Author: LBank Labs Research team - Hanze, Johnny

*All on-chain data is dated as of 12:00 a.m. EST on Sunday, January 14th.

1. Macro Market Overview 

U.S. Stocks End Rough Week on High Note After Jobs Report. According to WSJ, the benchmark stock index ended Friday less than 0.1% higher, within 0.3% of a record high that has stood for more than two years. The tech-heavy Nasdaq Composite also added less than 0.1%. The Dow Jones Industrial Average declined 0.3%, or 118 points. Each index ended the week higher, after declining in the first week of January. Many analysts believe the market’s January performance sets the tone for the rest of the year.

Labor Department data released Thursday hinted that inflation might not be cooling quite as quickly as some investors hoped. The choppy trading Thursday came after the consumer-price index showed inflation rose more than expected in December. The Labor Department said core prices—a closely watched metric that excludes volatile food and energy prices—rose 3.9% from a year ago. That was just above economists’ forecasts for a 3.8% increase.

Last week, the three major U.S. stock indices experienced gains. The tech-heavy Nasdaq Composite Index rose by 3.1%, while the Dow Jones Industrial Average and the S&P 500 increased by 0.3% and 1.8%, respectively. Despite the approval of the SEC for 11 large asset management firms to launch Bitcoin spot ETFs in the crypto market last week, the performance of web3-related stocks was the opposite. These stocks, except for a short-term uptrend at the opening on the 11th, saw declines across the board. Notably, COIN dropped by 15.1%, MARA by 21.4%, and MSTR by 23.1%.

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

Macro indexes

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in December on a seasonally adjusted basis, after rising 0.1 percent in November, the U.S. Bureau of Labor Statistics reported last week. Over the last 12 months, the all items index increased 3.4 percent before seasonal adjustment.

The all items index rose 3.4 percent for the 12 months ending December, a larger increase than the 3.1-percent increase for the 12 months ending November. The all items less food and energy index rose 3.9 percent over the last 12 months, after rising 4.0 percent over the 12 months ending November. The energy index decreased 2.0 percent for the 12 months ending December, while the food index increased 2.7 percent over the last year.

(Source: U.S. BUREAU OF LABOR STATISTICS)

The Producer Price Index for final demand fell 0.1 percent in December, seasonally adjusted, the U.S. Bureau of Labor Statistics reported last week. Final demand prices moved down 0.1 percent in November and 0.4 percent in October. On an unadjusted basis, the index for final demand rose 1.0 percent in 2023 after increasing 6.4 percent in 2022.

The December decrease in the index for final demand is attributable to a 0.4-percent drop in prices for final demand goods. The index for final demand services was unchanged.

(Source: U.S. BUREAU OF LABOR STATISTICS)

The U.S. Dollar Index (DXY) displayed a fluctuating trend last week, reaching a high of over 102.760 on Thursday and closing at 102.439 on Friday. Overall, it remained relatively flat compared to the previous week.

DXY (Source: TradingView)

Interest-rate futures indicate that investors believe that the Fed is likely to cut rates at its March meeting, according to CME Group. Events this week have led some to question whether that might be too soon for the central bank to reverse course.

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

The yield on the 10-year Treasury note (US10Y) closed at 3.941%, down from 3.974% on Thursday, marking a 2.7% decrease compared to the previous week and a nearly 5% decline from the peak in October.

US10Y (Source: TradingView)

The current AUM for spot BTC ETF groups is $29.4 billion. According to Blockworks, as of January 14, among the 11 spot BTC ETF groups, excluding Hashdex DEFI, the total Assets Under Management (AUM) is $29.4 billion, with GBTC having an AUM of $28.6 billion, and the rest amounting to $0.8 billion. Notable components include IBIT with an AUM of $122.3 million and a trading volume of $564.7 million, FBTC with an AUM of $247.4 million and a trading volume of $432.7 million, BITB with an AUM of $240.4 million and a trading volume of $77.6 million, ARKB with an AUM of $10.3 million and a trading volume of $149.1 million, among others.

(Source: Blockworks)

2. Crypto Market Pulse

Market Data

Last week, the cryptocurrency market saw a seven-day increase of $40 billion, reaching a current total market capitalization of $16.9 trillion. Despite the SEC's unanimous approval of Bitcoin spot ETFs launched by several asset management firms on the 10th, the price of Bitcoin did not show a significant rise. Instead, Ethereum (ETH) continued to grow, approaching $2,700. On the day following a Twitter hack of the SEC's official account, which disseminated false information, Bitcoin's spot price surged above $48,000, only to plummet back to the $44,000 level. As of the early morning of January 14th, the spot price of Bitcoin retreated to $42,870, a 3% decrease from the previous week. As the second-largest cryptocurrency, Ethereum benefited from positive expectations for an ETH spot ETF, reaching $2,534 and rising by 11%. Furthermore, Bitcoin's market share decreased by two percentage points, currently standing at 50%, with a market value of $838 billion. Ethereum's market share increased by one percentage point to 18%, with a market value of $307 billion.

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

$ENS, $SUI, and $ETC emerged as Top 3 gainers, while $KLAY, $RUNE, and $IOTA were Top 3 losers. Among the top 100 cryptocurrency projects by market capitalization, $ENS emerged as the top gainer with a weekly increase of over 90%. This surge not only followed a wave of gains in Ethereum ecosystem projects after January 10 but may also have been influenced by Vitalik Buterin's supportive comments on $ENS last week.
Additionally, SUI, the native token of the Sui blockchain network, has experienced an almost 50% increase, possibly influenced by factors such as the continuous rise in Sui's Total Value Locked (TVL). On January 12th, the TVL surpassed 250 million USD, and on January 13th, it exceeded 275 million USD, reaching 282 million USD. Currently, it has surpassed 300 million USD. The third-place $ETC's recent gains were also influenced by the overall bullish trend in the $ETH ecosystem, briefly surpassing $30 per unit. Last week's upward momentum data reflects the positive expectations of widespread mainstream altcoins after the approval of BTC spot ETF, particularly within the Ethereum ecosystem, indicating a promising future for the cryptocurrency market.

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

Last week, the total supply of stablecoins continued to exhibit a significant growth trend, surpassing $128.5 billion. With the smooth approval of Bitcoin spot ETFs, the net growth rate of stablecoin supply continued to rise, reaching new highs. This indicates that a large influx of new capital is entering the cryptocurrency market. Additionally, observing the net position data of stablecoins on exchanges over the past week, the overall trend shows a net inflow, and the net change in inflow has reached new highs. This reflects an increase in the total supply of stablecoins on exchanges over the past seven days. The overall stablecoin data performance aligns with market changes, indicating positive prospects for the market's future development.

Stablecoins Market Cap (Data: Glassnode)

In the derivatives market, the open interest in Bitcoin and Ethereum perpetual contracts remained relatively stable. Over the past seven days, the total open interest in the futures market has been influenced by the price fluctuations of Bitcoin and Ethereum, showing an increasing trend after the 10th. Liquidation data indicates that, following the significant volatility in Bitcoin due to the hacking of the SEC Twitter account on the 9th, a substantial number of short positions were liquidated. For Ethereum, a significant liquidation of short positions occurred around the 10th, reflecting Ethereum's unexpected surge at that time. Subsequently, the sharp pullback in Bitcoin and Ethereum on the 12th led to a wave of long liquidations. A series of data indicates that the current market still faces uncertainty, with an ongoing strategic game between long and short positions.

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

In the DeFi market, the total value locked (TVL) increased last week, reaching $564 billion. Over the past seven days, the trading volume on decentralized exchanges (DEX) rose to $388 billion, an increase of over 20% compared to the previous week. The market share gap between decentralized exchanges (DEX) and centralized exchanges (CEX) slightly narrowed, with DEX now accounting for 16% of the total CEX trading volume. With the positive sentiment in the crypto market over the past week, most of the top ten mainstream blockchains experienced an increase in TVL, except for Tron, which saw a slight 0.3% decline. Manta entered the top ten blockchains by TVL with a seven-day increase of 15%.

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

Last week, the NFT market capitalization experienced growth, increasing by 6% to reach $8.1 billion. At the same time, the total trading volume continued to rise, increasing by 16% over the past seven days. However, in the top NFT collections, both the floor price and average prices showed a declining trend. The floor price of Bored Ape Yacht Club (BAYC) increased by only 0.6%, but the average price decreased by 11%. Mutant Ape Yacht Club (MAYC) saw declines of over 10% in both floor prices and average prices. The Blue Chip Index, calculated using the market value of a weighted collection of blue-chip stocks (ETH/USD), decreased from 5405 to 5364.

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

LBank Labs Recap

In the inaugural week following the listing of the BTC ETF, market dynamics unfolded with a nuanced narrative. Despite not conforming to a classic "sell the news" scenario, the price action has proven disconcerting for bullish sentiments. The consecutive two-day downtrend has prompted speculation regarding institutional employment of the BTC ETF for exit liquidity. Here's a comprehensive breakdown of the current landscape:

1.              Grayscale GBTC Trust Dynamics: Investors in the Grayscale GBTC trust exhibit a compelling incentive to exit the trust and reallocate capital towards the newly introduced ETFs.

2.              FTX Liquidation Approval: FTX, a major stakeholder, has received approval for portfolio liquidation, adding a layer of complexity to the market dynamics.

3.              Coinbase BTC Premium Negativity: The negative territory observed in Coinbase's BTC premium serves as a signal, potentially indicating selling activities, likely by GBTC trust investors.

Currently, the prevailing uncertainty surrounds the motive behind BTC selling on Coinbase. While the presented evidence strongly suggests a shift between products, not all funds appear to be flowing seamlessly into the ETFs. A meticulous examination of the intricate relationship between BTC and the ETF, encompassing daily settlement processes, asset NAV calculations, etc., is underway to offer insights into the anticipated trend over the next few months.

Altcoin Market Highlights:

JTO - LIDO of Solana: JTO is garnering increased attention with its ascending price trajectory. Notably, a substantial portion of investors is expressing confidence through long positions in the perpetual market, accompanied by a consistently positive basis, implying a likelihood of further price appreciation.

QUARK - Anticipation for Integration: Anticipation is building around potential integrations of ARC20 by Binance or OKX, driving a surge in retail investor interest in QUARK, currently the second-largest market cap token on ARC20.

ACE - Recovery and Growth Potential: ACE is exhibiting signs of recovery following a period of sustained selling. Rumors circulating suggest token sales by Binance, with indications pointing toward promising price growth in the coming weeks.

ENS - Vitalik's Tweet Impact: After Vitalik's tweet regarding ENS, the token witnessed an impressive surge of over 100%. The question arises: is this indicative of a broader resurgence for ETH?

TROLL - Elon Musk's Influence: TROLL has emerged as a new favorite in the market's meme coin category, spurred by Elon Musk's alteration of its title on Twitter to Chief Troll Officer.

•               BTC price optimistic: $43000 - $44500

•               BTC price neutral: $42000-$43000

•               BTC price pessimistic: $40500 - $42000

3. Major Project News

[Ethereum] Goerli Dencun Announcement. The Ethereum Foundation plans to launch the Dencun upgrade on the Goerli testnet at 6:32 UTC on January 17, 2024. If the upgrade on the Goerli testnet proceeds smoothly, Dencun upgrade will be activated on the Sepolia and Holesky testnets in the coming weeks. Once Dencun successfully operates on all three testnets, the mainnet activation will be scheduled. Dencun marks the final upgrade for the Goerli network before the core team stops supporting it.

(Source: blog.ethereum.org)

[Layer2] Base's 2024 Mission, Strategy and Roadmap. Layer2 network Base has unveiled its 2024 strategy and roadmap, treating Base as an economic entity comprised of three parts: a developer platform, an application ecosystem, and a capital market, building around these components. The goal is to expedite decentralization while enhancing network usability, significantly reducing costs, setting the intelligent wallet as the default setting, streamlining on-chain processes, and incorporating Coinbase onto the chain, among other initiatives.

(Source: base.mirror.xyz)

[Layer2] The Starknet community has approved the proposal for the Alpha V0.13.0 upgrade. The Starknet community has voted in favor of the proposal to activate the Alpha V0.13.0 upgrade on the mainnet, with a support rate of 99.46%. The main feature of this upgrade is the addition of V3 transaction types, aimed at enabling the Starknet network to support future functionality upgrades, such as adding $STRK as a Gas token outside of Ethereum.

(Source: governance.starknet.io)

[Layer2] The Arbitrum community has initiated a vote on the "Long-Term Incentive Pilot Program" proposal. As of January 16, the proposal aims to establish a long-term incentive pilot program for the DAO to test new incentive designs and address necessary questions to ensure readiness for a long-term plan. The program plans to distribute between 25 to 45 million ARB tokens to protocols built on Arbitrum. The specific quantity will be determined by DAO through Snapshot voting and subsequently approved through Tally voting. The distribution is set to occur over a 12-week period to protocols within the Arbitrum ecosystem.

(Source: snapshot.org)

[BNB Chain] Navigating the BNB Beacon Chain Fusion Roadmap: Six Month Plan. Binance recently announced a significant restructuring plan for the BNB Chain network architecture. According to a summary by BNB Chain validator Twitter@48ClubIan after a developer conference call, the plan involves phasing out the BNB Beacon Chain within the next six months. The election mechanism for BSC validators will transition from the BNB Beacon Chain to the BSC. The first dual-chain hard fork is scheduled for April, activating the BSC election mechanism and gradually shutting down the election mechanism on the Beacon Chain. Current validator node stakers have the option to migrate to the BSC or unstake, cross-chain, and restake. The Beacon Chain will be closed, resulting in asset invalidation, affecting BEP-2, BEP-8, and BEP-5 Atomic Swap assets. Cross-chain bridges based on the Beacon Chain will be shut down, preventing BNB from using IBC to connect to Cosmos. After the migration is complete, staking assets with validator nodes will be more convenient for users.

(Source: bnbchain.org)

[Cosmos] Cosmos has announced plans to initiate the Cosmos Hub improvement process in 2024. Cosmos has announced the initiation of the Cosmos Hub upgrade process in 2024, introducing the concept of Partial Set Security, a reimagining of opt-in security that allows a subset of hub validators to run physical nodes for each consumer chain. This concept aims to provide a more scalable and cost-effective approach through validator delegation while maintaining high decentralization and security.

(Source: Twitter@cosmoshub)

4. Key Fundraising Data

Last week witnessed a total of 25 financing events, raising a substantial amount of over $98 million*.
Compared to the previous week, financing activities experienced a comprehensive rebound in both trading volume and total financing amount. The blockchain services sector led with the highest number of financing events, totaling 4. The social sector recorded the highest total financing amount, raising a total of $23.5 million, accounting for 24% of the overall financing amount. The largest financing event was led by the Tune.FM project, successfully securing $20 million in funding. Tune.FM is a tokenized music marketplace for music streaming micropayments, NFTs, and live social audio experiences. More detailed information is provided below.

*6 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. [CeFi] Crypto custodian Finoa raises $15 million in strategic funding round at flat valuation of $100 million.

Finoa, a Germany-based crypto custodian and staking services provider focused on serving institutional clients, raised $15 million in a strategic funding round co-led by Maven 11 Capital and Balderton Capital. Other investors in the round included Blue Bay Ventures, Signature Ventures, Coparion, and Venture Stars, Finoa said Tuesday. The equity round began in June last year and closed in December, Christopher May, co-founder and co-CEO of Finoa, told The Block in an interview.

Finoa was initially looking to raise $5 to $6 million in the round from existing investors but ended up raising more, given the interest from external investors as the firm recently returned to profitability, May said. The strategic funding round comes nearly three years after Finoa raised $22 million in Series A funding in April 2021. Fiona did not go for a big Series B round, given challenging market conditions last year, and instead went for a smaller strategic round for growth, May said. A source with knowledge of the matter said the round maintained a flat valuation of $100 million, mirroring Finoa's Series A valuation from 2021.

•               Official Link: https://www.finoa.io/

2. [Social] Hedera-Based Tune.FM Raises $20M for Artist-Friendly Web3 Music Platform.

Web3 music platform Tune.FM has received $20 million in capital from alternative investment group LDA Capital to advance its goals of helping musicians earning a greater share of royalties from their work. Using Hedera Hashgraph's blockchain technology, Tune.FM provides musicians with a platform to receive micropayments for streaming in its native JAM token (JAM) as well as minting non-fungible tokens (NFTs) for digital music assets and collectibles.

"The problem with today’s major streaming platforms is that large corporations reap the lion’s share of the profits, leaving artists with a small piece of the pie," Tune.FM said in an emailed announcement shared with CoinDesk. "Tune.FM wants to shake up the current standard by offering artists up to 90% of their streaming revenue."

•               Official Link: https://tune.fm/signup/?next=/

3. [GameFi] SKYARK CHRONICLES secures $15 million in funding led by Binance Labs.

SkyArk Chronicles, a well-known player in the 3A game platform space, recently achieved a significant milestone in its development journey. On January 12, 2024, the company announced the successful completion of a $15 million financing round, a major achievement in the competitive gaming industry. The leading global cryptocurrency exchange, Binance, spearheaded this financing initiative, signaling significant recognition of the potential of SkyArk Chronicles in the gaming sector.

This funding round not only brings financial upliftment to the company but also validates its growing influence in the gaming industry. With participation from over 40 institutions, it's evident that SkyArk Chronicles has garnered substantial interest and confidence from a wide range of investors. This funding will propel SkyArk Chronicles' ambitious plans to fundamentally transform the gaming industry through innovative approaches like blockchain-based games and NFT game engines, underscoring its commitment as a key player in both gaming and blockchain technology.

•               Official Link: https://www.skyarkchronicles.com/

4. [NFT] ArenaX Labs raises $6M to develop AI-powered games.

ArenaX Labs, the studio behind AI Arena, announced last week that it has raised $6 million in its latest round of funding. It plans to put this funding to use in building out the PvP platform fighter as well as developing similar titles. The company’s core mission, according to its founders, is to use gaming as a way of educating players on how to understand and work with AI.

AI Arena allows users to train their own AI-powered character to fight their battles, with the outcome of each fight determined by the player’s skill at said training. The game, which is planned for a beta launch early this year, will be free-to-play and run in browsers. ArenaX also plans for a web3 version for users to compete for rewards. However, the point of the title is more to help users understand how AI functions and learns.

•               Official Link: https://aiarena.io/#/

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📢 Disclaimer: The weekly crypto market insights are provided for informational purposes only and should not be considered as financial advice. The cryptocurrency market is highly volatile and unpredictable. Prices and trends can change rapidly, and past performance is not indicative of future results. Always conduct thorough your own research and consult with a qualified financial professional before making any investment decisions.