Author: LBank Labs Research team - Hanze, Johnny
*All on-chain data is dated as of 12:00 a.m. EST on Sunday, February 3rd.

Welcome back to LBank Labs Weekly Digest! Here we list all you need to know about crypto market in the past week (Jan.28-Feb.3).

Keywords: #FOMC #Employment

Meta added $204.5 billion to its market value Friday, the biggest one-day market-cap gain for a U.S. company. PHOTO: DAVID PAUL MORRIS/BLOOMBERG NEWS

1. Macro Market Overview 

U.S. Stocks Start 2024 With Third Straight Month of Gains. According to WSJ, megacap tech shares propelled the major stock indexes higher Friday while a stronger-than-expected jobs report shook the bond market. The S&P 500 rose 1.1% to reach an all-time high. The Dow Jones Industrial Average gained about 135 points, or 0.3%, closing at a record for the ninth time this year. The Nasdaq Composite added 1.7%. All three indexes notched a fourth consecutive week of gains. Meanwhile, Friday’s monthly jobs report revealed an acceleration in hiring that blasted past economists’ expectations. Employers added a seasonally adjusted 353,000 jobs last month, the Labor Department reported, the strongest in a year. Wages also outpaced expectations, jumping 4.5% last month from a year earlier. The hot labor-market data further tamped down expectations about how quickly the Federal Reserve may start cutting interest rates. Investor optimism that inflation had slowed enough for the central bank to cut rates early this year lost steam after Fed Chair Jerome Powell on Wednesday signaled a March rate cut was unlikely.

Last week, the three major U.S. stock indices saw gains, with the technology-heavy Nasdaq Composite Index rising by 1.1%, while the S&P 500 and Dow Jones Industrial Average both increased by 1.4%. Web3-related stocks also experienced modest gains over the seven-day period, with COIN rising by 3.2%, and MARA and MSTR increasing by 1.9% and 0.9%, respectively.

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

Macro indexes

Total nonfarm payroll employment rose by 353,000 in January, and the unemployment rate remained at 3.7 percent, the U.S. Bureau of Labor Statistics reported last week. Job gains occurred in professional and business services, health care, retail trade, and social assistance. Employment declined in the mining, quarrying, and oil and gas extraction industry.

The Employment Situation (Source: Bureau of Labor Statistics)

Last week, the U.S. Dollar Index (DXY) closed at 103.962 on Friday, marking a 0.5% increase compared to the previous week. DXY started an upward trend from the lowest point within the seven-day period, near 102.900, reaching a peak of over 104.000 before closing.

DXY (Source: TradingView)

The Federal Reserve has announced its first interest rate decision of 2024, maintaining the benchmark interest rate in the range of 5.25% to 5.50%, unchanged from the previous level. This decision aligns with market expectations. According to data from the Chicago Mercantile Exchange (CME) Group, interest rate futures indicate that only around 20% of investors currently believe that the Federal Reserve may cut interest rates at the March meeting. This data represents a significant decrease compared to 80% a month ago and 50% a week ago.

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

Bond yields surged. The yield on the 10-year U.S. Treasury note—a benchmark for borrowing costs ranging from mortgages to corporate loans—climbed to 4.024% on Friday, from 3.862% on Thursday. That was the biggest one-day increase in the 10-year yield since September 2022, according to Dow Jones Market Data.

US10Y (Source: TradingView)

Bitcoin spot ETF saw a total net inflow of $80 million last Friday, marking the fifth consecutive day of net inflows. On the same day, Grayscale's GBTC experienced a net outflow of $140 million. Excluding Grayscale, the other nine ETFs collectively had a net inflow of $220 million. Among them, BlackRock's ETF IBIT had the highest daily net inflow at $100 million, accounting for 45% of the total net inflow. Fidelity's ETF FBTC followed with a daily net inflow of approximately $78.95 million, representing 36% of the total net inflow. As of now, the total net asset value of Bitcoin spot ETFs is $28.16 billion, and the historical cumulative net inflow has reached $1.5 billion.

Left: Bitcoin Spot ETF Overview, Right: Daily Trading Activity of Bitcoin Spot ETF

(Source: Blockworks, SoSo Value)

2. Crypto Market Pulse

Market Data

Last week, the total market capitalization of the cryptocurrency market remained relatively stable, currently standing at $16.4 trillion. Bitcoin and Ethereum experienced minor retracements starting on Wednesday of last week, reaching lows of $42,000 and $2,250, respectively. As of the early morning of February 4th, the spot price of Bitcoin is $42,880, marking a 1% increase from last week. Ethereum, as the second-largest cryptocurrency, is currently priced at $2,300, representing a 1% decrease over the past seven days. Furthermore, the market capitalization of Bitcoin and Ethereum has remained relatively unchanged at $842 billion and $276 billion, respectively.

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

$FLR, $LINK, and $PENDLE emerged as Top 3 gainers, while $JUP, $MANTA, and $1000SATS were Top 3 losers. In the top 100 cryptocurrency projects by market capitalization, $FLR emerged as the biggest gainer with a weekly increase of over 37%. The Flare token ($FLR) is a versatile cryptocurrency on the Flare network with various uses, including the allocation of voting rights, collateral for staking, and wrapping other tokens. Flare Network is a blockchain project designed to introduce Ethereum-like functionality to various non-EVM compatible networks, such as XRP Ledger and Litecoin, through decentralized Oracle systems and smart contracts. The token has experienced significant growth in the past few months. The second position goes to the $LINK token, the native token of the Chainlink network. Chainlink is a cryptocurrency designed to incentivize global computer networks to provide reliable real-world data for smart contracts running on blockchain. Chainlink continues to expand its partnerships and ecosystem, providing services to more blockchain projects. This ecosystem expansion may increase Chainlink's usage and subsequently drive up token prices. The third position is occupied by $PENDLE, the native cryptocurrency of the Pendle ecosystem with multiple functions in the Pendle protocol. $PENDLE can be used for liquidity provision, governance voting, and protocol incentives. By staking $PENDLE tokens, users can shape the protocol's future direction and earn a portion of protocol revenue. The high returns offered by $PENDLE have become one of the driving factors behind its price increase.

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

Last week, the total supply of stablecoins remained relatively stable, currently standing at $129.5 billion. Over the past seven days, the net position change in stablecoin supply continues to remain positive, indicating an increasing demand from investors in the cryptocurrency market. Additionally, observing the net position data of stablecoins on exchanges over the past week, there has been a shift from net inflow to net outflow for the first time since January, suggesting a slowdown in the current market demand growth.

Stablecoins Market Cap (Data: Glassnode)

In the derivatives market, there was no significant change in the open interest of Bitcoin and Ethereum perpetual contracts. Over the past seven days, the total open interest in the futures market was influenced by the short-term retracement in the prices of Bitcoin and Ethereum, reaching a noticeable low on Tuesday. Liquidation data indicates that the initial retracement in the early part of last week led to a significant number of long positions being liquidated for both Bitcoin and Ethereum. Various data points suggest that the current market is in a retracement phase, characterized by ongoing volatility.

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

In the decentralized finance (DeFi) market, the total locked value (TVL) experienced a decline last week, currently standing at $576 billion. Over the past seven days, the trading volume on decentralized exchanges (DEX) decreased to $238 billion, remaining relatively stable compared to the previous week. The market share gap between decentralized exchanges (DEX) and centralized exchanges (CEX) continues to widen, with DEX now representing 10% of the total CEX trading volume. In the past week, due to the volatility in the cryptocurrency market, the TVL of most of the top ten major blockchains has seen a decline. Sui, on the other hand, continued its growth trend, with an increase of over 21% in the past seven days, while Avalanche performed poorly, dropping by over 8%.

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

Last week, the market capitalization of non-fungible tokens (NFTs) experienced a decline, currently standing at $8.3 billion. At the same time, the total trading volume also started to cool down, decreasing by 30% over the past seven days. Additionally, in the top NFT collections, both the floor price and average prices mostly showed a downward trend. The floor price of the Exhausted Ape Yacht Club (BAYC) dropped by 2%, and the average price decreased by 4%. On the other hand, the floor price of the Mutant Ape Yacht Club (MAYC) decreased by 4%, and the average price dropped by 5%. The blue-chip index, calculated using a weighted market value of a set of blue-chip stocks (ETH/USD), fell from 4895 to 4632.

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

3. Major Project News

[Ethereum] Testing ‘went very well’ — ETH devs to set Dencun hard fork date on Feb. 8. Ethereum developers plan to set a mainnet launch date for the Dencun upgrade on Thursday, Feb. 8, which will introduce several Ethereum Improvement Proposals (EIPs), including proto-danksharding, which is expected to drive down transaction costs on layer-2s. In a Feb. 1 post to Reddit, Ethereum core developer Tim Beiko said recent testing of the upgrade “went very well” and highlighted key details of the All Developer Execution Call (ACDE) 180 call, where Ethereum developers drew attention to the recent success of the Sepolia fork on Jan. 30, as well as the upcoming Holesky testnet upgrade on Feb. 7.

The upgrade will follow last year’s Shapella upgrade, executed on the Ethereum mainnet on April 12, 2023. The upgrade allowed the unstaking of Ether and was regarded as an important update to onboard more institutional investors to Ethereum. “Assuming everything looks good by then, we’ll pick a mainnet fork time on next week’s ACDC [All Core Developers Call],” said Beiko. The next ACDC call is scheduled for late next week. Galaxy Digital’s vice president of research, Christine Kim, pinned the chances of a Dencun mainnet activation by the end of March at 80%, adding that it was also possible that Dencun could go live by the end of February but said the odds of this were closer to 40%.

(Source: galaxy.com)

[Layer2] Starknet will collaborate with Celestia to jointly establish a high-throughput Layer 3 network.
Starknet announced on the X platform that it will collaborate with Celestia to achieve a high-throughput Layer 3 network. Starknet stated that establishing high-throughput application chains on Starknet using Celestia as a modular DA is a game-changing combination. This collaboration will involve porting Celestia Blobstream to Cairo for use on Starknet.
Starknet core developer and Ethereum core contributor abdel.stark.eth (Twitter@dimahledba) announced on X platform that within 36 hours of the relevant announcement, over 10 external contributors have been assigned tasks and have started building the Blobstream Starknet project.

(Source: Twitter@Starknet)

[Layer2] Polygon-powered Immutable zkEVM mainnet launches in early access mode. Web3 game development platform Immutable collaborates with Polygon to launch the Immutable zkEVM mainnet in early access mode for selected game studios and ecosystem partners. The network utilizes zkRollup technology to be compatible with Ethereum applications and operates separately from the project's existing StarkEx-based Layer 2 chain, with plans to open to the public in the coming weeks. Immutable states that games including Guild of Guardians, Metalcore, Sharbound, Treeverse, Cool Cats, BADMAD Robots, Space Nation, Eyeball Games, and Imaginary Ones will be among the first to launch on Immutable zkEVM.

A zkEVM, or zero-knowledge Ethereum Virtual Machine, is a Layer 2 scaling solution that uses zero-knowledge proofs for more efficient Ethereum transactions. Immutable X currently provides fast and cheap transactions for gaming apps but lacks native compatibility with the Ethereum blockchain.

(Source: Twitter@Immutable)

[BNB Chain] BNB Chain 2024 Outlook. BNB Chain has released its 2024 outlook, stating that the core focus for this year is to build the "One BNB" interconnection paradigm. This strategy will integrate BSC, opBNB, and Greenfield into a cohesive ecosystem, ensuring seamless interaction between decentralized computing and storage solutions. The One BNB solution is crucial for the scalability of large-scale DApps, meeting the computational and storage needs and making BNB Chain a competitive choice for Web3 developers.

Additionally, the BNB Beacon Chain will be gradually phased out, and new governance, staking, and MEV PBS features will be integrated into BSC. This strategic shift, known as "BNB Chain Fusion," aims to simplify the network, enhance efficiency, reduce security risks, and align the architecture of BNB Chain with current and future technological requirements.

(Source: bnbchain.org)

[Polygon] The next upgrade for Polygon zkEVM will make the network a Type 2 ZK-EVM. Polygon zkEVM announced on social media its plans for the Etrog upgrade. This upgrade will transform Polygon zkEVM into a Type 2 ZK-EVM, allowing developers to deploy their code on Polygon ZK-EVM just like on Ethereum. With this update, developers can copy and paste their code without additional modifications. According to the shared update, the 10-day timelock for the Etrog upgrade has been triggered, and Polygon developers can join the testing phase on Cardona (Polygon-zkEVM's new Sepolia anchored testnet).

(Source: Twitter@0xPolygon)

[Avalanche] Durango: Avalanche Warp Messaging Comes to the EVM. Avalanche on X announces that the pre-release code for Durango has been published. Durango is a proposed upgrade to the Avalanche network, set to activate on the Fuji Testnet on February 13, 2024, at 11 AM Eastern Time. Durango introduces Avalanche Warp Messaging (AWM) to the C-Chain, enabling native cross-chain communication for each EVM chain in the Avalanche ecosystem and establishing standards for future Virtual Machines (VMs) to use AWM.

(Source: Twitter@avax)

4. Key Fundraising Data

Last week witnessed a total of 31 financing events, raising a substantial amount of over $112.4 million*. Compared to last week, financing activities remain active in terms of both transaction volume and total funding. The DeFi sector leads with the highest number of 7 financing events. The DeFi industry also records the highest total funding amount, raising a total of $48.4 million, constituting 43% of the overall funding amount. The largest financing event was led by Portal, successfully securing $34 million in funding. Portal is a Bitcoin-based cross-chain atomic swaps protocol. More detailed information is provided below.

*12 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] Hybrid crypto exchange Cube reaches $100 million valuation in new funding round.

Cube.Exchange, a hybrid crypto trading platform yet to launch publicly, has raised $12 million in a Series A funding round. 6th Man Ventures led the round, with GSR Markets, Foundation Capital, ParaFi Digital, Susquehanna Private Equity Investments, Everstake Capital and others participating, Cube said last Thursday.

The new round comes just over three months after Cube raised $9 million in seed funding. Cube CEO Bartosz Lipinski, a former Solana engineer, said that the company wasn't actively seeking funding but responded to "considerable inbound interest" from investors. "We closed the entire round in under a month," The structure of the Series A round involved equity with token warrants. Lipinski confirmed that structure and said the seed round had the same structure. The Series A round has brought Cube's post-money equity valuation to $100 million, the source said. Lipinski declined to comment on the valuation.

- Official Link: https://www.cube.xyz/

2. [DeFi] Bitcoin-based DEX Portal raises $34 million in seed funding from Coinbase Ventures and others.

Portal, a startup building a Bitcoin-based cross-chain decentralized exchange and wallet, has raised $34 million in a seed funding round. Investors in the round included Coinbase Ventures, Arrington Capital, OKX Ventures, and Gate.io, Portal said last Tuesday. The seed round was structured as a combination of a simple agreement for future equity (SAFE) and convertible notes, all of which have been fully converted into equity. There is no debt component in the round, Duggirala noted, declining to comment on valuation. He also declined to comment on the specific timeline for when the funding round started and ended but said it "closed recently."

At $34 million, Portal's seed round surpasses the typical size for a seed round. Duggirala said it was oversubscribed by more than two times due to increased interest in the growth of the Bitcoin ecosystem. The seed round brings Portal's total funding to $42.5 million, adding to the $8.5 million raised in pre-seed funding in 2021.

- Official Link: https://portaldefi.com/

3. [GameFi] Widely mocked NFT project Pixelmon raises $8 million in seed round including.

Pixelmon is a decentralized gaming brand consisting of mythical creatures of the same name. It is owned by Pixelation Labs, a subsidiary under Singapore-based Web3 venture capital LiquidX Studios. By September 2022, the project had replaced the artwork, brought in a new leadership team and outlined a new roadmap. Then in October 2023, it launched a casual side-scroller game, Kevin the Adventurer, something that boosted the NFT project's floor price — the lowest price on offer — from 0.35 ETH ($800) to a peak of 1.85 ETH ($4,200).

Its latest move is an $8 million seed investment from prominent investors including Animoca Brands, Delphi Ventures and Foresight Ventures (the parent company of The Block). The funding round also attracted participation from investors including Amber Group, 9GAG Founder Ray Chan and Immutable Co-Founder Robbie Ferguson, according to a press release.

- Official Link: https://hub.pixelmon.ai/

4. [Service] Clusters Raises $9M Seed Round for Cross-Chain Name Service.

Web3 names service Clusters has announced a $9 million seed round backed by Variant, Collab+Currency, Arrington Capital, Mask Network, Electric Capital, PalmTree Crypto, Bloccelerate, and Arca. The fundraising also attracted participation from angel investors Coinabse, Polygon and MetaStreet.

Clusters is a product of Delegate Labs, the company behind web3 identity provider Delegate Protocol. The platform leverages LayerZero’s omnichain protocol for its cross-chain name service. The platform allows users to buy a domain from any chain and automatically make it appear on other chains. The Clusters name service has been developed to address the challenge of fragmentation in the blockchain industry.

• Official Link: https://clusters.xyz/

📢 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.