Author: LBank Labs Research team - Hanze, Johnny

*All on-chain data is dated as of 12:00 a.m. EST on Sunday, March 3rd.

Keywords: #PCE #GDP

Welcome back to LBank Labs Weekly Digest! Here we list all you need to know about crypto market in the past week(Feb.25-Mar.2).

Author: LBank Labs Research team - Hanze, Johnny

Keywords: #PCE #GDP

All three major indexes traded in the green, opening March on a high note. PHOTO: BRENDAN MCDERMID/REUTERS

1. Macro Market Overview

All three major indexes traded in the green, opening March on a high note. According to WSJ, all three major indexes traded in the green Friday, opening March on a high note after four consecutive monthly gains. The Dow Jones Industrial Average rose 0.2%, or 91 points, while the S&P 500 glided 0.8% higher. Thanks largely to semiconductor firms, the tech-heavy Nasdaq Composite led the pack with a 1.1% climb, also setting a new record. Fresh economic data Thursday did little to change the widespread belief that policymakers can cool inflation without provoking an economic slowdown. The personal-consumption expenditures price index rose 0.3% last month from December, in line with economists’ expectations. Fresh data released last Wednesday showed that the growth rate of the U.S. economy in the fourth quarter was downgraded slightly to a 3.2% annual pace, but the economy is still expanding at a rapid clip and showing few signs of slowing down.

Last week, all three major U.S. stock indices experienced gains, with the technology-focused Nasdaq Composite Index rising by 1.8%, the Dow Jones Industrial Average increasing by 0.1%, and the S&P 500 climbing by 0.9%. Meanwhile, bitcoin continued to stage a sharp comeback last week. The cryptocurrency briefly topped $64,000, close to its record high, reaching its highest level since Nov. 17, 2021. A new crop of bitcoin exchange-traded funds are adding to the rally. Web3-related stocks performed strongly last week, with COIN increasing by 24%, MARA climbing by 12%, and MSTR climbing by 57%. Additionally, Michael Saylor, the founder of MicroStrategy, stated that MicroStrategy purchased 3,000 bitcoins from February 15th to 25th, with an average purchase price of $51,813. As of February 25, 2024, MicroStrategy holds a total of 193,000 bitcoins, acquired at an approximate cost of $6.09 billion, with an average acquisition price of $31,544 per bitcoin.

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

Macro indexes

Real gross domestic product (GDP) increased at an annual rate of 3.2 percent in the fourth quarter of 2023, according to the "second" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 4.9 percent.

(Source: Bureau of Economic Analysis)

Personal income increased $233.7 billion (1.0 percent at a monthly rate) in January, according to estimates released today by the Bureau of Economic Analysis. Disposable personal income (DPI), personal income less personal current taxes, increased $67.6 billion (0.3 percent) and personal consumption expenditures (PCE) increased $43.9 billion (0.2 percent).

The PCE price index increased 0.3 percent. Excluding food and energy, the PCE price index increased 0.4 percent. Real DPI decreased less than 0.1 percent in January and real PCE decreased 0.1 percent; goods decreased 1.1 percent and services increased 0.4 percent.

(Source: Bureau of Economic Analysis)

Last week, the U.S. Dollar Index (DXY) displayed a contrary trend after witnessing gains in the U.S. stock market last Thursday. It briefly fell from around 104.200 to near 103.700 and ultimately closed at 103.885 on Friday. This represented basically the same as the previous week.

DXY (Source: TradingView)

According to data from the Chicago Mercantile Exchange (CME) Group, interest rate futures indicate that currently only about 4% of investors believe that the Federal Reserve may cut interest rates at its March meeting. This figure has remained stably low compared to last week.

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

Benchmark 10-year Treasury yields slipped Friday after weaker-than-expected reports on U.S. manufacturing activity, consumer sentiment and construction spending. The benchmark settled at 4.184%.

US10Y (Source: TradingView)

As of last week, the cumulative net inflows into Bitcoin spot ETFs reached a total of $7.35 billion. In the past seven days alone, net inflows into Bitcoin spot ETFs exceeded $1.7 billion. Currently, BlackRock's IBIT ETF has a total historical net inflow of $8 billion, closely followed by Fidelity's FBTC ETF, with a total historical net inflow of $4.8 billion. Grayscale's GBTC ETF has a total historical net outflow of $8.9 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 once again saw sustained growth, increasing by nearly $400 billion within seven days, reaching a current total of $2.35 trillion. Bitcoin and Ethereum experienced another surge on the 28th, with Bitcoin breaking $60,000 and Ethereum surpassing $3,500. As of the early morning of March 3rd, the spot price of Bitcoin reached $62,260, marking a 20% increase over the past seven days. Ethereum, as the second-largest cryptocurrency, is currently priced at $3,426, representing a growth of over 13% in the past seven days. Additionally, the market capitalization of Bitcoin and Ethereum stands at approximately $1.2 trillion and $413 billion, respectively, accounting for approximately 51% and 18% of the total market capitalization.

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

$WIF, $PEPE, and $FLOKI emerged as Top 3 gainers, while $WLD, $BLUR, and $BGB were Top 3 losers. Among the top 100 cryptocurrencies ranked by market capitalization last week, the top three gainers were all MEME Coins, reflecting the bullish sentiment prevailing in the crypto market recently. $WIF emerged as the biggest winner with a gain of over 400% within a week. Dogwifhat ($WIF) is a meme cryptocurrency running on the Solana blockchain, inspired by the Dogwifhat meme. The second-ranked $PEPE is a deflationary meme coin launched on Ethereum, inspired by the iconic frog Pepe internet meme. The third-ranked Floki token ($FLOKI) is a cryptocurrency based on the BNB Chain with a maximum supply of 1 billion tokens. $FLOKI is a decentralized currency. Unlike other meme coins, $FLOKI has developed a unique marketing approach by partnering with animal welfare organizations and donating a portion of its transaction fees to animal shelters. According to CoinDesk, the primary reason for the recent surge in the $FLOKI, themed around dogs, was the community's approval of a proposal to burn 2% of the token supply.

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

Last week, the total supply of stablecoins continued to rise, reaching a new high of $135 billion. Over the past seven days, the net position changes in stablecoin supply remained positive, with the net growth rate steadily increasing. This indicates a significant increase in demand for stablecoins in the cryptocurrency market over the past week. Furthermore, observing the net position data of stablecoins on exchanges over the past week still shows a continued trend of net outflows. This suggests increased purchasing power for crypto assets, which are increasingly favored by investors, indicating a positive outlook for the market in the future.

Stablecoins Market Cap (Data: Glassnode)

In the derivatives market, the open interest of perpetual contracts for Bitcoin and Ethereum has significantly decreased. Over the past seven days, the open interest in the futures market has been impacted by the rapid short-term price increases of Bitcoin and Ethereum, notably decreasing after the 28th. This indicates that a significant amount of positions were liquidated due to the volatile upswing. Liquidation data further indicates that the rapid price increases of Bitcoin and Ethereum last week led to a significant number of short positions being liquidated. The amount of short positions liquidated for Bitcoin and Ethereum approached approximately 150 million and 80 million, respectively. Various data sources indicate that the current cryptocurrency market is in a phase of volatile upswing.

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

In the decentralized finance (DeFi) market, the total value locked (TVL) continued to increase last week, reaching a current total of $92.4 billion. Over the past seven days, decentralized exchanges (DEX) saw trading volumes rise to $46.5 billion, an increase of 68% compared to the previous week. The market share gap between decentralized exchanges (DEX) and centralized exchanges (CEX) has relatively narrowed, with DEX now accounting for 23% of the total CEX trading volume. In the past week, due to the recent enthusiasm in the cryptocurrency market, the TVL of most top-ten blockchains has increased. Bitcoin saw a 46% increase over the past seven days, while Solana increased by 25%.

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

Last week, the market capitalization of Non-Fungible Tokens (NFTs) continued to grow, reaching $11.7 billion. Simultaneously, the total trading volume continued to heat up, reaching $211 million. However, among the top-ranked NFT collections, most experienced downward fluctuations in both floor prices and average prices. The floor price and average price of CryptoPunks remained relatively stable, increasing by 7% and 1% respectively. The floor price of Bored Ape Yacht Club (BAYC) decreased by 6%, while the average price remained unchanged. On the other hand, the floor price of Mutant Ape Yacht Club (MAYC) dropped by 10%, with the average price declining by 2%. The coin-denominated blue-chip index decreased from 5512 to 5455.

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

LBank Labs Recap

The bulls have firmly seized control of the market this week, propelling prices towards nearly reaching an ATH. Several factors have converged to fuel this impressive bull run:

1.              Institutional Interest Surge: Notably, there has been a surge in interest from major institutions, extending beyond traditional banks and asset managers. Even figures like Warren Buffet, who previously dismissed Bitcoin as a fraudulent asset, are now showing interest.

2.              GBTC Selling Pressure Mitigated: Earlier this week, the selling pressure from Grayscale Bitcoin Trust (GBTC) remained subdued, hovering in the low $50 million range. Conversely, buying volume has surged, exceeding $800 million per day. Monitoring platforms like Farside.co.uk offer valuable insights into the day-to-day Bitcoin ETF flow, aiding investors in tracking market dynamics.

3.              QE in China: While unofficial, multiple data sources indicate that China might be engaging in QE, injecting liquidity into the market.

In the short term, our outlook for Bitcoin remains optimistic. However, prudent investors are advised to gradually accumulate positions, as sharp downturns are not uncommon, especially surrounding events like halving.

Moving on to the burgeoning meme token sector, it's become the second most buoyant sector after AI. Tokens like $BONK, $FLOKI, and $PEPE have seen substantial gains and most of them doubled the price in a week, underlining the fervor in this domain. Of particular interest is $WIF, the "dog with hat" project within the Solana ecosystem, which has garnered attention even from traditional banking circles, with tweets featuring a dog donning a pink beanie.

Meanwhile, in the realm of ERC404 projects, there's significant potential. Leading tokens like $PANDORA and $DEFROGS attract both NFT enthusiasts and meme token traders alike. All eyes are now on the upcoming milestone, v2 of the protocol, with expectations high for $PANDORA to reach new highs in the ensuing weeks.

Looking ahead, our focus will be heavily skewed towards Ethereum projects in the coming month. Specifically, we'll be monitoring developments in restaking, DeFi, and infrastructure-related tokens such as $ENS, $RDNT, and $GMX, anticipating notable movements and opportunities within these sectors.

•               BTC price optimistic: $63000 - $66000

•               BTC price neutral: $60000-$63000

•               BTC price pessimistic: $57000 - $60000

3. Major Project News

[Ethereum] Ethereum Dencun upgrade is expected to be activated on the mainnet on March 13, 2024 at 13:55 UTC. On February 27th, Ethereum Foundation released an announcement regarding the upgrade of the Dencun mainnet. The upgrade has been successfully activated on all testnets. Dencun is expected to be activated on the Ethereum mainnet on March 13, 2024 at 13:55 UTC, at block height 269568. Node operators and stakers must upgrade their software to the versions listed in the announcement. The upgrade introduces a temporary data blob with EIP-4844, also known as "protodanksharding", which will help reduce L2 transaction fees.

Jordi Baylina, co-founder and technical lead of Polygon zkEVM, stated that the main challenge facing ZK rollups is the cost of data availability, and EIP-4844 could play an important role in reshaping the capacity and gas fees of Polygon zkEVM. After the implementation of EIP-4844 in the Dencun upgrade, the total data availability capacity of Ethereum will increase by three times. When combined with data compression, the potential cost reduction ranges from 10 to 50 times, but the actual cost savings will depend on various factors.

(Source: blog.ethereum.org)

[Layer2] StarkWare Unveils New 'Stwo' Cryptographic Prover That's 'Blazingly Fast'. StarkWare, the developer firm behind layer-2 network Starknet, announced on Thursday at ETHDenver that it is building a new cryptographic prover, called Stwo. A prover is a key component for layer-2s, since they generate proofs that are then posted to the base layer blockchain – a crucial process in linking the networks and sharing the security. With a faster prover, processing transactions costs should be lower, which in effect then will also lower fees for users and speed up transactions, according to the StarkWare team.

In August, StarkWare open-sourced its existing prover, known as Stone. The new prover, "Stwo," gets its name from a portmanteau of Stone and Two, and anyone will be able to run it as well as examine its codebase, according to a press release seen by CoinDesk.

(Source: Twitter@StarkWareLtd)

[Layer2] Blast mainnet has gone live, and 50% of the airdrop will be distributed to token holders. Blast mainnet officially launched at 5:00 am on March 1st. Early access users can bridge to the mainnet and use Dapps on Blast. 50% of the Blast airdrop is allocated to Blast point users, and the other 50% is allocated to Blast Dapps. The "GOLD" airdrop will be distributed to Dapps every two weeks, and Dapps can choose to retain the airdrop, but many excellent Dapps have promised to distribute all airdrops to users.

Currently, $2.3 billion and 181,888 community members will be released to the Blast mainnet. Mainnet users will continue to receive Blast points.

(Source: Twitter@Blast_L2)

[Layer2] Shiba Inu Adopts Tech to Bring More Privacy to SHIB Token Holders. Shiba Inu plans to introduce a new privacy-focused network on top of the Shibarium blockchain in a move that boosts the value proposition of SHIB tokens, a representative shared with CoinDesk in a release on Wednesday. Shiba Inu is working with open-source cryptography company Zama on the as-yet-unnamed network. The network will use Fully Homomorphic Encryption (FHE) – a privacy tool that lets developers use data on untrusted domains without needing to decrypt it.

The Shiba Inu ecosystem token treat (TREAT) will power the "new privacy layer," which lets developers add a focused network on top of Shibarium, a layer-2 network that settles transactions on the Ethereum blockchain. The move will improve on-chain privacy for SHIB token holders, Shiba Inu developers said, and help safeguard their personal and transactional data.

(Source: Twitter@ShibariumNet)

[Polygon] Polygon zkEVM: Elderberry Upgrade Coming to Mainnet Beta. According to official sources on February 26, the 10-day time lock for the Polygon zkEVM mainnet beta upgrade has been activated, and transaction information for the Elderberry proposal and upgrade contracts has been published on GitHub and Etherscan. Polygon has announced that the Elderberry upgrade has been released on the testnet, and assuming network stability, it may go live on the mainnet around March 7.

The new upgrade has made important optimizations to ROM, reducing certain counter errors on the network, and making some additional fixes to last month's Etrog upgrade.

(Source: polygon.technology)

[Tron] The TRON community is expected to release the GreatVoyage-v4.7.4 (Bias) version in Q1, 2024. The TRON community expects to release version GreatVoyage-v4.7.4 (Bias) in the first quarter of 2024, introducing several significant updates. It is anticipated that this version will reduce the complexity of TRON's core protocol development, further enhance the stability of network consensus, increase the speed of voting reward extraction, and substantially optimize the performance of network infrastructure.

According to reports, the updates in the Bias version mainly include support for gRPCurl tool invocation, clearer module dependencies, faster voting reward extraction, and higher network throughput performance. TRON states that the GreatVoyage-v4.7.4 (Bias) version is expected to significantly optimize the performance of the TRON network and further enhance user experience.

(Source: medium.com)

4. Key Fundraising Data

Last week witnessed a total of 37 financing events, raising a substantial amount of over $142.9 million*. Compared to last week, financing activities continue to remain active in terms of both trading volume and total funding. The blockchain service sector leads with the highest number of funding events, totaling up to ten. The chain sector recorded the highest total funding amount, raising a total of 47.5 million dollars, representing 33% of the overall funding. The largest funding event was led by Ether.Fi, successfully raising 27 million dollars. Ether.Fi is a decentralized and non-custodial liquid staking platform, which aims to build a decentralized non-custodial staking solution. The protocol allows stakers to retain control of their keys while delegating validator operation to a node operator. More detailed information is provided below.

* 15 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. [DeFi] Ether.fi has completed a $27 million financing round, led by Bullish and CoinFund.

According to official sources, on February 28th, the liquidity re-staking protocol, ether.fi, announced the completion of a $27 million financing round, led by Bullish and CoinFund.

Ether.fi stated that it has received support from over 95 investment institutions and individual investors, including Amber Group, BanklessVC, OKX Ventures, Consensys, Selini Capital, Foresight Ventures, Fourth Revolution Capital, and others.

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

2. [Chain] Polygon's modular blockchain project Avail has completed a $27 million seed round of financing, led by Founders Fund and Dragonfly.

Avail, a modular blockchain project on Polygon, announced the completion of a $27 million seed round of financing. The round was led by venture capital firms Founders Fund and Dragonfly, founded by Peter Thiel, with participation from SevenX Ventures, Figment, Nomad Capital and several angel investors.

It is reported that Avail was spun out of Polygon in March 2023, led by Anurag Arjun, co-founder of Polygon. The proceeds from this round of financing will be used to develop three core products: its data availability solution (DA), Nexus, and Fusion. The first iteration of Nexus is expected to launch in 2024, while Fusion Security will be ready in 2025.

• Official Link: https://www.availproject.org/

3. [Service] Solana Veterans Raise $17M for 'Backpack' Crypto Wallet, Exchange.

According to official sources on February 28th, Backpack has completed a strategic Series A funding round with a valuation of $120 million and raised $17 million. Placeholder led the funding round with participation from Hashed, Robot Ventures, Amber Group, Wintermute, Jump Crypto, Selini Capital, and Delphi Digital, as well as individual investors including the founder of Solana and other Solana ecosystem project founders such as Jito, Zeta Market, Drift, Monad, and Galxe.

The Backpack ecosystem consists of various products and services, including the popular Backpack non-custodial wallet, the regulated global crypto exchange Backpack Exchange, and the Solana ecosystem blue chip NFT Mad Lads. Backpack is also the creator and developer of Anchor, the Solana smart contract framework, and the executable NFT (xNFT) token standard.

• Official Link: https://backpack.exchange/

4. [Chain] LBank Labs Invests in QED: Unleashing Bitcoin’s Full Potential with Zero-Knowledge Proofs.

LBank Labs has marked a new milestone by participating in the $3 million funding round for QED. This innovative venture is set to revolutionize the Bitcoin ecosystem with its groundbreaking zk-Native blockchain protocol. The funding round, led by Arrington Capital, witnessed contributions from renowned venture capital firms including Starkware, Draper Dragon, Blockchain Builders Fund, Edessa Capital, and others.

QED’s pioneering technology integrates the scalability of Zero-Knowledge (ZK) Proofs with the liquidity and security of Bitcoin (BTC), aiming to position Bitcoin as a cornerstone of the decentralized economy. This innovative approach, developed by the team renowned for implementing modular arithmetic in TapScript, is not just another blockchain solution. It’s a game-changer in decentralized applications (DApps), offering unlimited computation for a fixed gas fee and introducing ‘smart signatures’, akin to smart contracts.

• Official Link: https://qedprotocol.com/

📢 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.