LBank Labs Weekly Digest (November 26- December 2) #23

LBank Labs
16 min readDec 4, 2023

*All on-chain data is dated as of 12:00 a.m. EST on Sunday, December 3rd.

Welcome back to LBank Labs Weekly Digest! Here we list all you need to know about crypto market in the past week(Nov.26 — Dec.2).

Author: LBank Labs Research team — Hanze, Johnny

Keywords: #PCE #GDP #ETF

Investors have been reassured in recent weeks by inflation and economic data suggesting a soft economic landing. PHOTO: BRENDAN MCDERMID/REUTERS

1 Macro Market Overview

U.S. Stocks surge as bets on interest rate cuts drive gains for the week. According to WSJ, hopes that the Federal Reserve is done raising interest rates turbocharged a broad-based rally, driving prices of everything from stocks to Treasurys and gold sharply higher. The Dow Jones Industrial Average added 2.4% for the week, notching a fifth weekly gain to mark its longest winning streak since late 2021. The S&P 500 added 0.8% and closed at its highest level since March 2022. The tech-heavy Nasdaq Composite added 0.4%. On Friday, Federal Reserve Chair Jerome Powell offered the strongest signal yet that officials are likely done raising rates, saying the central bank’s policy is “well into restrictive territory.” His comments were laced with caution, but they appeared to reassure investors who have been digging in on expectations of rate cuts next year. Traders have ramped up bets that the Fed will trim rates as soon as March, CME Group data show.

Commerce Department data on Thursday showed that Americans slowed their spending and that inflation continued to ease in October, boosting expectations that the Fed is done raising rates. Stocks’ rally began after yields peaked in October, picking up steam midmonth after data showed consumer prices fell by more than Wall Street expected. Thursday’s data showed that the personal-consumption expenditures price index, the Fed’s preferred inflation gauge, remained mild in October. Another morsel of good economic news arrived Wednesday, when data showed the economy grew at a 5.2% annual rate last quarter, the fastest pace since late 2021. Still, economists expect growth to slow in the fourth quarter as consumers pull back on spending. Furthermore, data Tuesday suggested consumers have grown more confident in recent weeks. The Conference Board said its consumer-confidence index rose in November to 102 from just above 99 in October.

Web3-related stocks experienced another significant surge in the past week. MSTR rose by 3.9%, while COIN and MARA saw impressive increases of 17.5% and 24.8%, respectively. Notably, MicroStrategy (MSTR) once again made a substantial investment by purchasing approximately 16,130 bitcoins for around $593.3 million in cash. The average price per BTC in this transaction was $36,785. Currently, MicroStrategy holds a total of 174,530 bitcoins, valued at approximately $5.28 billion, with an average acquisition cost of $30,252 per bitcoin.

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

Macro indexes

Personal income increased $57.1 billion (0.2 percent at a monthly rate) in October, according to estimates released last week by the Bureau of Economic Analysis (tables 2 and 3). Disposable personal income (DPI), personal income less personal current taxes, increased $63.4 billion (0.3 percent) and personal consumption expenditures (PCE) increased $41.2 billion (0.2 percent).

The PCE price index increased less than 0.1 percent. Excluding food and energy, the PCE price index increased 0.2 percent (table 5). Real DPI increased 0.3 percent in October and real PCE increased 0.2 percent; goods increased 0.1 percent and services increased 0.2 percent (tables 3 and 4).

Personal Income and Outlays, October 2023 (Source: the Bureau of Economic Analysis)

Real gross domestic product (GDP) increased at an annual rate of 5.2 percent in the third quarter of 2023, according to the “second” estimate. In the second quarter, real GDP increased 2.1 percent. The increase in the third quarter primarily reflected increases in consumer spending and inventory investment. Imports, which are a subtraction in the calculation of GDP, increased. Profits increased 3.3 percent at a quarterly rate in the third quarter after increasing 0.2 percent in the second quarter.

Gross Domestic Product (Second Estimate) Corporate Profits (Preliminary Estimate) Third Quarter 2023 (Source: the Bureau of Economic Analysis)

The U.S. Dollar Index (DXY) fell by 0.21% to 103.193, marking a consecutive week of losses following a 0.34% decline last week. This trend is attributed to new economic data and growing expectations that the Federal Reserve (Fed) is nearing the completion of interest rate hikes, with the possibility of starting rate cuts next year.

DXY (Source: TradingView)

According to the FedWatch tool from the Chicago Mercantile Exchange Group, the probability of the Federal Reserve maintaining interest rates within the current range of 5.25% to 5.5% in December has risen to 98.8%. This is slightly higher than the 95.5% probability observed during the same period last week.

Left: EFFR, Right: Target Tate Probabilities for 13 December 2023 Fed Meeting (Source: Federal Reserve Bank of New York, CME FedWatch Tool)

Powell’s comments, alongside new economic data, fueled a wave of buying in the government-bond market that drove the benchmark 10-year U.S. Treasury yields (US10Y) down to 4.197%, the lowest level since early September. The yield on 2-year Treasurys, which are especially sensitive to interest-rate expectations, recorded the biggest weekly decline since March, around the time Silicon Valley Bank collapsed.

US10Y (Source: TradingView)

Grayscale Gears Up for Spot Bitcoin ETF, Updating Trust Agreement for Sake of ‘Operational Efficiencies’. A document filed on Wednesday indicates that Grayscale has updated the GBTC (Grayscale Bitcoin Trust) agreement for the first time since 2018. This update aims to optimize the GBTC structure, prepare for the anticipated listing of a spot Bitcoin ETF, and enhance competitiveness against other applicants such as BlackRock. The GBTC update involves two proposed modifications to the trust agreement, which will be subject to shareholder voting.

Simultaneously, the U.S. Securities and Exchange Commission (SEC) met with Grayscale last Thursday to discuss the potential ETF conversion of GBTC. Grayscale has recently hired John Hoffman, a long-time executive at Invesco ETF, who will serve as Grayscale’s Head of Distribution and Strategic Partnerships. Bloomberg analyst Eric Balchunas, on X platform, stated that the SEC also met with representatives from BlackRock and Nasdaq last Wednesday. According to comments from SEC staff during their meeting on November 20th, they presented a “revised” physically-backed model design. BlackRock had previously applied for a Bitcoin ETF in June, with several other asset management companies following suit with their applications.

(Source: Twitter@EricBalchunas)

2 Crypto Market Pulse

Market Data

Cryptocurrency market capitalization continues its upward trend, reaching $14.8 trillion. Last week, the latest core inflation data in the United States, including the Personal Consumption Expenditures (PCE), showed a moderate performance. Meanwhile, an increasing number of investors are inclined to believe that the pace of interest rate hikes is slowing down. These positive factors have contributed to a new round of gains in the cryptocurrency market. As of the early morning of December 3rd, the price of Bitcoin is $39,360, representing a 4.3% increase from the previous week. Ethereum, as the second-largest cryptocurrency, is currently priced at $2,157, showing a 4.0% growth. Furthermore, Bitcoin’s latest market share in the overall market has risen to 52%, with a market value of $770.3 billion. Ethereum’s market share has also slightly increased to 17.5%, with a market value of $259.3 billion.

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

$LUNC, $IOTA, and $TIA emerged as Top 3 gainers, while $KLAY, $BLUR, and $APE were Top 3 losers. Despite a tumultuous past, Terra Classic has recently shown signs of revival. Over the past month, in addition to being driven by the overall market uptrend, it has benefited from the revival plan of $LUNC (the $LUNC community has been actively formulating revival plans, including the recent terrad client v2.3.1) and the positive impact of community development, helping propel $LUNC higher. $IOTA’s price surged over 73% in the past seven days, ranking second in the top 100 altcoins in terms of the trend in gains. This upward movement is attributed to positive news about the $IOTA ecosystem, including the official announcement of a $100 million fund, which has excited investors about the token’s future potential. $TIA also resumed its upward trend last week, benefiting from the positive impact of the latest network upgrade. Coupled with a significant initiative involving a smart airdrop strategy targeting developers and researchers, this move has elevated demand for $TIA. Conversely, the majority of top losers have experienced pullbacks in an overbought scenario.

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

Last week, the total supply of stablecoins continued to exhibit a significant increasing trend, surpassing $124.2 billion. Since November, the total supply of stablecoins has shown a continuous upward trajectory, with a gradual rise in net additions to the supply chain, indicating a growing interest from investors in the cryptocurrency market. Simultaneously, observing the net position data of stablecoins on exchanges over the past week, the trend has shifted from a net outflow to a substantial net inflow. This once again suggests a reduction in selling pressure on crypto assets and an increase in market demand.

Stablecoins Market Cap (Data: Glassnode)

In the derivatives market, the futures open interest perpetual for Bitcoin and Ethereum contracts saw a slight increase, peaking around December 1st. Last week, as Bitcoin and Ethereum prices experienced volatility, the total open interest in the derivatives market showed a relatively synchronous trend.

On the other hand, observing the data on liquidation outcomes from the past week reveals a decrease in the volume of liquidation compared to previous periods, albeit still showing a fluctuating trend. There were two significant waves of liquidation, mainly around the 28th and 2nd, corresponding to fluctuations in the prices of Bitcoin and Ethereum on those respective dates.

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

In the DeFi market, the total value locked (TVL) increased last week, reaching $490 billion. Over the past seven days, the trading volume of decentralized exchanges (DEXs) saw a slight decline, reaching $19.6 billion, a decrease of 19.1% compared to the previous week. Additionally, the market share gap between DEXs and centralized exchanges (CEXs) remains over 20%, with DEXs now accounting for 24.1% of the total trading volume on CEXs. Among the top ten blockchain platforms by TVL, there was an overall upward trend in the past seven days. Tron and Cronos saw declines of 5.1% and 2.6%, respectively, while Solana experienced the most significant gain with a 16.1% increase, making it the top gainer for the week.

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

Last week, the NFT market saw a 6.7% growth in value, reaching a total of $7.6 billion. Over the past seven days, the total trading volume continued to increase by 4.3%. In the top NFT collections, the floor prices and average prices showed relatively small fluctuations. The floor price of the Bored Ape Yacht Club (BAYC) dropped by 0.8%, while the average price increased by 0.9%. The floor price of the Mutant Ape Yacht Club (MAYC) experienced a 1.9% decrease, while the average price increased by 2.9%.

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

3 Major Project News

[Ethereum] Ethereum Devnet #12 has activated the Cancun upgrade. Christine Kim, the Vice President of Research at Galaxy, summarized the 123rd Ethereum All Core Developers’ Call (ACDC) in a post.

The Cancun upgrade (also known as the Deneb upgrade for the protocol layer) was activated on Devnet #12 on November 30th. The Teku, Lodestar, and Lighthouse client software, as well as all Execution Layer (EL) client software, are currently undergoing testing on Devnet #12. Additionally, developers identified validator dropout issues on Devnet #11, and the Nimbus client team is working to address this problem. Devnet #11 will remain operational until the issue is resolved.

Since the Prysm client for CL has not yet joined Devnet #12, developers have agreed to postpone the planned Goerli shadow fork until the Prysm client software is ready for testing. Tim Beiko suggested launching the Goerli shadow fork at some point before the end of this year.

Furthermore, developers discussed clarifying the specifications for BlockByRoot and BlobSidecarsByRoot requests to explicitly mention whether CL nodes should respond to these requests in a specific order.

(Source: galaxy.com)

[Layer2] Starknet Foundation has conducted an airdrop snapshot. On December 1st, the Starknet Foundation confirmed the display of a screenshot outlining the airdrop plan and stated that the airdrop snapshot has been completed. The foundation emphasizes that they are currently formulating a plan to distribute tokens to certain past active users and contributors. The deadline for eligibility for the airdrop has been set, and any subsequent actions by users will not affect future airdrops. According to Scopescan monitoring, the STRK token contract was deployed 379 days ago, with a total supply of 10 billion tokens.

(Source: Twitter@StarknetFndn, Twitter@0xScopescan)

[Layer2] Celo Developer Proposes Mid-January Timeline for Evaluating Closely Watched Layer-2 Move. Celo’s primary developer, cLabs, has released a “Framework for Choosing Layer-2 Technology Stack” and plans to complete the evaluation in mid-January of next year. cLabs published the framework on its forum, inviting the community to provide feedback on the document before mid-December. The team plans to assess various competing solutions over the following month.

The Celo community approved the plan to transition to a Layer-2 blockchain in July. This choice has evolved into a fierce competition among some of the most prominent teams in the blockchain industry. cLabs’ priorities include a straightforward migration process, minimal downtime, low gas fees, and compatibility with Ethereum. The team aims to deliver CEL2 as quickly as possible, minimizing implementation risks and preferring projects that have been audited and verified in production.

(Source: Twitter@cLabs)

[Polygon] Polygon Co-founder: Polygon to Launch Two New Products on ZK and RWA in December. Polygon co-founder Sandeep Nailwal revealed some key milestones for Polygon in the coming month on the X platform: 1) On December 7th, Polygon will host the offline event Polygon Connect in India. 2) On December 14th, Polygon will publicly demonstrate the next generation of ZK products. Sandeep suggests that this might become a significant milestone for the entire Ethereum ecosystem. 3) On December 20th, Polygon will launch new products related to RWA and institutional adoption.

Furthermore, the official statement from Polygon Labs on the X platform indicates that Amazon Web Services (AWS) has made it easier for builders to develop and launch dApps by adding Polygon PoS to Amazon Managed Blockchain (AMB) Access. AMB Access Polygon provides instant serverless access to the Polygon PoS mainnet and the public preview version of the Mumbai testnet without the need for dedicated blockchain infrastructure. (Access is free during the public preview period, but standard AWS data transfer charges still apply.)

(Source: Twitter@sandeepnailwal, Twitter@0xPolygonLabs)

[Cosmos] Cosmos co-founder Jae Kwon has proposed a specific plan for the Cosmos fork called AtomOne. The plan includes a declaration, vision and mission, genesis allocation, token economics, AtomOne governance, AtomOne technical steering committee, and other elements to address diverse perspectives within the Cosmos community regarding objectives, token economics, and security. In this proposal, 10% of ATOM1 will be pre-mined for various purposes, while 80% of inflation and rewards will go to stakers who choose validators.

(Source: github.com)

[Sei] Sei v2 — The First Parallelized EVM Blockchain. Sei has released an upgrade introduction for its V2, announcing the addition of support for the Ethereum Virtual Machine (EVM). In its V2 upgrade, Sei will incorporate support for the Ethereum Virtual Machine (EVM), allowing developers to port Ethereum-based contracts to the Sei network. To facilitate this feature, Sei V2 will integrate Geth. Sei Labs has developed a dedicated interface to facilitate interaction between Sei’s existing smart contract components (based on CosmWasm technology) and EVM components. CosmWasm is a custom Cosmos SDK module that enables the execution of smart contracts within the Cosmos ecosystem. With V2, the team aims to achieve efficient integration between EVM and the Sei network.

(Source: blog.sei.io)

[Polkadot] Polkadot 2.0’s Blockspace As A Service (BaaS) is expected to launch in the second quarter of 2024. The primary change in version 2.0 involves a shift from parallel chain slot auctions to Coretime leasing. Lastic will provide a marketplace for buying and selling block space.

Coretime leasing in Polkadot 2.0 introduces a different resource management approach — either bulk or on-demand sales of block space: 1) Bulk Coretime Leasing: This option offers stable and predictable resource allocation, where block space is purchased in continuous 28-day cycles. Unused block space can be sold as NFTs within the time frame. 2) On-Demand Coretime Leasing: This option provides block space on demand, allowing small projects, medium-sized projects, DApps, smart contracts, and traditional enterprises to buy the required amount of block space for their needs.

Initially, BaaS prices are expected to be relatively low, adjusting naturally to current demand over time. This creates a market accessible to everyone. Currently, this new model is being tested on the Rococo testnet (fourth quarter of 2023) and will soon launch on Kusama (first quarter of 2024) and Polkadot (second quarter of 2024).

(Source: polkadotphilosophy.com)

4 Key Fundraising Data

Last week witnessed a total of 25 financing events, raising a substantial amount of over $299.2 million*. Compared to last week, both the number and total amount of financing activities have significantly increased. The Service sector attracted the most attention, with a total of 8 financing events, accounting for 32% of the overall number. The total financing amount for the sector reached $248.4 million, representing 83.0% of the total. The largest financing event of the past week was led by Wormhole, securing $225 million in funding. Wormhole enables a growing suite of products built around the foundational Wormhole Messaging protocol. More detailed information is provided below.

*8 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: Cryptorank, Foresights, LBank Labs)

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

  1. [Service] Wormhole raises $225 million at a $2.5 billion valuation, finalizing split from Jump Crypto amid firm’s recent pullback.

According to a report by Fortune, Wormhole has completed a $225 million financing round at a valuation of $2.5 billion. This funding round did not have a lead investor and saw participation from Brevan Howard, Coinbase Ventures, Multicoin Capital, ParaFi, Dialectic, Borderless Capital, Arrington Capital, and Jump Trading. It is also noted as the largest funding round for a cryptocurrency project in 2023.

Dan Reecer, the Chief Operating Officer of the Wormhole Foundation, stated that investors’ stakes would be entirely composed of token warrants, rather than company equity. However, he declined to comment on the name of the Wormhole token (which has not been previously reported) or when it would be launched.

Additionally, the team behind Wormhole announced the establishment of a new company called Wormhole Labs, which will assist in the development of the protocol. The unveiling of Wormhole Labs ultimately confirmed the split between Wormhole and Jump Crypto. Dan Reecer also refrained from disclosing how much of the $225 million would be allocated to Wormhole Labs and the Wormhole Foundation.

2. [Infrastructure] Decentralized Infrastructure Provider Grove Raises $7.9M.

Decentralized physical infrastructure (DePIN) provider Grove, previously named Pocket Network Inc., has raised $7.9 million from Fidelity-affiliated Avon Ventures, Placeholder Capital and Druid Ventures.

Grove will use the funding to form new partnerships that advance DePIN toward mainstream adoption, according to an emailed statement shared with CoinDesk on Thursday.

DePIN refers to the use of blockchain technology and token incentives to build physical infrastructure networks, so other projects don’t need to incur the costs of buying and running their own equipment. In this sense, it can be seen as a decentralized version of Amazon Web Services (AWS) or Google Cloud.

3. [Social] AnotherBall, the Company Behind IZUMO, Secures $12.7M in Seed Funding, Surpassing $14.8M in Total Funding.

AnotherBall, an entertainment company dedicated to “creating mutual understandings beyond boundaries,” announced last week that it has successfully secured USD$12.7 million in funding during its seed round. This brings the company’s total funding to approximately USD$14.8 million, further fueling its expansion.

This funding round was led by ANRI and Hashed, with additional participation from Global Brain, Globis Capital Partners, Sfermion, HashKey Capital, Everyrealm, Ethereal Ventures, Emoote, as well as several individual investors including Crunchyroll founder Kun Gao. Their collective interest in the rapidly evolving field of virtual entertainment aligns with the vision of IZUMO.

IZUMO has been actively engaging in pioneering technological projects such as “Ailis” and “SAI by IZUMO.” Drawing from the insights gained through these endeavors, IZUMO is currently developing a platform that will empower creators worldwide to connect with fans and monetize their content. The beta version of this platform is scheduled for release in the first quarter of 2024 (January-March), with a full-scale public launch expected later in the year.

4. [DeFi] DeFi yield platform Coinchange raises $10 million in funding.

Decentralized finance platform Coinchange raised $10 million in funding. The firms G1.VC, Spirit Blockchain, Good News Ventures, K2.CA and Atoia Ventures led the round, which saw additional participation from Mintfox.

Coinchange lets its business users trade and access digital asset yields as a service through its Earn API, a risk-managed platform for stable returns that supports bitcoin, ethereum and all major stablecoins.

The firm will use the funding to grow its operations and services along with onboarding new clientele, the company said in a statement.

See you next week! 🙌

🎙Forum: Feel free to leave your comments on our official LBank Labs Twitter account, and don’t hesitate to ask questions about the tokens or projects that interest you. We will diligently gather them and discuss them in the recap section of our weekly digest!

📢 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.

--

--