its March meeting, according to CME Group. The central bank held interest rates steady earlier this month and signaled that slowing inflation could prompt rate cuts. On Thursday, stocks rebounded after economic data showed the Federal Reserve’s preferred inflation indicator rose by 2% in the third quarter, less than previously estimated.

The three major US stock indices recorded gains across the board last week, with the tech-heavy Nasdaq Composite Index rising by 1.34%, the S&P 500 Index increasing by 0.85%, and the Dow Jones Industrial Average gaining 0.32%. On the other hand, web3-related stocks also saw widespread increases last week, with COIN and MSTR rising by 18.74% and 8.64%, respectively, while MARA surged by 45.90% in the seven-day period.

Left: Three Indexes, Right: Nasdaq, COIN & MARA & MSTR (Source: Yahoo Finance)

Macro indexes

Personal income increased $81.6 billion (0.4 percent at a monthly rate) in November, according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI), personal income less personal current taxes, increased $71.9 billion (0.4 percent) and personal consumption expenditures (PCE) increased $46.7 billion (0.2 percent).

The PCE price index decreased 0.1 percent. Excluding food and energy, the PCE price index increased 0.1 percent. Real DPI increased 0.4 percent in November and real PCE increased 0.3 percent; goods increased 0.5 percent and services increased 0.2 percent.

Personal Income and Outlays, November 2023 (Source: U.S. BUREAU OF LABOR STATISTICS)

Real gross domestic product (GDP) increased at an annual rate of 4.9 percent in the third quarter of 2023, according to the “third” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 2.1 percent. The GDP estimate released today is based on more complete source data than were available for the “second” estimate issued last month. In the second estimate, the increase in real GDP was 5.2 percent. The update primarily reflected a downward revision to consumer spending. Imports, which are a subtraction in the calculation of GDP, were revised down. The increase in real GDP reflected increases in consumer spending, private inventory investment, exports, state and local government spending, federal government spending, residential fixed investment, and nonresidential fixed investment. Imports increased.

Gross Domestic Product, Third Quarter 2023 (Source: U.S. BUREAU OF LABOR STATISTICS)

The US Dollar Index (DXY) experienced a decline last week, closing at 101.709 on Friday, reflecting a 0.9% decrease. The US Dollar Index has shown a continuous downward trend for two consecutive weeks, influenced by recent widespread investor expectations of a Fed interest rate cut in 2024.

DXY (Source: TradingView)

According to the Federal Reserve Watch tool from the Chicago Mercantile Exchange Group, regarding the expectation of whether the Federal Reserve will adjust the effective federal funds rate (EFFR) in January next year, currently, 14.5% of traders believe the rate will be lowered to the range of 500–525 basis points. This percentage has increased compared to the previous week, while 85.5% expect it to remain between 5.25% and 5.5%.

Left: EFFR, Right: Target Tate Probabilities for 31 January 2024 Fed Meeting (Source: Federal Reserve Bank of New York, CME FedWatch Tool)

Last Friday, bond yields were largely unchanged, with the yield on the 10-year U.S. Treasury note (US10Y) falling to 3.901%, marking a consecutive decline for the third percentage point. US10Y, which serves as the benchmark for various borrowing costs, from mortgages to corporate loans, dropped to 3.876% on Wednesday, reaching the lowest level since July. It’s important to note that bond prices tend to rise when yields fall.

US10Y (Source: TradingView)

BlackRock’s proposed spot bitcoin ETF gets a ticker in latest filing with SEC. BlackRock’s proposed spot bitcoin ETF was christened with the ticker IBIT, according to an amended S-1 filing on Monday with the Securities and Exchange Commission. The updated filing also included new language about the creation and redemption mechanism to be employed by the fund, a topic of recent meetings between BlackRock and SEC officials. The latest update appeared to nod toward a so-called cash redemption model that analysts have said the SEC seems to be favoring, but it left open room for an “in-kind” process, subject to approval from regulators.

“The Trust issues and redeems Baskets on a continuous basis,” according to the filing. “These transactions will take place in exchange for cash. Subject to the In-Kind Regulatory Approval, these transactions may also take place in exchange for bitcoin.” “BlackRock has gone cash only,” Bloomberg Intelligence analyst Eric Balchunas wrote on X. “That’s basically a wrap. Debate over. In-kind will have to wait. It’s all about getting ducks in row bf holidays. Good sign.”

(Source: Twitter@EricBalchunas)

2 Crypto Market Pulse

Market Data

Last week, the cryptocurrency market maintained a steady uptrend, with the total market capitalization rising to $1.67 trillion. Bitcoin and Ethereum prices experienced oscillations to the upside. As of early December 24th, the price of Bitcoin is $43,600, reflecting a 4.3% increase from the previous week. Ethereum, the second-largest cryptocurrency, is currently priced at $2,293, showing a 3.4% increase. Additionally, Bitcoin’s market share increased by one percentage point to 52%, with a market capitalization of $853.7 billion. Ethereum’s market share remained relatively stable at 17%, with a market capitalization of $274.8 billion.

Left: Market Cap, Right: BTC&ETH Price (Data: CoinMarketCap)

$OP, $NEAR, and $SOL emerged as Top 3 gainers, while $1000SATS, $BTT, and $BONK were Top 3 losers. In the top 100 projects by market capitalization, the price of $OP surged to a record high of $3.8, driven in part by the progress of the Dencun upgrade within the Ethereum ecosystem. The schedule for the Ethereum Dencun upgrade on the 22nd has been officially confirmed. NEAR Protocol, as a member of the Ethereum ecosystem, has drawn attention due to its focus on applications and scalability. The increasing value of $NEAR may be attributed to its expanding ecosystem and significant milestones achieved in the blockchain technology sector. As for the third-ranking $SOL, it witnessed a 58% surge in the past week, driven by various factors, including significant developments in the Solana ecosystem and robust growth in the DeFi sector. These factors collectively contribute to the optimistic outlook for SOL, which has surpassed BNB in market capitalization, securing the fourth position with a stable $44 billion market cap. For the top losers, most of them experienced a pullback occurring in an overbought situation.

Top 10 Gainers & Losers (Data: CoinMarketCap, LBank Labs)

Last week, the total supply of stablecoins continued to show a significant growth trend, surpassing $125.4 billion. Over the past few weeks, the total supply of stablecoins has consistently followed a stable upward trajectory. Although the growth rate of net supply slowed down last week, the demand for cryptocurrency market investment continues to rise, and the total supply is still increasing. Meanwhile, observing the net position data of stablecoins on exchanges in the past week, the overall trend indicates a shift from net outflows to net inflows, reflecting a decrease in the overall supply of stablecoins on exchanges over the past seven days. However, the overall situation still suggests a positive outlook for the future development of the market.

Stablecoins Market Cap (Data: Glassnode)

In the derivatives market, the open interest for Bitcoin and Ethereum perpetual futures contracts saw a slight increase. The total trading volume in the futures market over the past seven days has risen in sync with the price increases of Bitcoin and Ethereum. Trading activity peaked around December 21st. Clearing data from the past week indicates a liquidation event around the 18th, where the liquidation volume for both long and short positions was similar and closely aligned with price changes.

Left: BTC & ETH Open Interest, Right: BTC & ETH Total Futures Liquidations (Data: Glassnode)

In the DeFi market, the total locked value (TVL) experienced an increase last week, rising to $537 billion, marking a 5.1% uptick. Over the past seven days, the trading volume on decentralized exchanges (DEX) surged to $645 billion, representing a significant growth of 115.5% compared to the previous week. Particularly noteworthy is the rapid narrowing of the market share gap between decentralized exchanges (DEX) and centralized exchanges (CEX), with DEX now occupying 65.0% of the total CEX trading volume. The TVL of the top ten mainstream public chains all increased in the past week, with Solana leading as the top gainer with a 43.4% increase, achieving a remarkable 157.0% growth in the past month.

Left: TVL & Volume, Right: Top 10 chains (Data: DefiLlama)

Last week, the NFT market experienced a pullback, declining by 9.8%, reaching a total value of $8.1 billion. Additionally, the total trading volume decreased by 19.2% over the past seven days. In the top NFT collections, both the floor prices and average prices saw declines. The floor price of the Bored Ape Yacht Club (BAYC) decreased by 0.7%, and the average price dropped by 6.2%. The Mutant Ape Yacht Club (MAYC) saw a slight increase in the floor price by 1.6%, but the average price still declined by 4.1%.

Market Cap & Volume, 7D (Data: NFTGo)

3 Major Project News

[Ethereum] Ethereum Developers Target January for First Testnet Deployment of Next Big Upgrade, ‘Dencun’. Tim Beiko, a core Ethereum developer, summarized the last Ethereum Core Developers’ Execution (ACDE) meeting of 2023. Developers plan to implement the Dencun upgrade on the Goerli testnet on January 17, with tentative dates for deployment on Sepolia on January 31 and on the Holesky testnet on February 7, followed by the mainnet.

Additionally, developers will attempt to fork the two networks within one week and release client versions to activate upgrades on both testnets. Discussions also covered the trade-offs between a major fork focused on Verkle (which may take over a year) and attempting to have a smaller fork (to deliver many smaller EIPs) and whether the next EL + CL fork needs to be coupled. There was an agreement to conduct a deeper study on Verkle during the early ACDE meetings in 2024.

(Source: Twitter@TimBeiko)

[Layer2] The Endgame for Decentralization in the OP Ecosystem is Stage 2. OP Labs published a post discussing the roadmap for decentralization in the Optimism ecosystem, stating that the ultimate goal is to quickly reach Phase Two, where there is a state root that no single organization can change. In 2024, the plan is for the Security Council to follow Optimism’s governance guidance and manage the upgrade keys for the ecosystem independently of the Optimism Foundation.

(Source: oplabs.co)

[Layer2] Arbitrum Integrates NEAR DA for Developers Building Ethereum Rollups. The NEAR Foundation has announced that its NEAR Data Availability Layer (NEAR DA) is now applicable to Arbitrum Orbit. Arbitrum Orbit is a tech stack that enables developers to launch their own configurable lightweight chains based on Arbitrum’s technology. It serves as a platform for Ethereum to provide L2/L3 scaling solutions, allowing developers to build dedicated chains with their own configurations. By integrating NEAR DA, builders of lightweight chains can benefit from lower data availability costs, significantly reducing the overall expenses of lightweight chains.

(Source: near.org)

[Layer2] Avail offers data availability for Starknet Layer 3 appchains on testnet. Avail is collaborating with StarkWare to enhance data availability in the Starknet Layer 2 network for validity-driven application chains. This data availability solution will be integrated into Starknet application chains developed using Madara, a customizable sequencer. These application chains will operate as “Layer 3” within the Starknet ecosystem. According to a statement, Layer 3 will leverage Avail for data availability services in various modes, including validium and sovereign rollup, each providing unique benefits in transaction processing efficiency and determinism. This infrastructure is expected to be available for use by Madara chains after the planned mainnet release in the first quarter of 2024. Developers can now begin experimenting with Madara’s data availability interface on the testnet.

Additionally, the Starknet mainnet V0.13 update is scheduled for January 10, 2024, during which Starknet will introduce support for $STRK token payments for Gas.

(Source: Twitter@Starknet)

[Layer2] ZKFair mainnet of the ZK-L2 network has been launched. ZKFair is a ZK-L2 network based on Polygon CDK and Celestia DA, with technical support from Lumoz RaaS. It is designed to address the high entry barriers for L2 users, and it follows a fair launch, community-driven approach. ZKFair has successfully transitioned from the testnet to the mainnet and has undergone audits from multiple security firms.

The total supply of ZKF tokens is 10 billion, and all tokens will be distributed to the community through airdrops. Of the total, 2.5 billion will be airdropped to community users, including those with Polygon zkEVM, zkSync, Linea, Scroll, ZKSpace interaction addresses, Lumoz point holders, Ordinals community members, and more. Users can now check the community airdrop amounts on the official website zkfair.io. The remaining 7.5 billion will be released through a Gas Fee Airdrop three days after the mainnet launch, with a gas fee cap of 3 million USDC. There will be no further issuance of ZKF tokens in the future.

(Source: Twitter@ZKFCommunity)

[Polkadot] Polkadot has outlined several significant upgrades planned for 2024. The official annual report reveals ongoing efforts to implement asynchronous support for enhanced network performance and scalability. Additionally, there are plans for Agile Coretime, a flexible scheduling allocation system, and the Minimal Relay optimization for relay chains. Deployment of the Polkadot-to-Ethereum cross-chain bridge Snowbridge is expected in the first quarter of next year.

(Source: paritytech.io)

4 Key Fundraising Data

Last week witnessed a total of 21 financing events, raising a substantial amount of over $203.9 million*. Compared to last week, financing activity continues to maintain its recent high levels both in terms of the number of deals and the total amount raised. The Service sector leads with the highest number of financing events, totaling 5. The GameFi industry records the highest total financing amount, reaching $102.3 million, constituting 50% of the total financing amount. The largest financing activity last week also occurred in the GameFi sector, led by MapleStory Universe, raising $100 million. MapleStory Universe is a collection of four different experiences, each collaborating to enhance a vast virtual world within the MapleStory universe. More detailed information is provided below.

*9 events of unknown amount are included, which have been excluded from the remaining data.

Top Left: Stats in Areas; Top Right: Stats in Rounds; Bottom: All Events

(Data: Cryptorank, Foresights, LBank Labs)

Below, we listed the most noteworthy fundraising deals for you:

1. [GameFi] Nexon has launched a $100 million Web3 fund for its blockchain gaming ecosystem, MapleStory Universe.

Game developer Nexon has announced a $100 million Web3 fund for its blockchain gaming ecosystem, MapleStory Universe. The fund is aimed at constructing a Web3 gaming economy, encompassing blockchain MMORPGs, mobile games, developer SDKs, and a sandbox platform. The initiative seeks to create lifelong storylines for over 180 million registered users through blockchain and NFTs.

Additionally, MapleStory Universe plans to integrate Polygon Supernets in March 2024, providing opportunities for large-scale online gamers to earn and trade NFT items.

• Official Link: https://maplestoryuniverse.io/

1. [Service] Crypto Accounting and Tax Reporting Platform TRES Raises $11M to Add New Blockchains.

TRES, a cryptocurrency accounting and taxation reporting platform, has raised $11 million to expand its service to all corners of the blockchain industry. The Tel Aviv-based company currently supports over 100 layer-1 and layer-2 networks including Bitcoin, Ethereum, Solana and Avalanche, and aims to add support for “new blockchains every week,” according to an emailed announcement on Wednesday.

TRES currently services clients with combined assets worth $19 billion, helping them manage, monitor and reconcile their digital asset activity. The Series A round brings TRES’ total funds raised to $18.6 million, with Faction, New Form, Cyber Fund and Ambush Capital among its backers.

• Official Link: https://www.tres.finance/

1. [DeFi] Coded Fi Ltd Acquires Chainge Finance at $47 Million Valuation and Appoints Financial Luminaries to Its Board.

Coded Fi Ltd has announced the successful acquisition of Chainge Finance, a leading force in the decentralized finance sector, with the transaction valuing Chainge at an impressive $47 million. This strategic move solidifies Coded Fi’s commitment to innovation and growth within the DeFi landscape, propelling the company into a new era of success.

Coded Fi is fervently pursuing its mission to establish itself as a frontrunner in the DeFi sphere. The company’s core objective revolves around providing a comprehensive decentralized crypto trading solution that caters to users globally. This vision is centered on delivering an all-in-one solution that simplifies and enhances the crypto trading experience.

• Official Link: https://chainge.finance/

1. [Service] Medallion, a platform for artists to connect directly with fans, raises $13.7M.

Medallion is a platform for artists to have a dedicated digital hub for promoting album releases, tour dates and merch drops, as well as selling digital collectibles and sharing exclusive content to foster deeper connections with fans. The company announced last week that it closed $13.7 million in Series A funding, co-led by Dragonfly and Lightspeed Faction.

Musicians are increasingly searching for direct ownership in their own communities and avoiding third-party platforms where interactions with fans are complex to manage. From a fan perspective, although there are plenty of ways to follow and connect with artists, these online interactions can be minimal.

• Official Link: https://www.medallion.fm/

Edited by El Bachir Essamari

 

#PCE #GDP #ETF #Layer2 #LbankLabs #Cryptocurrency #Marketanalysis #Blockchain #Investment

 

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