*All on-chain data is dated as of 12:00 a.m. EST on Sunday, September 3rd.
Welcome back to LBank Labs Weekly Digest! Here we list all you need to know about crypto market in the past week(Aug.27 — Sep.2).
Author: LBank Labs Research team — Hanze, Dannie
Keywords: #Grayscale #ETF #Ethereum #Layer2 #Non-EVM
1 Macro Market Overview
U.S. Stocks clinch weekly gain ahead of Labor Day. According to WSJ, August jobs report boosts investor hope of Fed rate pause. All three major indexes initially rose Friday after the report suggested the economy may be cooling enough for the Federal Reserve to hold off on further interest-rate increases. Earlier last week, positive economic data from the July reading of the personal-consumption expenditures price index, released on Thursday, led many investors to believe that the Federal Reserve would maintain high-interest rates for an extended period to curb inflation, boosting yields on long-term government bonds. However, data Tuesday added to signs of a cooling economy: Employers reported fewer open jobs last month, while a closely watched measure of consumer confidence tumbled in August. Stock gains accelerated after the releases.
For the week, the S&P 500 advanced 2.5%. The Dow and Nasdaq rallied 1.4% and 3.2%, respectively, each notching their best weeks since July.
Web3-related stocks experienced significant weekly gains, driven not only by macroeconomic factors but also by the positive impact of Grayscale’s victory in the Bitcoin spot ETF ruling. COIN and MSTR saw increases of 5.0% and 4.4%, respectively, while MARA recorded a substantial gain of 13.8%.
Grayscale wins their lawsuit against the SEC. Judge Neomi Rao of the United States Court of Appeals has overturned the SEC’s denial of Grayscale’s application to become a Bitcoin spot ETF, ruling that the SEC must reexamine the application. Grayscale’s legal victory represents a significant win in their legal battle against the SEC.
Furthermore, in the latest round of Bitcoin spot ETF applications, many applications including Blackrock’s have experienced delays, which was somewhat expected. Nevertheless, two analysts have stated that they are increasing the odds to 75% of spot Bitcoin ETFs launching this year (95% by the end of 2024). While they had factored in Grayscale’s win into their previous 65% odds, the unanimity and decisiveness of the ruling exceeded expectations and leaves the SEC with “very little wiggle room.” For more information, please refer to the image below.
2 Crypto Market Pulse
The cryptocurrency market faced a minor dip in the past week. The week began on a positive note for crypto investors, as a U.S. court ruled in favor of Grayscale on Tuesday. This decision overturned the SEC’s previous denial of Grayscale’s request to convert the Grayscale Bitcoin Trust (GBTC) into a spot Bitcoin ETF. Following this news, Bitcoin quickly surged to a two-week high of $27,322. However, it is important to note that Bitcoin still remained below the critical support level of $28,000.
By the end of the week, $BTC registered a 0.54% decrease, closing at $25,860 per unit as of 12:00 AM on September 3. $ETH is currently priced at $1,635 per unit, showing a 0.73% decline. The overall global cryptocurrency market cap also experienced a 0.67% decrease, reaching $1.042T last week. Bitcoin maintained its dominant position with a 48.37% market share, valued at $504B, while Ethereum accounted for 18.91% of the market, with a valuation of $197B.
$TON, $XDC, and $MIOTA emerged as Top 3 gainers, while $SUI, $HBAR, and $KCS were Top 3 losers. $TON, the native cryptocurrency of the Open Network, was this week’s biggest gainer in the top 100, rising 26.43% to $1.86. The coin began gaining momentum on Tuesday, following an announcement by the Ton Foundation last week. The foundation revealed its plan to distribute 1M $TON as rewards to users who had locked their coins in Believers.ton, a community-driven fund aimed at enhancing the decentralization of the coin’s tokenomics. The primary reason for the rise in $XDC price is the integration of tokenized U.S. government and private debt, along with real asset markets through Tradeteq onto the XDC network. The surge in $IOTA can be attributed to its innovative approach in the Internet of Things (IoT) sector, particularly in scalability and feeless transactions, which has garnered the attention of industry participants and investors. The primary reasons for price declines among the top losers last week, including $SUI, $HBAR, $KCS, can be attributed to the impact of a significant token unlock on price volatility and the pressure from selling after losing support levels.
The market cap of stablecoins experienced a slight increase last week with no major fluctuations. The overall exchange net position change started to show a net inflow from Tuesday, reversing the previous trend of long-term net outflows, indicating a positive impact on the market from Grayscale-related events.
In the derivatives market, trading activity peaked around the 29th last week. As the prices of $BTC and $ETH both saw significant rallies on the 29th, a large number of short positions were liquidated. However, there was subsequently a significant liquidation of long positions, indicating that positive catalysts in the crypto market are still lacking, dampening the ongoing bullish sentiment in the market.
In the DeFi market, the TVL remained relatively stable last week, reaching $37.67 billion. The seven-day trading volume on DEX stood at $12.00B, maintaining a similar level to the previous week. The DEX vs. CEX dominance increased to 10.51%, indicating a more significant decrease in trading volume for CEX in the past week’s trading activity. Among the top 10 blockchains by TVL, Base showcased remarkable performance with a 112% TVL growth in the last seven days, currently ranking eighth.
The NFT market experienced a slight 2.33% increase last week, reaching a total market capitalization of $4.97 billion. However, the trading volume continued its significant decline, dropping by 25.9% to $38.89M. Some top-tier blue-chip projects saw an increase in their floor prices last week, with BAYC rising by 14%, MAYC up 7.8%, and DeGod showing a 2% increase due to increased trading volume. Other NFTs mostly continued to decline in value. The overall market capitalization of the NFT market is currently on a steady decline.
LBank Labs’ Recap
The cryptocurrency market experienced an increase in prices earlier this week due to the news that Grayscale won its lawsuit against the SEC. This increased the probability of approval for a Bitcoin spot ETF. However, the market prices retraced after the SEC announced that it would postpone decisions on Bitcoin spot ETFs.
The current market expectation is that the Fed will not raise interest rates in September. The rate adjustment is more likely to happen in November, which is the last rate adjustment for the year.
Here are some notable events last week:
- CYBER Token: The price of CYBER has increased significantly due to positive news, including that DWF has acquired CYBER Tokens in the secondary market.
- SEC Bitcoin spot ETF delay: The SEC has announced that it will defer the approval timeline for Bitcoin spot ETFs. This affects at least three proposals submitted by well-known entities such as WisdomTree, Valkyrie, and Invesco. The SEC intends to extend the review process until at least mid-October.
- Decline in popularity of friend.tech: friend.tech has experienced a notable decrease in popularity.
From the perspective of on-chain data
- last week, BTC UTXO mainly flowed into the price ranges of 25,300 and 26,770. There was some selling pressure around prices of $28,000 and $30,000, but not much panic selling below $25,000. Funds above $28,000 appear to be more bearish.
- Miner wallets have shown a net outflow since August 29th, and this flow trend has continued after correction. Bitcoin exchange net position change has witnessed a decrease since August 31st.
- Stablecoins have seen an overall net outflow.
- The number of active BTC addresses has significantly decreased.
The overall market sentiment appears to be bearish, and based on historical data, there is a probability of more than 75% of a price decline in September.
- BTC price optimistic: $28000 — $31500
- BTC price neutral: $25000-$28000
- BTC price pessimistic: $24100 — $25000
3 Major Project News
[Ethereum] The Ethereum Foundation officially unveils the Ethereum Execution Layer Specification (EELS). The Ethereum Foundation has officially launched the Ethereum Execution Layer Specification (EELS) after over a year of development. EELS, which stands for Ethereum Execution Layer Specification, is a Python reference implementation of the core components of Ethereum’s execution clients. It places a strong emphasis on readability and clarity, making it more programmer-friendly while staying in sync with post-merge forks.
In addition, Ethereum core developer Tim Beiko has summarized the latest Ethereum All Core Developers’ Execution (ACDE) meeting. During the meeting, discussions revolved around the latest developments in the Dencun development network, as well as the roadmap for Verkle Trie and State Expiry. Tim Beiko also mentioned that the testing for the Cancun upgrade fork will be conducted in the order of Holesky, Goerli, and Sepolia testnets.
[Layer2] Circle is bringing native USDC to OP Mainnet. Circle has announced that it will launch native USDC on Optimism next week. In preparation for this, the Ethereum bridge for USDC will be renamed to USDC.e for better differentiation. Additionally, Circle has revealed plans to introduce native USDC on Base next week as well. Earlier reports from insiders have suggested that USDC will be launched on six new blockchains, including Polygon PoS, Base, Polkadot, NEAR, Optimism, and Cosmos, through the Noble network.
Furthermore, OP Labs has announced the release of their web3.js plugin designed to streamline gas fee calculations within the Optimism ecosystem. This plugin not only aids in bridging the gap for developers in the scaling space but also has the potential to incorporate additional rollup-specific features.
[Layer2] Offchain Labs recently announced Stylus testnet is live. Offchain Labs released the code and public testnet for Arbitrum Stylus, allowing developers to use both traditional EVM tools and WASM-compatible languages like Rust, C, and C++ to build applications on Arbitrum Nitro chains. In addition, by improving computational, storage, and memory efficiency, Stylus dramatically lowers gas costs and enables new resource-intensive blockchain use cases like alternative signature schemes, larger generative art libraries, C++ based gaming, and compute-heavy AI models that were previously impractical. The open source SDK is available now.
Additionally, the Arbitrum Sepolia testnet is now live.
[Layer2] The Endgame for zkSync: AMA with Alex, Co-founder and CEO of Matter Labs. In the latest community AMA, Alex, the co-founder and CEO of Matter Labs, stated that zkSync’s current focus is entirely on Era, with the goal of building a scalable Value Internet using the ZK Stack. The zkSync Era will transition to the STARK-based proof system called Boojum, which is currently in its final stages. This transition is expected to bring more efficient oracles and lower on-chain privacy costs once completed. Additionally, the total transaction volume on zkSync Era surpassed 100M transactions last week.
[Polygon] Polygon Releases ‘Chain Development Kit’ for ZK-Powered Networks on Ethereum. Polygon Labs has announced the launch of an open-source software development toolkit called the Chain Development Kit (CDK), aimed at assisting developers in building Ethereum Layer 2 networks supported by Zero-Knowledge (ZK) technology. CDK is a part of Polygon 2.0 and will enable developers to leverage Polygon’s ZK technology to create customized Layer 2 solutions. All chains built using CDK will be interconnected through a ZK-supported cross-chain bridge, facilitating interoperability.
Additionally, Polygon has announced the release of the Polygon zkEVM Dragon Fruit upgrade (also known as ForkID5) on the X platform, expected to go live on the mainnet in mid-September. The Dragon Fruit upgrade encompasses a series of improvements to the network, including support for the latest Ethereum opcode PUSH0.
[Sui] The Sui mainnet has been upgraded to version 1.8.1. This upgrade includes several fixes and optimizations. Key highlights of the upgrade include the addition of zkLogin protocol configuration feature flags for testing purposes and the use of updated proof verification logic for zkLogin signature verification. Additionally, when building Move code, the updated version will generate additional linter warnings related to collections in the Sui framework code (Bag, Table, and TableVec). There are several other upgrades as well, more details in the provided link.
Additionally, last week, Sui announced a new milestone by reaching 5,000,000 active accounts. Impressively, it only took 14 days for Sui to grow from 3M to 5M active accounts, adding 1M active accounts per week over the past couple of weeks.
[Avalanche] Avalanche has introduced a new cross-chain communication protocol, Teleporter, which is now available for testing. Teleporter is built on Avalanche’s native communication protocol called Avalanche Warp Messaging (AWM) and aims to provide smart contract developers with a simple, native way to invoke contracts on other EVM-based chains within the Avalanche ecosystem.
Additionally, last week, Avalanche Developers posted updates on Subnet-EVM version 0.5.4 an·d the release of Avalanche Rust (Avalanche-rs). Subnet-EVM version 0.5.4 introduces experimental support for Avalanche Warp Messaging via AWM precompiles for EVM, enhancing overall node performance and stability. This version also allows user nodes to stay synchronized with the latest AvalancheGo version. Avalanche-rs is an implementation of Snow Consensus, Avalanche P2P, and Avalanche Types in the Rust programming language.
[Cosmos] The Cosmos community is currently voting on the “v12 upgrade” proposal, which includes updates such as the introduction of a Liquid Staking Module. According to the official governance page, voting for the “v12 software upgrade” proposal is open until September 8th. The Gaia v12 upgrade is a major release that incorporates the Liquid Staking Module and updates to other core dependencies. This version has undergone extensive testing, and operators can join public testnets for testing before the upgrade. In case of issues, validator coordination can be used to create and execute emergency plans.
4 Key Fundraising Data
Last week witnessed a total of 12 financing events, raising a substantial amount of over $26.0 million*. There was a weekly slowdown in the activity of financing events, with a decrease in the total financing amount. The Social and GameFi sectors garnered widespread attention, accounting for 4 out of the total financing events, which is 33.33% of the overall number. The total financing amount reached $15.1M, constituting 58.08% of the total fundraising. This week’s largest financing project was led by Kinjo, securing $6.5M. Kinjo enables children to earn virtual currency called Robux through playing, learning, and gaming on the Roblox metaverse platform, with their performance evaluated based on their learning outcomes. Further details are provided below.
*3 events of unknown amount are included, which have been excluded from the remaining data
Below, we listed the most noteworthy fundraising deals for you:
Educational technology startup Kinjo, based on the metaverse platform Roblox, has successfully secured a $6.5M seed funding round. The round was led by LiveOak Venture Partners, with participation from Silverton Partners, Breyer Capital, and Roble Capital.
Kinjo allows children to earn virtual currency known as Robux by playing, learning, and gaming within the Roblox metaverse platform. Their performance is evaluated based on their learning outcomes. The company also has plans to expand its educational value scoring system to include “Fortnite” and “Minecraft” in the future.
- Official Link: https://kinjo.com/
The web3 marketing startup DeForm raised $4.6M in seed funding. Kindred Ventures led the round, which had additional participation from Elad Gil, Scalar Capital and others. DeForm aims to give marketers blockchain-based tools to tailor marketing initiatives for web3 users.
DeForm intends to use the funds to expand its team, as well as to continue tackling the hurdles for verifying consumer transaction history across different blockchains.
- Official Link: https://www.deform.cc/
FirstMate, a startup aiming to equip NFT creators with digital storefronts, raised $3.75M in a round led by Dragonfly Capital — the crypto VC that raised $650M for its third fund last year. Coinbase Ventures and NextView also participated in the round.
FirstMate concurrently unveiled the beta launch of its marketplace website builder, for which it has partnered with Manifold, another startup in the NFT space.
- Official Link: https://www.firstmate.xyz/
Stroom Network, a “liquid staking” protocol for Bitcoin’s Lightning Network, has raised $3.5M in an oversubscribed seed funding round. The round was led by Berlin-based crypto investment firm Greenfield, with participation from Lemniscap, No Limit Holdings, Cogitent Ventures and Mission Street, Ankr’s venture arm, according to a statement.
The funding will be used for team expansion and launching Bitcoin “liquid staking” on Lightning, including releasing a corresponding Ethereum-based wrapped token, lnBTC.
- Official Link: https://stroom.network/
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.