*All on-chain data is dated as of 12:00 a.m. EST on Sunday, February 18th.
Author: LBank Labs Research team - Hanze, Johnny
Keywords: #CPI #PPI

Quarterly profits from S&P 500 companies have been topping their year-earlier results. PHOTO: BRENDAN MCDERMID/REUTERS

1. Macro Market Overview

All three major U.S. indexes finished the week lower, after two hotter-than-expected inflation readings. According to WSJ, the stock-market rally hit speed bumps this week when government data showed that prices rose more than expected last month and suggested that the Federal Reserve’s fight against inflation may not end as easily as some investors expected. All three major U.S. stock indexes fell Friday after wholesale prices came in hotter than expected, confirming the signal sent Tuesday when consumer prices rose beyond economists’ expectations. This week’s two inflation readouts together tell economists and investors that the Federal Reserve’s preferred gauge is likely to show price pressures firmed in January, ending a streak of much better inflation readings. Core inflation as measured by the personal-consumption-expenditures price index, which will be released later this month by the Commerce Department, is likely to have increased by 0.4% in January, according to forecasts from a handful of Wall Street economists. Core inflation excludes volatile food and energy prices, and forecasters believe it better captures underlying price trends.

Last week, the three major U.S. stock indices experienced declines. The tech-centric Nasdaq Composite Index fell by 1.3%, while the S&P 500 and Dow Jones indices dropped by 0.4% and 0.1%, respectively. On the other hand, stocks related to web3 saw a wave of gains last week. Following Bitcoin's surge to the $50,000 level, COIN rose by over 26%, while MARA and MSRT saw increases of 13% and 8%, respectively.

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 January on a seasonally adjusted basis, after rising 0.2 percent in December, the U.S. Bureau of Labor Statistics reported last week. Over the last 12 months, the all items index increased 3.1 percent before seasonal adjustment.

Percent changes in CPI for All Urban Consumers (CPI-U): U.S. city average
(Source: Bureau of Labor Statistics)

The Producer Price Index for final demand increased 0.3 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported last week. Final demand prices declined 0.1 percent in December 2023 and advanced 0.1 percent in November. On an unadjusted basis, the index for final demand rose 0.9 percent for the 12 months ended January 2024.

Monthly and 12-month percent changes in selected final demand price indexes, seasonally adjusted
(Source: Bureau of Labor Statistics)

Last week, the U.S. Dollar Index (DXY) saw an increase after the release of inflation data on Tuesday. It rose from around 104.000 to 104.950 at one point and ultimately closed at 104.275 on Friday. This represents a 0.3% increase compared to the previous week.

DXY (Source: TradingView)

According to data from the Chicago Mercantile Exchange (CME) Group, interest rate futures indicate that only about 10% of investors currently believe that the Federal Reserve may cut interest rates at the March meeting. This figure has significantly decreased from 50% approximately two weeks 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, with the yield on the 10-year U.S. Treasury note (US10Y), a benchmark for borrowing costs from mortgages to corporate loans, rising to 4.283% on Friday. This increase came in response to the unexpectedly hot inflation data released on the previous Tuesday, indicating an upward trend in yields.

US10Y (Source: TradingView)

The cumulative net inflow of Bitcoin Spot ETF (Exchange-Traded Fund) assets has reached $5.04 billion. Last Friday, Grayscale's GBTC ETF experienced a daily net outflow of $150 million. The Bitcoin spot ETF with the highest daily net inflow was BlackRock's IBIT ETF, recording a daily net inflow of $191 million. Currently, IBIT has accumulated a total historical net inflow of $5.36 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 saw another increase, growing by over $100 billion in seven days and currently standing at $1.95 trillion. Both Bitcoin and Ethereum experienced upward trends starting from last Monday, with the spot price of Bitcoin reaching $51,790 as of the early morning of February 18, representing a growth of over 10% from the previous week. Ethereum, as the second-largest cryptocurrency, is currently priced at $2,800, showing an increase of over 8% over the past seven days. Furthermore, the market capitalizations of Bitcoin and Ethereum are approximately $1.02 trillion and $338 billion, respectively, maintaining their positions at around 51% and 17% of the total market capitalization.

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

$BGB, $SC, and $VET emerged as Top 3 gainers, while $ASTR, $PENDLE, and $BSV were Top 3 losers. In the top 100 cryptocurrency projects by market capitalization, $BGB emerged as the biggest winner with a weekly gain of over 54%. $BGB is the platform token for Bitget, dedicated to establishing a simple, secure, and convenient cryptocurrency ecosystem. It provides exclusive benefits for holders with the goal of profiting together from Bitget's growth. Last week, it successfully reached a new high by surpassing $1.1. The second position goes to $SC, the native token of Siacoin, a decentralized cloud storage blockchain. Compared to traditional cloud storage methods, Siacoin's decentralized system offers increased security, speed, and cost-effectiveness. The rise in the token's value indicates an increasing demand for this type of service. In the third position is VeChain, a blockchain compatible with smart contracts that enhances supply chain management. It is dedicated to the widespread adoption of blockchain on a global scale. Its native token, $VET, serves as an intermediary for exchanges and transactions on the VeChain blockchain. Over the past two months, VeChain has shared numerous upgrades related to its blockchain, many of which have piqued user interest. One recent upgrade is the account abstraction, a significant factor contributing to the sudden surge in $VET prices.

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

Last week, the total supply of stablecoins continued to grow, reaching a new high of $132.5 billion. In the past seven days, the net position change in stablecoin supply remained positive, with the net growth continuing to expand, indicating an increasing demand from investors in the cryptocurrency market. Additionally, observations of the net position data for stablecoins on exchanges over the past week show that the net outflow since February is still ongoing, suggesting a reduction in selling pressure on current crypto assets.

Stablecoins Market Cap (Data: Glassnode)

In the derivatives market, the open interest for Bitcoin and Ethereum perpetual contracts has experienced a slight increase. Over the past seven days, the total open interest in the futures market has been influenced by the renewed upward movement of Bitcoin and Ethereum prices. The activity in derivative trading reached its peak starting from last Monday, aligning overall with the price trends. Liquidation data indicates that the upward movement in Bitcoin and Ethereum prices at the beginning of last week resulted in the liquidation of a significant number of short positions. Various data sources suggest that the current cryptocurrency market is in an upward phase.

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 continuous increase last week, currently standing at $72.77 billion. Over the past seven days, the trading volume on decentralized exchanges (DEX) rose to $25.4 billion, marking a 21% increase compared to the previous week. The market share gap between decentralized exchanges (DEX) and centralized exchanges (CEX) has remained relatively stable, with DEX now accounting for 12% of the total CEX trading volume. In the past week, due to the recent enthusiasm in the cryptocurrency market, the TVL of the top ten ranked blockchains has all seen an increase. Bitcoin, with a 84% increase in the last seven days, has climbed to the sixth position among the top ten.

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

Last week, the market capitalization of Non-Fungible Tokens (NFTs) experienced a continuous increase, reaching $10 billion. Simultaneously, the total trading volume began to heat up, with a 19% increase over the past seven days. However, in the top NFT collections, both the floor prices and average prices mostly showed a downward trend. The floor price of CryptoPunks decreased by 3%, while the average price increased by 12%. The floor price and average price of Bored Ape Yacht Club (BAYC) both declined by 4%. On the other hand, Mutant Ape Yacht Club (MAYC) saw a 7% decrease in the floor price and a 5% decrease in the average price. The coin-denominated blue-chip index dropped from 5731 to 5635.

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

3. Major Project News

[Ethereum] Ethereum All Core Developers Execution Call #181. Galaxy Research Vice President Christine Kim summarized the 181st Ethereum All Core Developers' Execution (ACDE) meeting, where developers shared the latest preparations for the mainnet activation of the Dencun upgrade. The discussion covered various Ethereum Improvement Proposals (EIPs), with most proposed to be included in the Pectra upgrade, while others were suggested as "retroactive" EIPs, meaning protocol rule changes would retroactively apply to all Ethereum transactions since the genesis.

Developers also agreed to include EIP 2537 in Pectra, which involves adding the BLS12-381 curve precompile. Additionally, preparations for the shadow fork of the Dencun upgrade are underway, with the goal of completing the mainnet activation by March 13th.

(Source: galaxy.com)

[Layer2] Horizon Labs: Set to release the official ApeChain roadmap, APE will be implemented using the LayerZero OFT standard. According to official sources, Horizon Labs has announced its collaboration with Arbitrum and its development company OffChain Labs, intending to release the official ApeChain roadmap. This roadmap includes the implementation of APE as a fully chain-homogeneous token (OFT) standard supported by LayerZero Labs. In terms of business development, Horizon Labs stated that it would collaborate with Web3 gaming projects released on ApeChain in the future, while also establishing connections with Yuga Labs and other contributors to the Ape ecosystem. Regarding Ape community collaboration, ApeChain will provide support to the Ape community, seeking feedback and participation in the execution process from the Ape community.

Earlier reports indicated that ApeChain would be developed using Arbitrum technology and led by Horizen Labs in its growth.

(Source: Twitter@HorizenLabs)

[Solana] Filecoin has announced its integration with Solana. Solana will leverage Filecoin to make it easier for infrastructure providers, explorers, indexers, and any users requiring historical access to their block history. This integration aims to enhance data scalability and security by utilizing Filecoin's decentralized storage capabilities.

Filecoin is an open-source, publicly accessible cryptocurrency and digital payment system. The Filecoin system aims to create a data storage and retrieval method based on blockchain technology.

(Source: Twitter@Filecoin)

[Polygon] Polygon has announced that AggLayer v1 mainnet is about to go live. Polygon has officially announced that the mainnet of its aggregated layer solution, AggLayer v1, is set to launch soon, aiming to utilize zero-knowledge proofs to connect blockchains. AggLayer aims to enable developers to connect blockchains to support unified liquidity. AggLayer will ensure modular and holistic chain security, including chains within the Polygon ecosystem. AggLayer is set to be a crucial component of Polygon 2.0, representing the next generation iteration of the network. Unlike typical interoperability solutions, AggLayer will aggregate ZK proofs for all connected chains.

(Source: Twitter@0xPolygon)

[Tron] Tron Announces Its Bitcoin Layer 2 Solution and Road Map. Justin Sun, on the X platform, has announced that TRON is set to launch its Bitcoin Layer 2 solution and roadmap. This innovative approach aims to connect various tokens within the TRON network, including stablecoins, with the Bitcoin network and its Layer 2 constructions like Ordinals World in a decentralized manner through multiple combinations. The roadmap is divided into three phases. Phase α involves Bitcoin being integrated into the TRON network through cross-chain means, allowing for exchanges via cryptocurrency exchanges. Phase β includes TRON collaborating with multiple Bitcoin Layer 2 protocols and gradually announcing significant partnerships. Phase γ entails the announcement of an integrated Layer 2 solution for TRON, BTTC, and the Bitcoin network. This solution introduces a protocol highly synergized with Bitcoin, aiming to maintain the speed and low fees of the POS system while ensuring the security of POW and UTXO alongside BTC Layer 2.

(Source: Twitter@justinsuntron)

[Avalanche] Avalanche: Durango Successfully Activated on Fuji Testnet. Avalanche recently announced on the X platform that Durango was successfully activated on the Fuji testnet last week. Additionally, the first C-Chain <> Subnet Avalanche Warp Message (utilizing Teleporter) was sent alongside its activation.

Durango introduces Avalanche Warp Messaging to the C-Chain, enabling native cross-chain communication for every EVM chain within the Avalanche ecosystem. It also establishes standards for future virtual machine (VM) usage of AWM.

(Source: Twitter@avax)

4. Key Fundraising Data

Last week witnessed a total of 21 financing events, raising a substantial amount of over $133.7 million*. Compared to the previous week, financing activities remain active in terms of trading volume and total funding. The decentralized finance (DeFi) sector leads with the highest number of funding events, totaling five. The DeFi industry also recorded the highest total funding amount, raising a total of $56.3 million, constituting 42% of the overall funding amount. The largest funding event was led by MetaStreet, successfully securing $25 million. MetaStreet operates as a liquidity scaling protocol for NFT credit markets, offering a capital vault as its main product to facilitate secondary market liquidity for NFT-backed notes. Participants can deposit capital to earn yields from diversified portfolios of NFT-backed notes. 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. [Stablecoin] USDe developer Ethena raises new funding round at $300 million valuation.

On February 16th, according to The Block, stablecoin project Ethena Labs announced the completion of a $14 million strategic funding round, valuing the company at $300 million. The round was led by Dragonfly, Brevan Howard Digital, and the family office Maelstrom of Arthur Hayes, the founder of BitMEX. In July of the previous year, Ethena Labs had also secured $6.5 million in seed funding, with Dragonfly leading the round and participation from Deribit, Bybit, OKX, Gemini, Huobi, Arthur Hayes, and his family office.

USDe is an Ethereum-based stablecoin secured by derivatives. It achieves price stability through "delta-neutral" hedging across centralized and decentralized venues. Put simply, USDe is backed by a long staked ether position and a short ether position. The approach ensures that "losses or gains by either position are offset to provide a dollar-denominated return profile," Ethena said. "This is conceptually identical to typical cash and carry strategies performed with treasuries and futures." To create USDe, Ethena allows users to deposit U.S. dollars, ETH or liquid staking tokens as collateral.

• Official Link: https://www.ethena.fi/

2. [Infra] Modular blockchain developer Lava raises $15 million, offering reward points called Magma.

On February 15th, according to The Block, modular blockchain infrastructure developer Lava Network completed a $15 million seed funding round. The funding was led by Jump Capital, Hashkey Capital, and Tribe Capital, with participation from North Island Ventures, Dispersion Capital, Alliance DAO, Finality Capital Partners, and others. Executives from various blockchain projects such as Celestia, Cosmos, StarkWare, and Filecoin also participated in this funding round.

Lava Network is currently in the testnet phase and plans to launch its mainnet in the first half of this year. Before the mainnet launch, Lava introduced the Magma rewards program, allowing users to earn Magma points by switching their RPC connections to Lava.

• Official Link: https://www.lavanet.xyz/

3. [DeFi] NFT collateralized lending platform MetaStreet announced the completion of a $25 million financing round.

On February 15th, NFT collateralized lending platform MetaStreet announced the completion of a $25 million financing round. Investors in this round include Andrew Kang, GMoney, MrBlock, DCF God, Dingaling, Sisyphus, Spencer, FreeLunchCapital, Jae Chung, GoodAlexander, and others. This financing round follows the earlier seed and venture financing rounds in 2022, bringing MetaStreet's total funding to $49 million. MetaStreet is in the process of establishing a decentralized interest-bearing token platform with the aim of unlocking $3.5 billion in revenue opportunities in the NFT market. Specifically, MetaStreet is introducing Liquid Credit Tokens, which can provide a scalable capital market for on-chain illiquid assets.

In addition, MetaStreet has also announced the launch of Ascend, a platform designed to facilitate entry into the illiquid credit market. Ascend focuses on expanding on-chain debt capacity, aiming to unlock untapped opportunities for NFTs and other illiquid assets.

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

4. [Infra] Cross-chain protocol Analog has secured $16 million in seed funding and strategic financing.

Cross-chain protocol Analog has secured $16 million in seed funding and strategic financing, bringing the company's valuation to $120 million. Tribe Capital led this funding round, with participation from NGC Ventures, Wintermute, GSR, NEAR, Orange DAO, Mike Novogratz's Samara Asset Group, and Balaji Srinivasan. Analog's co-founder, Victor Young, mentioned that the funding round began in October of the previous year and concluded in December, with funds raised through Simple Agreement for Future Tokens (SAFT).

Analog's core team is based in Bangkok and Zurich. Built on Substrate, Analog is developing cross-chain communication tools. Its key products include the Rust-based blockchain network Timechain, a universal messaging protocol, the developer-centric product Analog Watch, and the Timegraph SDK and API suite, enabling application builders to create applications across multiple chains. Analog plans to launch a public "incentive" testnet in the first or second quarter of 2024 and roll out the mainnet by the end of the second quarter.

• Official Link: https://www.analog.one/

See you next week! 🙌

📢 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.