LBank Labs Weekly Digest (July 30-August 5) #6
*All on-chain data is dated as of 12:00 a.m. EST on Sunday, August 6th.
Welcome back to LBank Labs Weekly Digest! Here we list all you need to know about crypto market in the past week(Jul.30 — Aug.5).
Author: LBank Labs Research team — Hanze, Johnny
Keywords: #ETF #Layer2 #DeFi #CURVE
1 Macro Market Overview
U.S. Stocks’ weekly loss serves as a warning shot to investors. According to WSJ, America’s credit downgrade earlier sparked a selloff in bonds and stocks, arresting markets’ summer climb and growing confidence that the country can get inflation under control while escaping a recession. The drop in bond prices after Fitch’s downgrade of the U.S. credit rating left yields on longer-term government debt hovering near their highest levels since last November. Moreover, the Treasury’s plan to issue more debt than expected, along with strong economic data, has led to surging Treasury yields, causing market players to reassess their growth projections.
In the past week, the stock market faced headwinds with the S&P 500 declining by 2.3%, the Dow Jones falling 1.1%, and the tech-heavy Nasdaq Composite dipping 2.8%. Notably, tech giants that have been market drivers were significantly impacted last week, as these stocks are particularly sensitive to rising Treasury yields.
Web3-focused stocks declined sharply last week, impacted by negative sentiment, SEC lawsuits, recent security vulnerabilities, and Coinbase’s Q2 earnings falling short of expectations undermining investor trust. Specifically, COIN, MARA, and MSTR plummeted by 7.9%, 5.1%, and 13.2%, respectively.
14 Ethereum futures ETFs Applications have been submitted by multiple issuers. According to Bloomberg ETF analyst, James Seyffart, following Volatility Shares’ submission of an Ethereum futures ETF application on July 28th, multiple issuers including Bitwise and Roundhill have quickly followed suit. This includes applications for Ethereum ETFs and Bitcoin & Ether ETFs.
James Seyffart and a colleague recently stated in a new announcement that they estimate a 75% probability for the approval of the Ethereum futures ETF, mirroring their odds for the Bitcoin futures ETF back in early September 2021.
Hong Kong regulator granted retail cryptocurrency trading licenses. Last week, HashKey and OSL secured licenses in Hong Kong for crypto retail trading. This move follows just two months after Hong Kong introduced its Virtual Asset Service Provider licensing regime on June 1, aiming to establish itself as a global crypto industry hub.
The digital-asset industry is increasingly turning to Asia for growth opportunities as the region clarifies regulations. Hong Kong, Japan, Singapore, and South Korea are among the jurisdictions seeking to woo crypto businesses.
2 Crypto Market Pulse
Market Data
Crypto Market Faces Resistance After Volatile Week Influenced by Hacker Attacks and SEC Lawsuit. Last week, BTC dipped 0.98%, ending at $29,030 at 12:00am on August 6th, while ETH fell 2.50% to end the week at $1,832. Earlier, influenced by various negative factors, Bitcoin momentarily dropped below $28,800. Although buoyed by a Fitch downgrade, it faced resistance at the $30,000 level and largely held steady within the resilient $29,000 range amid reduced volatility. ETH followed a similar trajectory.
The global cryptocurrency market cap was at $1.163T last week, a 1.94% decrease from the previous week’s $1.186T. Bitcoin commanded 48.5% of the market at a valuation of $564.6B, while Ethereum held 18.9% with a market cap of $220.2B.
$XDC, $SHIB, and $BONE emerged as Top 3 gainers, while $COMP, $CRV, and $AAVE were Top 3 losers. Open-source blockchain protocol XDC Network’s $XDC token was the week’s biggest gainer in the top 10, rising 13.40%. The token started picking up momentum on Tuesday, a day after XDC Foundation announced the integration of the network with Infocomm Media Development Authority Singapore, to digitalize cross-border trading. Moreover, over the last seven days, $SHIB has seen an impressive 12.91% growth, while $BONE closely followed with an 12.84% price surge. The coins started picking up pace last Friday, in anticipation of the launch of Ethereum layer-2 blockchain Shibarium, set to debut at the ETH Toronto conference scheduled for August 15 and 16. Meanwhile, DeFi tokens such as $COMP, $CRV, and $AAVE experienced significant declines, evidently impacted by last week’s Curve security incident.
Last week, the stablecoin market cap slightly decreased to $120.8B. Impacted by the Curve incident, the DeFi market faced challenges as liquidity providers shifted funds towards the stablecoin market. This shift was evident as the Exchange Net Position Change for stablecoins showed a significant net outflow after the 30th.
The derivatives market saw a trading activity spike around the 1st, aligning with broader macro market trends. BTC experienced intraday fluctuations over $1,000, peaking and then retracting, leading to liquidation highs for both BTC and ETH. Following this, BTC’s open contract volume trended upward relative to ETH.
The DeFi market’s TVL stood at $40.72B, reflecting a weekly decline of over 6.7% due to the Curve incident. Transaction volumes surged by 47.58% from the previous week, reaching $14.81B. Notably, all chains in the top ten TVL rankings saw a downward trend, with Polygon registering the most significant drop of 13.55%.
The NFT market declined last week, with a market cap drop to $5.74B and an 8.59% decrease in transaction volume. In Q2 2023, NFT transaction volumes saw a significant decline, with the number of new entrants to the market diminishing over time.
LBK Labs’ Recap
The trading range for BTC has significantly narrowed, with price fluctuations now occurring within a few hundred-dollar range. Recently, there was a brief drop to approximately $28,600, triggered by a substantial $4 billion liquidation zone at that level. However, the price quickly recovered above $29,000, indicating resilience within the current range. As we move into the coming week, several focal points are worth considering:
- Declining Stablecoin Supply: The supply of USDC is experiencing a decrease, attributed to redemption fees and reduced trading activity in the US, where market makers’ participation has been lacking. On the other hand, the total supply of USDT is steadily rising, but certain exchanges have witnessed selling pressure on Tether’s stablecoin. Given the highly positive correlation between stablecoin amounts and trading activity, it is unlikely that the BTC price will break out of the current range.
2. SEC’s Response to BTC Spot ETF: The market’s attention is closely focused on the Securities and Exchange Commission’s (SEC) response to the BTC Spot ETF. According to Bloomberg, the probability of approval has increased to 65%, compared to 50% just a week ago. As August 9th marks the date of the potential results, this event will be closely monitored by investors and analysts alike.
3. GameFi Tokens and Blockchain Games: GameFi tokens are gaining significant attention, particularly with Bandai Namco announcing their involvement in blockchain games. Moreover, certain highly anticipated blockchain games are reaching the beta stage of development. These developments are likely to drive an increase in trading activity for GameFi tokens in the coming weeks.
Here is the forecast for the BTC price next week
BTC price optimistic: $29800 — $31500
BTC price neutral: $28800 — $29800
BTC price pessimistic: $26800 — $28800
3 Major Project News
[Layer2] Base Mainnet Set to Launch on August 9th, Bridge Functionality Now Live. Coinbase is building the bridge to the on-chain economy and making it easy, fast, and useful for anyone, anywhere, to come on-chain with Coinbase Wallet and the Coinbase app.
To celebrate the launch of Base mainnet, Onchain Summer is kicking off on August 9 with over 50 leading brands, platforms, marketplaces, artists, and creators.
[Layer2] AIP-2: Activate support for account abstraction endpoint on Arbitrum One and Nova. Offchain Labs has officially activated support for account abstraction endpoints on Arbitrum One and Arbitrum Nova.
As part of the broader development of account abstraction standards and tooling, Ethereum researchers have proposed a new RPC endpoint that adapts L2 sequencers to the specific needs of ERC-4337 bundlers. Offchain Labs has contributed to this new method by developing, testing, and incorporating adjustments necessary to support the endpoint for Arbitrum’s sequencer into Nitro with v.2.0.14, which is now live on the Arbitrum testnet.
[Layer2] opBNB: From Testnet to Mainnet. opBNB leverages the Optimism OP Stack Bedrock, an open-source modular optimistic rollup framework that can be modified to meet BSC ecosystem requirements. Whether it’s for gaming, decentralized exchanges, everyday transactions, or digital collectibles, opBNB addresses a wide range of requirements while delivering exceptional performance.
[Layer1] Sei: The mainnet is now ready for launch. Sei stated that for genuine resilience and robustness, a blockchain must be decentralized. Atlantic-2 testnet achieved the fastest time to the finality of any blockchain, with validator nodes located in 12 countries, across 3 continents. Its mainnet is now ready for launch.
[DeFi] GMX V2 Beta is now live. GMX V2 beta has been launched on the Arbitrum and Avalanche mainnets. The updated version introduces new tradable assets including $SOL, $XRP, $LTC, $DOGE, and $ARB, and offers multi-collateral trading. Additionally, the revamped Oracle system signs prices for every block, ensuring trades are executed close to intended prices, even in high-volume scenarios.
For liquidity providers, V2 offers segregated GM (GMX Market) pools, allowing them to tailor their risk exposure to specific tokens. The new version also incentivizes both long and short positions, aiding in auto-hedging risks between liquidity providers and traders. Other enhancements in GMX V2 include lower transaction fees and increased trading incentives.
[DeFi] Trader Joe is now live on Ethereum. Decentralized exchange Trader Joe has been deployed on Ethereum, introducing its centralized AMM Liquidity Book to the Ethereum ecosystem. Trader Joe will initially open $USDC/$USDT and $DAI/$USDC markets and plans to launch on-chain limit order functionality on Ethereum in the coming days.
The JOE token adopts LayerZero’s Omnichain Fungible Token (OFT) standard, allowing for seamless bridging across Avalanche, Arbitrum, and BNB. An extension to Ethereum is imminent, with a subsequent launch of sJOE staking anticipated.
4 Key Fundraising Data
Last week witnessed a total of 12 financing events, raising a substantial amount of over $21.1 million*. Fundraising in the financial sector witnessed a significant downturn, hitting a new low for the year in total amounts raised. Nonetheless, the blockchain service sector remained a magnet for attention, accounting for 6 financing deals or 50.00% of the total, with an aggregate amount of $14.1 million, making up 66.82% of the overall funds. The week’s largest funding event was clinched by Orbital, a platform that offers both traditional and crypto payment solutions for global enterprises, securing over $6.4 million in funding. Further details are below.
* 7 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. [Service] Orbital Raises £5M to Help Enterprises Realise the Potential of Blockchain Payments.
Orbital, the London, Tallinn, and Gibraltar-based traditional finance and crypto payments platform for global enterprises, has raised £5M ($6.4M) in an oversubscribed growth round led by Golden Record Ventures, at an attractive valuation in which the founders are maintaining a large majority. Participants in the round include New Form Capital, GSRV, Psalion and Luminous Futures. The funding marks Orbital’s first institutional capital raise, having been bootstrapped and profitable since being founded in London in 2017.
The funding round will enable Orbital to continue its rapid growth, secure additional licenses in new jurisdictions, and further develop its product.
- Official Link: https://www.getorbital.com/
2. [Service] Hushmesh Raises $5.2M to Fix the Web’s Foundational Security Flaws.
Hushmesh, a cybersecurity startup focused on safeguarding global digital infrastructures, has announced the completion of a $5.2 million early-stage funding round led by cyber and advanced tech investors, Paladin Capital Group, with participation from Akamai Technologies.
Hushmesh intends to use the funds to develop Mesh, an automated security-integrated global information space, allowing individuals and organizations to operate online without concerns of malicious attacks or data breaches.
- Official Link: https://www.hushmesh.com/
3. [DeFi] Nomura Backs $6M Round for On-Chain Fund Platform Solv Protocol.
Solv, an on-chain fund platform that enables users to earn smart yields on diverse assets, within a security-first framework, has secured $6 million in new funding from visionary partners including Laser Digital, UOB Venture Management, Mirana Ventures, Emirates Consortium, Matrix Partners, Bing Ventures, Apollo Capital, HashCIB, Geek Cartel, and Bytetrade Labs.
The capital will help the startup expand its team and continue working on the technological development of its platform.
- Official Link: https://solv.finance/
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.
