LBank Labs Weekly Digest (August 13–19) #8

LBank Labs
12 min readAug 21, 2023

*All on-chain data is dated as of 12:00 a.m. EST on Sunday, August 20th.

Welcome back to LBank Labs Weekly Digest! Here we list all you need to know about crypto market in the past week(Aug.13–19).

Author: LBank Labs Research team — Hanze, Dannie

Keywords: #ETF #ETHU #BTC #Stablecoin #Layer2

Erhan Coral, Turkey, Winner, National Awards, Sony World Photography Awards 2023

1 Macro Market Overview

U.S. Stock major indexes shed more than 2% last week, deepening their August slump. According to WSJ, U.S. government bond yields on Friday fell back from Thursday’s multiyear highs, but remained lofty enough to make investors think twice about betting on stocks to maintain this year’s surprising rally. Federal Reserve officials still see inflation risks and the potential need for higher interest rates, according to meeting minutes released on August 16th. This concern has prompted investors to reconsider their confidence in the stock market’s unexpected rally this year. Money-market funds continued to balloon this week as investors parked cash in sure bets on government bonds, attracting an influx of nearly $36 billion, the largest since May.

The S&P 500 recorded a decrease of 2.1%, while the Dow Jones fell by 2.2% in the same period. The Nasdaq Composite, primarily composed of interest-sensitive technology stocks, faced a 2.6% drop, marking its first consecutive three-week decline of the year.

Under the pressure of risk aversion, Web3-related stocks continued their significant decline from the previous week. Stocks like COIN, MARA, and MSTR experienced declines of 9.6%, 24.2%, and 14.6% respectively.

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

SEC Could Greenlight Ether Futures ETFs at Same Time. The Securities and Exchange Commission is likely to allow multiple exchange-traded funds tracking ether futures to launch at roughly the same time, according to people familiar with the matter.

Asset manager Volatility Shares said this week that it intends to launch its ETF tracking futures linked to the second-largest cryptocurrency on Oct. 12. That would make it the first ether futures fund to launch in the U.S. under the standard process.

(Source: Twitter@EricBalchunas, Twitter@JSeyff, Bloomberg, SEC.gov)

Jacobi Asset Management Launch Europe’s First Bitcoin ETF. Europe has beaten the U.S. with the roll-out of the first Bitcoin exchange-traded fund (ETF) as London-based Jacobi Asset Management last week announced the product’s listing on Euronext Amsterdam, trading under the ticker BCOIN. It charges investors a 1.5% annual management fee. Fidelity Digital Assets handles custodial services for the fund, while Flow Traders takes on the role of market maker. Authorized participants include Jane Street and DRW.

“This fund has been designed to give institutional investors a simple, secure, and transparent access to Bitcoin whilst addressing their sustainability requirements,” Jacobi CEO Martin Bednall said. “We believe this ETF launch will be the catalyst for institutional adoption of digital assets.”

(Source: Twitter@BitcoinNewsCom)

2 Crypto Market Pulse

Market Data

The Cryptocurrency market experienced a significant downturn last week, with BTC prices plummeting by over 10%. On Thursday, BTC suffered a sudden drop, breaching the $26,000 mark and hitting a two-month low. This decline was driven by several negative factors, including the bankruptcy filing of Evergrande, elevated U.S. treasury yields, and substantial write-offs of BTC by SpaceX. BTC concluded the week with an 11.22% decrease, closing at $26,100 per unit as of 12:00 AM on August 20. ETH, influenced by BTC’s performance, dipped to as low as $1,538 and is currently priced at $1,669 per unit, marking a decline of 9.73%.

The global cryptocurrency market cap diminished by 10.05%, reaching $1.056T last week. Bitcoin maintained a dominant 48.30% market share, valued at $510B, while Ethereum constituted 19.13% of the market, with a valuation of $202B.

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

$RUNE, $AKT, and $HBAR emerged as Top 3 gainers, while $CFX, $COMP, and $LTC were Top 3 losers. Last week, in the midst of the general downturn in the cryptocurrency market, most altcoins experienced a decline. However, certain altcoins managed to maintain substantial growth momentum. $RUNE, the native token of the ThorChain network, led the gains, surging by 30.85% to $1.75. This price surge was fueled by the increasing adoption and utilization of the THORChain decentralized exchange platform. The platform achieved a record daily volume of $100 million, attributed to its rapid settlement speeds and cost-effectiveness compared to centralized exchanges. The rise of $AKT seems linked to fundamental factors, including the public release of its complete Cloudmos code base. Investors are intrigued by Akash Network’s potential to establish itself as a major player in the decentralized cloud computing realm. The uptick in $HBAR can be attributed to mounting institutional adoption and positive sentiment surrounding the Hedera network. Notably, major corporations like Hyundai, Kia, and FedNow have recently embraced Hedera for various use cases, such as supply chain tracking and payments.

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

Last week, the market cap of stablecoins dropped to around $120.2B. In response to the sharp decline in BTC price, the stablecoin market cap decreased by over $1B within a span of seven days. The net outflow of positions from exchange balances began to gradually diminish around midweek, indicating the market’s entry into a cooling phase.

Stablecoins Market Cap & Exchange Net Flow Volume (Data: Glassnode)

In the derivatives market, trading activity peaked around the 16th last week, aligning with the overall trend in the cryptocurrency market. BTC and ETH both initiated significant downward trends on Wednesday, followed by reaching their respective liquidation peaks. Both BTC and ETH experienced substantial liquidations within a short period, with liquidation amounts exceeding $200M. Subsequently, the market entered a subdued phase.

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

The DeFi market’s TVL dropped by 8.39% over the past week, reaching $38.44B. Reflecting the overall downward trend in the cryptocurrency market, the DeFi sector displayed a declining trajectory. The total trading volume on DEX surged to $15.75B, marking a significant 44.9% weekly increase. Additionally, the DEX vs CEX dominance ratio rose to 10.58%. Among the top ten blockchain projects by TVL, all experienced varying degrees of decline last week. Notably, Optimism and Tron were the hardest hit, each experiencing drops exceeding 10%.

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

Last week, the NFT Market Cap experienced a 6.18% decline, dropping to $5.34B in total value. Simultaneously, the trading volume saw a minor increase of 0.41% over the seven-day period, reaching a cumulative $69.33M. The overall NFT market is currently undergoing a cooling phase, with relatively low user activity.

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

LBK Labs’ Recap

The recent market movement has exhibited a notable surge in volatility, albeit in a direction that has posed challenges for long-position holders. The underlying catalyst for the substantial 10% decline remains elusive at this juncture. While a confluence of news on August 18th presents itself as potential triggers for this widespread selloff, our analysis suggests a more nuanced interpretation that attributes this phenomenon to algorithmic behaviors. It is noteworthy that the majority of the sell order happens in an hour and it happens at a time at the end of day in North America, dawn in Asia, and midnight in Europe when the trading volume is low. Worth mentioning is the extent of liquidation on this day, which surpasses the volume when FTX collapses.

In parallel, the bankruptcy filing by Evergrande has materialized as an anticipated development, given the company’s financial situation following the aftermath of the Covid-induced lockdowns last year. It is noteworthy that this bankruptcy news only resulted a moderate degree of selling pressure in the Hang Seng stock market.

Another pertinent development involves SpaceX’s complete divestiture of their $373 million Bitcoin holdings. It is reasonable to posit that this disposition was executed gradually over the course of the previous year, as opposed to being executed in a singular transaction last week.

On a regulatory front, the imminent approval of ETH futures exchange-traded funds (ETFs) by the Securities and Exchange Commission (SEC) stands out as a favorable development. This positive regulatory stance lends credence to the growing optimism surrounding the potential approval of BTC spot trading before the advent of the forthcoming year.

As we turn our attention to the impending week, our analysis anticipates further downward pressure on market valuations. A salient observation from the 3-month BTC liquidation chart reveals a conspicuous accumulation of trading volume just above the $24,000 threshold. Worth monitoring is the relatively subdued influx of stablecoins onto exchanges, indicating that sidelined capital has not yet surged back into the market.

Price Range

  • BTC price optimistic: $29000 — $31500
  • BTC price neutral: $26000 — $29000
  • BTC price pessimistic: $24100 — $26000

3 Major Project News

[Layer2] Announcing the Scroll Beta Testnet on Sepolia. Scroll has announced the open Beta testing of Scroll Sepolia testnet, featuring upgrades in three main aspects: zkEVM enhancement, bridge upgrade, and infrastructure improvement. The zkEVM upgrade improves EVM compatibility through pre-compiled upgrades, supporting all EVM opcodes. In terms of the bridge upgrade, gas costs can be reduced by up to 50%, introducing trustless message relaying between L1 and L2 to eliminate reliance on trusted relayers. The infrastructure upgrade focuses on data integrity, introducing underflow proofs and enhancing coordinator functionality.

In the future, Scroll will run the Sepolia testnet alongside the mainnet, serving as the primary testing platform for users and developers. Scroll Goerli, on the other hand, will cease operation after the mainnet launch.

(Source: scroll.io)

[Layer2] Starknet 0.12.1 version is coming. Next week the 2nd stage of the Starknet Quantum Leap gets pushed to Mainnet, improving transaction efficiency for liftoff. The Starknet 0.12.1 upgrade aims to improve transaction efficiency as part of the Starknet Quantum Leap. Currently, invalid transactions waste valuable sequencer resources without paying fees. The upgrade adds a validation stage before sequencing to filter out invalid transactions earlier. Failed transactions will have a REVERTED status & be included in the block, paying fees.

(Source: Twitter@Starknet)

[Layer2] Immutable zkEVM begins testnet phase with 12 Web3 games in development. Web3 gaming platform Immutable has commenced public testing of its Immutable zkEVM in collaboration with Polygon Labs. Work on the zero-knowledge Ethereum Virtual Machine (zkEVM) network began in March after Immutable announced a partnership with Polygon Labs. Polygon’s own “holy grail” Ethereum-scaling zkEVM hit mainnet on March 27.

In Aug. 14 announcement, Immutable said its zkEVM will give game developers access to lower development costs and the security and network effects that come with the Ethereum ecosystem. In March, Immutable’s co-founder and president, Robbie Ferguson, said the zkEVM is aimed at increasing ownership rights for Web3 gamers.

(Source: immutable.com)

[Layer2] Shiba Inu’s Ethereum Layer-2 Blockchain Shibarium Goes Live Amid Push for DeFi Growth. Shiba Inu developers on Wednesday were set to push live the much-awaited Shibarium blockchain, an Ethereum layer-2 network that uses SHIB tokens as fees.

However, Shibarium has issued a progress update, currently focusing on reinforcing security measures and conducting thorough testing. In its current phase of internal testing, Shibarium is successfully generating blocks. The team will continue expansion and testing efforts, with plans to reopen the Shibarium network to the public next Monday.

(Source: shibariumtech.com)

[Layer1] Sei mainnet officially launched. The long-awaited moment for the Sei Community has arrived: The public beta launch of Pacific-1. After months of eager anticipation, meticulous preparation, and careful planning, the Sei Foundation is excited to invite all those seeking thrills and adventure to step into the world of the Sei blockchain.

(Source: Twitter@Sei_FND)

[DeFi] The dYdX Chain public Testnet 2 is live. dYdX Chain’s Public Testnet 2 will incorporate over 30 new markets, trading rewards and fees, spam prevention, liquidity tiers, order book optimizations, and oracle enhancements, among other aspects.

(Source: Twitter@dYdX)

[DeFi] EigenLayer Announces New Cap Increase for Liquid Staking Tokens (LSTs). On August 22 at 7am Pacific Time, EigenLayer will take another step forward in its evolution. Restaking opportunities will be expanded by raising the caps on Liquid Staking Tokens (LSTs), including stETH, rETH, and cbETH. After the caps are lifted, users will be able to deposit any one of these tokens into EigenLayer. At the point any LST reaches a milestone of 100k tokens restaked, a global pause will be implemented.

(Source: blog.eigenlayer.xyz)

4 Key Fundraising Data

Last week witnessed a total of 16 financing events, raising a substantial amount of over $194.4 million*. Financing activities remained active with a significant increase in cumulative funds raised. The Service and Infrastructure sectors received attention, totaling 8 funding rounds, constituting 50.00% of the total. The overall funding amounted to $163.6 million, accounting for 84.16% of the total funds raised. The largest funding project of the week was led by BitGo, securing $100 million. BitGo offers regulated custody, financial services, and essential infrastructure for both investors and developers. Further details are outlined below.

*3 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: Cryptobank, Foresights, LBank Labs)

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

1.[Service] BitGo Bucks Crypto Downturn to Raise Funding at $1.75 Billion Valuation.

Digital asset custodian BitGo offers regulated custody, financial services, and essential infrastructure for both investors and developers. On Wednesday, BitGo announced that it had raised $100 million in Series C funding at a valuation of $1.75 billion. The company issued a statement saying the interest came from “new, outside strategic investors” in the U.S. BitGo CEO Mike Belshe played coy regarding the identities of the funding round’s participants, telling only that they include investors from ‘outside the crypto industry.’and Asia.

The funds will be utilized to “make strategic acquisitions and expand its secure and regulated custody, wallet, and infrastructure solutions globally.”

2.[Service] Blockchain-Harnessing AI Project Jada Receives $25M in Capital.

Jada AI, an artificial intelligence project that harnesses blockchain technology, has raised $25 million from alternative investment group LDA Capital. The project aims to offer AI services that aid decision-making for organizations and scale up their operations, according to an emailed announcement.

The capital will be used to grow the project’s team of developers and add new organizations.

3.[Infra] ZetaChain raises $27M in equity round to enable chain-agnostic interoperability.

Layer 1 blockchain operator ZetaChain raised $27 million in a round featuring several crypto and trading heavyweights. Investors in the round include Blockchain.com, Human Capital, VY Capital, Sky9 Capital, Jane Street Capital, VistaLabs, CMT Digital, Foundation Capital, Lingfeng Capital, GSR, Kudasai and Krust, according to an announcement today. This is the first raise for the business. No valuation was disclosed.

In the announcement, the company said it aims to establish “a new standard for blockchain interoperability,” giving users the means to manage all their assets and data more easily.

4.[Social] Zepeto, Jump Crypto Joint Venture ZTX Raises $13M for Metaverse Platform on Arbitrum.

Prominent South Korean metaverse platform Zepeto is expanding into blockchain space with its ZTX (ZepetoX) initiative, created in partnership with Jump Crypto — and ZTX announced a $13 million seed round led by its venture capital partner. The Jump Crypto-led round includes other investors such as Collab+Currency, Parataxis, MZ Web3 Fund, Everest Ventures Group.

With ZTX, Zepeto aims to help boost crypto adoption by introducing ownership to its 3D environments, with ZTX set to launch its inaugural Genesis Home Mint this month. The collection of 4,000 bespoke 3D houses — sold as NFTs on Ethereum scaling network Arbitrum — affords membership to one of its four districts, alongside access to future drops, events, and in-game enhancements.

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.

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