LBank Labs Weekly Digest (November 12–18) #21
*All on-chain data is dated as of 12:00 a.m. EST on Sunday, November 19th.
Welcome back to LBank Labs Weekly Digest! Here we list all you need to know about crypto market in the past week(Nov.12–18).
Author: LBank Labs Research team — Hanze, Johnny
Keywords: #CPI #PPI #ETF #Layer2 #ZK
1 Macro Market Overview
U.S.stocks advance for a third straight week According to WSJ, U.S. investors’ appetite for risk has returned. The S&P 500 rose 0.1% Friday, capping off a 2.2% gain for the week. The broad-based index, which booked a third straight weekly advance, has closed higher in 13 of the last 15 sessions. The Dow Jones Industrial Average was little changed Friday, while the Nasdaq Composite was up 0.1%. Tuesday’s cooler-than-expected inflation report was the latest reason for investors to cheer, helping extend a furious November rally in which the S&P 500 has jumped 7.6%. Consumer prices were unchanged in October from the previous month and up 3.2% from a year ago, less than what economists surveyed by The Wall Street Journal had forecast. The figures helped reassure investors that the Federal Reserve is likely done raising rates and put a soft landing for the U.S. economy in view.
Furthermore, the new data released Wednesday also bolstered that view. Producer prices fell 0.5% in October from the previous month, the Labor Department said, marking the largest single-month decline since April 2020. Retail sales fell 0.1% over the same period, the first decline since March. Traders are betting the Federal Reserve’s rate-hike campaign is done for now and that inflation will head toward target levels without a steep recession — the elusive “soft landing.” Interest-rate derivatives now indicate that traders see a greater-than-50% chance of an interest-rate cut by the Fed’s May meeting. Last week, the three major indices continued their upward trend at the close. The technology-focused Nasdaq Composite Index rose by 2.4%, the Dow Jones Industrial Average increased by 1.9%, and the S&P 500 saw a gain of 2.2%. Stocks related to Web3 generally maintained an upward trajectory, with MSTR experiencing a 4.4% pullback last week, while MARA and COIN saw increases of 3.9% and 6.6%, respectively.
Macro indexes
In October, the U.S. Consumer Price Index (CPI) without seasonal adjustment showed a year-on-year rate of 3.2%, slightly below the expected 3.3%, and lower than the previous value of 3.7%. The U.S. core CPI without seasonal adjustment for October had a year-on-year rate of 4%, in line with the expected 4.1%, and consistent with the previous value of 4.1%. This CPI report significantly diminishes the possibility of a rate hike in December, suggesting that the rate hike in July of this year was likely the last one in this current cycle.
The U.S. released the Producer Price Index (PPI) for October, indicating a year-on-year rate of 1.3%, below the expected 1.90%, and a previous value of 2.20%. The month-on-month PPI for October was -0.5%, lower than the expected 0.10%, and a previous value of 0.50%. The core PPI for October showed a year-on-year rate of 2.4%, below the expected 2.70%, and unchanged from the previous value of 2.70%. The month-on-month core PPI was 0%, below the expected 0.30%, and consistent with the previous value of 0.30%.
The October PPI index in the United States recorded its largest decline since April 2020, further indicating a weakening of inflationary pressures in the overall economy.
On last Friday, the U.S. Dollar Index (DXY) fell by 0.49%, closing at 103.815. DXY experienced a nearly 1.8% decline for the week, marking the largest weekly drop since mid-July and the second-largest decline this year. This significant decrease is attributed to easing inflationary concerns in the United States, which has intensified speculation among investors regarding a potential interest rate cut by the Federal Reserve (Fed).
CME indicates that the probability of the Federal Reserve maintaining interest rates in the current range of 5.25% to 5.5% in December has risen to 100%, surpassing the 86% probability observed on Friday.
The yield on the 10-year U.S. Treasury bond (US10Y) remained relatively unchanged last Friday, closing at 4.439%. Over the course of the week, it experienced a decline of 4.6%. This decrease coincided with the release of the latest inflation data on Tuesday, contributing to its lowest level in two months.
Fidelity has submitted an application for an Ethereum spot ETF to the SEC. Bloomberg analyst James Seyffart stated on social media that Fidelity has submitted an application for an Ethereum spot ETF to the U.S. SEC, becoming the seventh applicant for an Ethereum spot ETF, which is planned to be listed on Cboe.
Additionally, official documents indicate that BlackRock submitted its S-1 application for a spot Ethereum ETF to the U.S. Securities and Exchange Commission (SEC) on November 15th. Earlier on November 10th, Nasdaq had submitted a 19b-4 form (rule change filing) to the SEC for BlackRock’s Ethereum spot ETF, “iShares Ethereum Trust.” The ETF is planned to be listed on Nasdaq, with Coinbase serving as the Ethereum custodian.
2 Crypto Market Pulse
Market Data
The total market capitalization of the cryptocurrency market remains steady at $1.4 trillion. The latest inflation data released last week in the United States indicates that inflationary pressures in the overall economy are diminishing. Investors are re-focusing on risk investments, which is seen as positive for the cryptocurrency market. As of midnight on November 19th, the price of Bitcoin is $36,680, representing a 1.1% decline from last week. Ethereum, as the second-largest cryptocurrency, is currently priced at $1,963, showing a 4.2% decrease. Additionally, Bitcoin’s market share in the overall market has slightly decreased to 51%, with a market capitalization of $714.6 billion. Ethereum’s market share has also experienced a decline, currently standing at 16.8%, with a market value of $235.4 billion.
$TIA, $KAS, and $RNDR emerged as Top 3 gainers, while $CFX, $FTT, and $APT were Top 3 losers. Last week, $TIA continued its upward trend and claimed the top spot as the top gainer among the top 100 tokens by market capitalization. After announcing its departure from the traditional overall blockchain model and embracing a modular approach, $TIA experienced a significant surge in price, with substantial trading volume further indicating investor interest. $KAS secured the second spot as the top gainer with an impressive 60% weekly increase. Among major cryptocurrencies by market capitalization, Kaspa emerged as the cryptocurrency with the highest appreciation in 2023, garnering attention from Binance. The news of Kaspa’s listing on Binance contributed to its further surge. As a leader in the AI sector, $RNDR also gained attention last week. Apart from the general popularity of AI, the potential reasons for this surge might be related to innovative proposals recently mentioned by its community. Conversely, among the top losers last week, most were impacted by market fluctuations and experienced corrections after previous surges. For example, FTT faced a 17% decline after a significant surge in the previous week.
Last week, the total supply of stablecoins continued to significantly increase, surpassing $122.5 billion. With the progress of last week’s new round of Ethereum spot ETF applications from large institutions such as Fidelity and BlackRock, investor demand for the cryptocurrency market continues to expand. Meanwhile, looking at the net position data of stablecoins on exchanges in the past week, there has been a shift from net inflows to net outflows. At the same time, the recent trend has shown fluctuations in both net inflows and net outflows, indicating that the supply of stablecoins on exchanges is currently subject to volatility in response to market changes.
In the derivatives market, the total open interest of Bitcoin futures contracts continues to decline, while the total open interest of Ethereum futures contracts remains stable. Over the past few weeks, there hasn’t been a significant increase in the total open interest of Bitcoin and Ethereum futures contracts, indicating that the derivatives market has not seen a influx of new funds. On the other hand, around the 14th of last week, the decline in Bitcoin and Ethereum prices led to the liquidation of a large number of long positions, with the total liquidation amounts exceeding $100 million and $50 million, respectively. This suggests that the current market still exhibits considerable volatility.
In the DeFi market, the total value locked (TVL) slightly decreased last week, dropping by 1.3% to reach $457 billion. Over the past seven days, the trading volume on decentralized exchanges (DEXs) continued to significantly increase, reaching $28 billion, a growth of 14.5% compared to the previous week. Furthermore, the market share gap between DEXs and centralized exchanges (CEXs) remains above 20%, with DEXs now accounting for 23.7% of the total trading volume on CEXs. Among the top ten blockchain platforms ranked by TVL, performance over the past seven days has been mixed. It is noteworthy that Solana continued to lead in terms of the largest TVL increase, with a gain of 5.4% last week. On the other hand, the Layer2 solution Base experienced the largest decline, falling by 6.3%.
Last week, the NFT market capitalization remained relatively stable, with a decrease in trading volume exceeding 45%. The current NFT market capitalization has reached $7 billion, and the trading volume over the past seven days has seen a decline following the sharp increase in the previous week, with the current volume at $81.6 million. In the top NFT collections, the majority experienced a pullback in both floor prices and average prices at the end of last week. The floor price and average price of the Bored Ape Yacht Club (BAYC) decreased by 2.7% and 2.4%, respectively. Similarly, the floor price and average price of the Mutant Ape Yacht Club (MAYC) also declined by 5.9% and 3%, respectively.
LBank Labs’ Recap
BTC is currently experiencing a stagnation near $36,600, lacking significant liquidation above $38,000. Market participants have strategically placed limit buy and sell orders within the range of $33,000 to $38,000, anticipating price fluctuations in the near term. The delay of BTC and ETH ETFs is expected, with no substantial selling pressure observed in response to this news. The injection of almost $200 billion in liquidity since the beginning of November, coupled with a decline in the RRP balance, suggests increased liquidity in risk assets, particularly in altcoins.
Recent developments in the altcoin market include dramatic price action in YFI, where an increase in OI for DYDX to $60 million preceded a sharp “rug pull.” Wintermute and Jump reduced their YFI holdings during this period, and a quick recovery to this week’s high is not anticipated.
AGIX and WLD have reacted to news regarding Sam Altman and OpenAI’s board changes. Both tokens initially fell following the announcement of the CEO’s departure but recovered when Sam Altman resumed the role of CEO. No fundamental changes in the projects or significant shifts in the order book behavior were identified, suggesting the price movement was news-driven and likely to revert to the previous trading range.
IMX’s future long/short ratio by account is below 1, while the by-position ratio is greater than 1, indicating a potential indicator of a short squeeze and a potential increase in price.
In the meme sectors, a local top has been observed, with many recently listed tokens on Binance experiencing significant price surges. If BTC stabilizes, there is a potential for further upside in these tokens.
- BTC price optimistic: $37500 — $39500
- BTC price neutral: $35500-$37500
- BTC price pessimistic: $33500 — $35500
3 Major Project News
[Ethereum] Ethereum All Core Developers Consensus Call #122 Writeup. Galaxy Research Vice President Christine Kim summarized the 122nd Ethereum Core Developers Consensus (ACDC) conference call. Developers agreed to initiate discussions on the launch of Devnet #12 during the upcoming ACDE meeting next Thursday. They also delved into a proposal put forth by Péter Szilágyi, a Geth developer, aimed at addressing concerns about diversity in the Execution Layer (EL) clients.
Teams working on the Consensus Layer (CL) clients are making improvements to Blob propagation, which is expected to significantly reduce the complexity and issues related to Blob propagation observed across the past 11 devnets. Most CL client teams plan to complete the implementation of updates to the Deneb specification either this week or the next.
[Layer2] Starknet next versions (v0.12.3, v0.13.0) and Sepolia testnet migration. The Starknet community forum has released information regarding the upcoming versions (V0.12.3, V0.13.0) and the migration of the Sepolia testnet, including the following details: 1) V0.12.3 will bring a significant change by deprecating the feeder gateway. Builders are advised to migrate to API services or run independent full nodes. V0.12.3 also introduces some changes to the validate of account contracts. 2) V0.13.0 will include a new transaction type, V3. This transaction type lays the foundation for future features on the roadmap, including paying transaction fees with STRK instead of ETH, a fee market, paymaster, and nonce generalization. Additionally, V0.13.0 will come with a new Cairo version, V2.4.0, introducing string literals and basic string operations.
The planned dates for network upgrades are as follows: 1) November 19, 2023: V0.12.3 Goerli testnet. 2) December 11, 2023: V0.12.3 mainnet. Note that this is a week earlier than previously communicated dates. 3) December 5, 2023: V0.13.0 Goerli testnet. This date may be postponed by a week, potentially to December 13, 2023. 4) January 22, 2024: V0.13.0 mainnet, pending governance vote.
Besides version updates, after deprecating Goerli, Starknet migrated the testnet to Sepolia. The Goerli testnet will be supported until the end of 2023, and developers are encouraged to migrate to Sepolia as much as possible.
[Layer2] OKX and Polygon have jointly launched the zkEVM Layer2 network X1, with OKB serving as the native token. According to official announcements from OKX, the collaboration with Polygon has resulted in the introduction of the zkEVM Layer2 network X1, which is now officially live on the testnet. This network represents an upgrade to OKBC. X1 is a high-performance, highly secure Ethereum Layer2 network built on the Polygon CDK. It utilizes Zero-Knowledge Proof (ZK) technology to assist users in achieving lower transaction costs, with OKB serving as its native token. X1 aims to serve as a bridge connecting OKX’s global user base of over 50 million users with the Polygon and Ethereum ecosystems. It allows developers to seamlessly and securely deploy EVM-based DApps, connecting more smart contracts, wallets, and tools.
Additionally, the OKX Web3 wallet has now integrated with the X1 testnet. Users can seamlessly switch to the X1 testnet with a single click, eliminating the need for manual configuration. Through the OKX Web3 wallet app and plugin, users can perform operations such as storing, managing, and cross-chain transactions involving assets on the X1 testnet. As of now, the OKX Web3 wallet supports 80 public chains.
[Layer2] Linea: Getting Ready for the Next Major Version Alpha V2 and Open Sourcing Linea Stack. Linea has announced preparations for the upcoming major release, Alpha V2. The new version promises lower transaction costs, faster speeds, and 100% EVM coverage. Additionally, Linea plans to open-source the Linea Stack. With Ethereum undergoing the Dencon upgrade (EIP-4844), Alpha V2 is set to use blob storage on L1 to significantly reduce Rollup costs. The team is actively working on lowering fixed transaction costs by compressing data sent to L1 and aggregating proofs. Linea aims to reduce block time to 4 seconds, tripling the speed, and plans to introduce mechanisms to further reduce block time in the future.
To support client diversity, both Besu and Geth are already supported, and the new Linea sequencer will replace Linea-Geth with Linea-Besu. Linea also mentioned collaboration with the MetaMask team to develop plans for better serving the Linea ecosystem.
ZK-RaaS platform Lumoz (formerly Opside) has announced the launch of StableNet in December during the RaaS Day event jointly hosted with Polygon. StableNet is a zkEVM (Zero-Knowledge Proof Rollup) based on Ethereum as Layer 1 (L1). Key innovations include: 1) Adoption of USDC stablecoin as the native token, with transaction gas fees priced in USDC. 2) The first mainnet zkEVM project based on Polygon CDK and Celestia. 3) Support for atomic cross-Rollup communication, allowing addresses on StableNet to directly call contracts on the Ethereum network. 4) Introduction of a decentralized prover network for more stable and reliable ZKP computation. 5) Optimized gas economic model, with all gas fee income generated on StableNet being distributed back to the community, including DApp developers, liquidity providers, and regular users.
Lumoz is an officially certified CDK technology provider for Polygon, having undergone extensive technical transformations and customized upgrades for Polygon CDK. Lumoz also supports various types of zkEVM, including zkSync, Scroll, and more.
[XRPL] XRPL (XRP Ledger) is set to release rippled V2.0.0, introducing a new API version. Community analyst Krippenreiter has provided a detailed analysis of the upcoming update to the rippled server software for the XRP Ledger. A core change in rippled V2.0.0 is the introduction of a new API version, described as a “major breakthrough change.” This API version represents a significant shift in the XRPL operation framework, impacting the way requests and responses are handled.
Another crucial aspect is the improvement in transactions per second (TPS) performance, which will significantly enhance consensus stability and throughput. The community had previously noticed that Ripple updated its official website a few weeks ago, claiming that the ledger could process 3,400 transactions per second, a substantial increase from the previous 1,500 transactions.
This update also introduces four new fixes, including XChainBridge, aimed at enhancing interoperability of XRPL assets across various ledgers. It also includes DID, fixDisallowIncomingV1, and fixFillOrKill.
[Solana] Neon EVM is working on letting users pay transaction fees with different tokens. The Solana EVM compatibility solution, Neon Testnet, has now enabled users to pay transaction fees using tokens such as SOL, USDC, and USDT, instead of the platform’s native token. This functionality is expected to be rolled out on the Neon EVM development network in the coming weeks, with mainnet support anticipated to launch in the first quarter of 2024.
[Sui] The Sui mainnet has been upgraded to version V1.13.0, with updates that include strengthening the validator node protection mechanism. Key points of the Sui mainnet upgrade to V1.13.0 and Sui protocol upgrade to version 30 are as follows: 1) When running the Prover, warnings about the current Move Prover support level for Sui will now be printed. 2) The validator node protection mechanism has been strengthened to prevent the acceptance of transactions in scenarios where there are long-running transactions waiting to be executed in a particular object queue or when there is a large number of transactions pending in a specific object queue. 3) Error messages for const-in-const errors have been modified to point to the function gate. 4) A configuration option (30) has been added to the protocol configuration to support providers being empty. This marks the first step in deprecating protocol configuration to check for supported providers and transitioning to using node configuration. 5) Sui now validates zkLogin old addresses (derived using the filled address_seed), upgrading the protocol version to 29 to enable validation of old addresses.
4 Key Fundraising Data
Last week witnessed a total of 31 financing events, raising a substantial amount of over $375.9 million*. Compared to last week, both the number and total amount of financing activities have significantly increased. The CeFi (Centralized Finance) sector attracted the most attention, with only 3 financing activities, accounting for nearly 10% of all financing activities. However, the total financing amount reached a high of $295.9 million, representing 78.7% of the overall financing. The largest fundraising activity this week also took place in the CeFi industry, led by the Blockchain.com project, with a fundraising amount of $110 million. Blockchain.com was founded in 2011 and is a cryptocurrency financial services company headquartered in the United Kingdom. It is one of the earliest pioneers in the infrastructure of the Bitcoin community. More detailed information is provided below.
*10 events of unknown amount are included, which have been excluded from the remaining data.
Below, we listed the most noteworthy fundraising deals for you:
Crypto exchange Blockchain.com has secured a $110 million raise in Series E financing. Kingsway Capital, an investment management firm based in the UK, led the new funding round, according to a company release. Additional participants include Baillie Gifford, Lakestar, Lightspeed Venture Partners, Coinbase Ventures and others.
Blockchain.com’s valuation sits at “less than half of” $14 billion, Bloomberg reported citing sources familiar with the matter. The firm reached its $14 billion valuation in March of 2022 after an undisclosed amount raised in a Series D financing round.
- Official Link: https://www.blockchain.com/
BC Technology Group (863.HK), the parent company of OSL and Hong Kong’s only publicly listed firm fully dedicated to digital assets, has secured a substantial investment of approximately HK$710 million Hong Kong Dollars from BGX, a prominent player in cryptocurrency services. Pending shareholder approval, this strategic share subscription marks a significant milestone for BC Technology Group and OSL, signaling a new phase of growth and innovation in the digital asset sector.
This investment by BGX serves as a resounding endorsement of OSL’s vision to lead the regulated evolution of the digital asset market. The partnership reflects a commitment to excellence, with OSL aiming to set new standards in digital asset security, compliance, and technological innovation. The collaboration with BGX, known for its global digital asset footprint, is poised to bring powerful synergy to OSL’s mission of providing secure and regulated access to digital assets, enhancing the platform’s offerings.
- Official Link: https://bc.group/
3. [CeFi] Fnality raises $95 million in round led by Goldman, BNP Paribas.
Fnality, the London-based blockchain payments firm, raised another $95 million in a round led by Goldman Sachs and BNP Paribas. DTCC, Euroclear, Nomura and WisdomTree also participated in the round, alongside some of a number of the banks that backed Fnality when it raised $63 million in 2019, according to multiple reports. Those banks include Banco Santander, BNY Mellon, Barclays, CIBC, Commerzbank, ING, Lloyds Banking Group, Nasdaq Ventures, State Street, Sumitomo Mitsui Banking Corporation, and UBS. Fnality did not immediately respond to a request for comment.
The news confirms a September 2022 report from The Block, which revealed that Fnality had hired Broadhaven Capital Partners in pursuit of a Series B round.
- Official Link: https://www.fnality.org/home
4. [DeFi] CoinFund co-leads $14 million Series A round for asset manager Superstate.
Superstate, an asset management firm utilizing blockchain technology, closed part of a $14 million Series A funding round. The web3-focused investment firms Distributed Global and CoinFund co-led the round, which saw additional participation from Breyer Capital, Galaxy, Arrington Capital, Road Capital, CMT Digital, Folius Ventures, Nascent, Hack VC, Modular Capital and Department of XYZ.
“The first close was oversubscribed — we’ve kept space in the round available for strategic investors,” Superstate co-founder and CEO Robert Leshner told last week. “Rather than wait until the full round is complete, we are announcing the round now and will release additional details on the full close in the future.”
- Official Link: https://superstate.co/
See you next week! 🙌
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📢 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.
