LBank Labs Weekly Digest (July 2–8) #2
*All on-chain data is dated as of 12:00 a.m. EST on Sunday, July 8th.
Welcome back to LBank Labs Weekly Digest! Here we list all you need to know about the crypto market in the past week(Jul.2–8).
Author: LBank Labs Research team — Claire, Johnny
Keywords: #Fed #ETFs #Layer2 #Security #MEME
1 Macro Market Overview
US Stocks & Bonds Suffer Weekly Losses as Investors Brace for Further Rate Increases. According to WSJ, a stretch of strong economic data released on July 6th hardened investors’ expectations of further Fed’s interest-rate increases, fueling a lockstep weekly decline for U.S. stocks and government bonds. The high-tech Nasdaq composite dropped 0.92% last week, while the Dow slipped 1.94% and the S&P 500 fell 1.15%.
Despite the adverse effects of possible interest rate increases, web3-related stocks demonstrated remarkable growth, primarily fueled by advancements in Bitcoin ETF applications. COIN, MARA, and MSTR all experienced a weekly increase exceeding 10%.
BlackRock Bitcoin ETF Application Refiled, Naming Coinbase as ‘Surveillance-Sharing’ Partner.
The Nasdaq exchange has refiled its application to list BlackRock’s proposed bitcoin exchange-traded fund, joining rivals in naming the U.S. exchange Coinbase as the market that will be monitored in a so-called surveillance-sharing agreement.
Several other pending applications, including one on behalf of BlackRock’s money-management rival, Fidelity, have since been updated to name Coinbase as the partner for the surveillance-sharing agreements. The sponsor of a bitcoin trust must enter a surveillance-sharing agreement with a regulated market of significant size to secure a go-ahead from regulators, based on a reading of according to the SEC’s previous rulings.
Likewise, Bitwise followed just one day after Blackrock, and Valkyrie also refiled for spot bitcoin ETF with Coinbase as a surveillance partner on July 5th. Until now, there have been 8 institutions waiting for their next decision from SEC.
2 Crypto Market Pulse
Market Data
Last week, the market witnessed an overall volatile decline, primarily driven by Bitcoin’s new high and concerns surrounding potential interest rate hikes. The market capitalization peaked at $1.225 trillion on the 3rd before experiencing a turbulent downturn. On the 6th, there was a brief attempt at recovery, but the market quickly dipped to a weekly low of $1.16 trillion. However, a slight rebound was observed, and the market closed at $1.18 trillion. BTC and ETH both experienced price fluctuations following a similar pattern, with BTC declining by $30,299 and ETH declining by $1,868. It is worth noting that Bitcoin achieved a remarkable milestone on the 3rd by reaching its highest level in nearly a year, with a price of $31,383.
During the first half of the week, the market was primarily influenced by the positive impact of Bitcoin’s surge. However, the second half of the week was dominated by macroeconomic factors, specifically the increasing expectations of a U.S. interest rate hike on the 6th. This development had a similar negative impact on both the U.S. stock market and the cryptocurrency market.
Last week, BONE, SOL, and MKR emerged as the Top 3 gainers, while BSV, ZEC, and WOO were the Top 3 losers. The weekly gainers were predominantly comprised of tokens associated with DeFi and infrastructure. BONE has attracted attention since Shiba Inu confirmed the launch of its new layer2 solution Shibarium — During a crab market, MEME can shine brightly as a unique spotlight amidst the downturn. SOL’s price rise may be partly attributed to its strong performance in terms of Total Value Locked (TVL) and its partnership with Coca-Cola recently, while MKR's price rise may be attributed to its multi-chain launching strategy for Spark Protocol incubated by MakerDAO. On the other hand, the weekly losers included tokens that were impacted by the Multichain security incident, such as Fantom and ApeCoin.
The market cap of stablecoins continued its decline, while the net position change on exchanges exhibited a net inflow on the 8th, marking the conclusion of consecutive 15-month net outflows. As selling pressure in the market gradually intensified, the exchange position data provided by Glassnode recorded the first net inflow in nearly 15 months on the 8th. However, the overall market cap continued to exhibit a downward trend.
The derivatives market observed peaks in trading activity on both the 3rd and 6th, aligning with the broader macro market trends. In line with the new high of Bitcoin on the 3rd and the macro interest rate increase on the 6th, both BTC and ETH reached their respective liquidation highs. Similarly, the open interest for BTC and ETH also reached its peak on the 3rd before undergoing a subsequent decline.
DeFi exhibited similar performance to the overall crypto market, ultimately declining to $44.31B. The daily volume aligned with the overall market, with the volatility on the 6th creating the highest trading peak for DeFi in July. This week, the best-performing chains were Pulse and Solana, which experienced gains of 8.63% and 7.85% respectively.
NFT experienced another week of decline, approaching its lowest point in a year. Last week, the NFT market witnessed a decline of 2.02%, reaching a total value of $5.99B. This decline brings the market closer to its yearly lowest point recorded in November($5.88B), indicating a cooling trend in the market once again.
LBK Labs’ Recap
Heading into the second week of the latter half of the year, there is a notable emphasis on the regulations surrounding the cryptocurrency market. This includes the application for a Bitcoin spot ETF by entities like Blackrock and other traditional financial institutions, and ongoing legal battles involving exchanges and law enforcement, among other factors. The absence of clear guidance in these areas is expected to further restrict the liquidity of trading activities. Despite an overall increase in the market’s capitalization, with the M2 money supply growing by $130.9 billion since April, the cryptocurrency space has yet to experience the full impact of this influx. Moreover, the Total Value Locked (TVL) in the decentralized finance (DeFi) sector continues to decline.
For the first half of this week, it is anticipated that the market will remain within its current price range until the release of the Consumer Price Index (CPI) data on Wednesday, according to US time. Volatility is expected to increase during the latter half of the week. Altcoins have shown weaker performance compared to Bitcoin recently. Consequently, any positive news may prompt increased trading activity in smaller-cap tokens. Conversely, negative developments could lead to a decline in these tokens due to a loss of confidence, potentially resulting in an outflow of stablecoins from exchanges. The options market indicates a prevailing expectation of further upward movement, as approximately 67% of positions are in favor of call options.
BTC Options Open Interest and 24h Volume(Data: Coinglass)
BTC price optimistic: $31500 — $34000
BTC price neutral: $29500 — $31500
BTC price pessimistic: $26500 — $29500
3 Major Project News
[Layer2] Layer-2 blockchain Public Goods Network launched a testnet on July 7, supported by Gitcoin
Layer-2 blockchain Public Goods Network launched a testnet on July 7, promising to spend “the vast majority of net sequencer fees” on public goods instead of paying them out to the development team or token holders, according to an announcement from the network’s developers. In economics, a “public good” is a good that cannot be produced for profit because it is difficult to exclude non-payers from its consumption.
The new network was developed by the same team that created Gitcoin, a project that seeks to raise funds for open-source projects. Public Goods Network is being built using the OP Stack, meaning that it can become part of the proposed “Superchain” that will include Optimism and Base networks.
[Layer2] Avail, Spun Out of Polygon, Launches Data Attestation Bridge to Ethereum
Avail, a project that was spun out of Polygon earlier this year to handle data storage and verification for blockchains, launched the “data attestation bridge” on its live testnet on Friday, a new offering designed to reduce costs for layer 2 and layer 3 chains in the Ethereum ecosystem.
The data attestation bridge, which is still in its testnet phase, helps secure data off-chain. It’s connected to Ethereum and can be used by both zero-knowledge and optimistic rollups that use Ethereum as a base layer.
The new version includes: 1)achieved a 10x increase in throughput by implementing the Sequencer in Rust, driven by a close collaboration between StarkWare and LambdaClass. 2) A smoother user experience will be provided as the ‘PENDING’ status for transactions has been removed. 3) A new syscall has been introduced, allowing easy retrieval of past block hashes. 4) supports a new Cairo syntax that focuses on safety.
[Bitcoin] Bitcoin Ordinals Launchpad Proposes BRC-69 Standard to Reduce Costs by 90%
Bitcoin Ordinals launchpad platform Luminex has proposed the BRC-69 standard, designed to simplify the creation of Recursive Ordinals collections, reducing inscription costs and streamlining the on-chain pre-reveal process.
Luminex claims BRC-69 can reduce the cost of inscriptions by over 90%, helping to optimize the Bitcoin block space as the number of inscriptions grows. The reduction is achieved through a 4-step process of inscribing traits, deploying a collection, compiling it, and minting the assets, Luminex said.
[Security] Attacker Pockets $10 Million from Poly Network Security Attack: Beosin
Poly Network suffered a security attack on July 2nd, allowing an attacker to pocket $10 million worth of ether. The attacker illicitly minted varying amounts of 57 tokens across 10 blockchains, including Ethereum, BNB Chain, and Metis.
Following the incident, Poly Network announced a suspension of its services and said it was actively working with centralized exchanges and law enforcement agencies to identify the perpetrator and recover the funds. The team recommended that the affected projects withdraw liquidity from decentralized exchanges and urged users holding the impacted assets to unlock them and claim back their LP tokens tied to those assets. The team also appealed to the attacker to return the user assets in order to “avoid any potential legal consequences.”
[Security] Multichain MPC Bridge Sees $130M Outflows, Due to the Exploit.
Cross-chain router Multichain developers have confirmed an exploit that impacted $130 million in user-supplied tokens and cautioned users against using its service, as per Friday tweets. Developers said Friday that the team “is currently investigating.” The impact has already extended to Fantom, Moonriver, Kava, Dogechain, Conflux, and ETHW ecosystems. Tether, USDC, and Binance have responded to the incident.
4 Key Fundraising Data
Last week witnessed a total of 9 financing events, raising a substantial amount of over $41.95 million*. The financing area experienced a significant downturn, with both the number and the total amount of the funding events reaching a new low for the year. However, Blockchain Infrastructure and Service sectors continued to draw the most attention, with a total of 7(77.8%) funding events amounting to $16.15 million(38.5%). The largest funding event of the week was contributed by a Thai centralized exchange called BitKub, which sold 9.92% of its shares to local game publisher Asphere Innovations for $17.8 million (please see more details below).
* 2 events of unknown amount are included, which have been excluded from the remaining data
Below, we listed the most noteworthy fundraising deals for you:
1. [CEX] Thai Crypto Exchange Bitkub Raises Fresh $17.8m
Bitkub, a Thailand-based crypto exchange founded in 2018, has agreed to sell a 9.22% stake in the company to local game publisher Asphere Innovations for US$17.8 million, according to regulatory filings.
The sale of shares to Asphere will provide Bitkub with additional capital, which will help the company expand its digital asset services in Thailand, a country where over 6.2 million people owned crypto as of last year.
- Official Link: https://www.bitkub.com/
2. [Social] Decentralized Social Network Bluesky Raised $8m, and Offered the First Paid Service
Decentralized social network Bluesky announced the completion of an $8 million funding round, with Neo leading the investment. Contributors include Joe Beda, the co-founder of Kubernetes, Bob Young from Red Hat, and Protocol Labs, etc.
Bluesky plans to utilize the new capital to expand its team and enhance activities such as supporting decentralized AT protocols built for Bluesky applications. Bluesky has also launched its first paid service, starting with a collaboration with domain registrar Namecheap to offer custom domain names.
- Official Link: https://blueskyweb.xyz/
3. [Infra] WazirX Founder’s Shardeum Completes $5.4 Million Strategic Funding Round
Shardeum, a Layer 1 blockchain deploying dynamic state sharding, completed a strategic funding round for $5.4 million. The firm intends to use the funds to bolster its ecosystem as it prepares to launch its mainnet by the end of 2023. Participants in the round include Amber Group, Galxe, J17 Capital, TRGC, Jsquare, Bware Labs, Tané Labs, Hyperithm Group and Luganodes. A Shardeum representative told The Block that the firm’s most up-to-date valuation is $248 million.
- Official Link: https://shardeum.org/
LBank Labs, the venture capital arm of the global exchange LBank, has announced the establishment of a $10 Million MEME Special Fund. The move is intended to encourage high-quality early-stage innovative MEME projects, foster industry growth, and give back to the wider community.
LBank Labs will seek innovative and quality-driven MEME projects globally, emphasizing LBank’s influence and commitment to the worldwide MEME project landscape. The creation of this fund is expected to further stimulate industry innovation and growth.
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.
