*All on-chain data is dated as of 12:00 a.m. EST on Sunday, October 15th.
Welcome back to LBank Labs Weekly Digest! Here we list all you need to know about crypto market in the past week(Oct.8–14).
Author: LBank Labs Research team — Hanze, Johnny
Keywords: #CPI #ETF #Layer2 #Non-EVM
1 Macro Market Overview
Nasdaq Falls to End Week After Volatile Session. According to WSJ, the threat of broader conflict in the Middle East drove investors to safe-haven assets like U.S. Treasurys, gold and utility stocks Friday, while rising oil prices lifted energy shares. According to a report Wednesday, producer prices climbed 0.5% in September from the month before, hotter than economists expected. But core producer prices, which strip out volatile food and energy categories, rose just 0.2% from the prior month. Data Thursday showed recent progress in lowering inflation paused in September. The consumer-price index rose 3.7% from a year earlier, the same as in August. Core prices, which exclude the volatile food and energy categories, rose 4.1% from a year earlier, down from 4.3% in August. Stocks began to turn lower after University of Michigan consumer-sentiment data for October fell short of analysts’ expectations. Furthermore, minutes from the Fed’s September policy meeting showed a majority of officials believed then that one more rate increase this year would likely be appropriate, while some thought no further increases would be needed.
The S&P 500 and Dow industrials gained 0.5& and 0.8&, respectively, for the week, while the tech-focused Nasdaq declined slightly, falling 0.1%. Web3-related stocks had a poor performance last week, influenced by investors’ recent expectations of potential long-term high-interest rates. $COIN, $MARA, and $MSTR each fell by 7.2%, 6.7%, and 6.2% within the week.
In September, the US non-seasonally adjusted CPI (Consumer Price Index) year-on-year rate was 3.7%, slightly above the expected 3.6%, with the previous value at 3.7%. The US non-seasonally adjusted core CPI year-on-year rate for September was 4.1%, meeting expectations, and down from the previous value of 4.3%.
According to WSJ reporter Nick Timiraos, the continued slowdown in core price growth, along with some moderation in wage growth and rising bond yields, might lead Federal Reserve policymakers to believe that further interest rate hikes this year are no longer necessary.
CPI (Source: U.S. BUREAU OF LABOR STATISTICS)
Last Friday, the U.S. Dollar Index (DXY) closed the day at 106.672, marking a slight increase of 0.5% compared to the previous levels. On the previous Thursday, DXY reversed its earlier downtrend, gaining strength after the release of the CPI report. In contrast, stocks, which had been rising for several days, began to face pressure.
DXY (Source: TradingView)
On October 12th, newly released Federal Reserve meeting minutes revealed that during the Fed’s monetary policy meeting in September, policymakers unanimously agreed that high-interest rates should be maintained “for a while” and advocated a “cautious” approach to rate decisions. When it came to the question of whether further rate hikes were necessary, the majority of participants believed that another rate increase at a future meeting was appropriate, while some also thought that there might not be a need for further rate hikes. The CME FedWatch Tool predicts a 93.8% chance that interest rates will remain unchanged, up from 72.9% a week ago.
EFFR (Source: Federal Reserve Bank of New York, CME Group’s FedWatch Tool)
Treasury yields, which have been rising lately and pushing stocks down, edged lower last Friday. The yield on benchmark 10-year Treasury notes (US10Y) declined to 4.612%, marking a 4.02% decrease from the previous week. Yields fall as prices rise.
US10Y (Source: TradingView)
ARK has submitted an updated version of its spot Bitcoin ETF prospectus. According to Bloomberg ETF analyst Eric Balchunas, a few weeks ago, the SEC had sent emails to issuers of Bitcoin spot ETFs with comments and questions regarding the S-1 form. On October 12, ARK submitted an updated version of its Bitcoin spot ETF application to the SEC. Changes include: 1) Asset net value calculation not following GAAP accounting standards. 2) The trust company keeps assets with a custodian in a separate wallet on the Bitcoin blockchain, preventing them from mixing with the company’s or other client assets. 3) Responses to other issues raised by the SEC. Following ARK’s response to the SEC’s comments, Invesco Galaxy also updated its Bitcoin spot ETF S-1 document.
Additionally, ProShares is set to launch a Short Ethereum Strategy ETF (SETH) next week, beginning trading on October 16, Eastern Time. This fund does not directly short ETH but aims to profit from the asset’s price decline. Analysts suggest that the SEC has expedited the approval process for all long/traditional Ethereum futures ETFs, with this ETF scheduled to become effective on its normal/expected date, as its filing was submitted in August alongside other ETFs.
Analysts have also shared their opinions on Bitcoin spot ETFs. For more information, refer to the attached graphic.
(Source: Twitter@EricBalchunas, Bloomberg, SEC.gov)
2 Crypto Market Pulse
Last week, the cryptocurrency market capitalization experienced a decline following volatility. Growing geopolitical concerns and the possibility of further interest rate hikes exerted pressure on the cryptocurrency market. As of October 15th, 12:00 AM, the price of Bitcoin stood at $26,890, marking a 4% decrease over the week. Ethereum, as the second-largest cryptocurrency, dropped to a seven-month low of $1,524 on Thursday, a price level last seen in March. The current average Ethereum price is $1,555, representing a 5% decrease. The total market capitalization of the cryptocurrency market decreased by 4.3% to reach $1.05 trillion. Additionally, Bitcoin’s market share within the entire market remained at 50%, totaling $525 billion, while Ethereum’s market share dropped to 17.8%, currently at $187 billion.
Left: Market Cap, Right: BTCÐ Price (Data: CoinMarketCap)
$LOOM, $KLAY, and $FXS emerged as Top 3 gainers, while $MNT, $AVAX, and $DYDX were Top 3 losers. In recent months, the price of the gaming operating platform Loom Network has been defying gravity. It soared to a high point of $0.3, marking a roughly 670% increase from this month’s lowest levels. It became the best-performing cryptocurrency last week. The recent price surge may indicate that the market recognizes the platform’s value proposition in this rapidly growing industry. The upward momentum of $KLAY may have been driven by recent network upgrades and a hard fork. This development is a significant step in enhancing the efficiency, security, and overall performance of the Klaytn blockchain. The Klaytn community eagerly anticipates that these upgrades will have a positive impact on the network ecosystem. $FXS price broke out from a 230-day long-term descending resistance trendline, gaining 6% in a week. The launch of sFRAX, a staking vault, could have contributed to this increase. Users can stake FRAX and earn Treasury Bill Yield.
With rising inflation expectations in the United States, the cryptocurrency market has been affected by negative sentiment, leading to bearish market conditions for certain altcoins such as $MNT, $AVAX, and $DYDX, which have recently been under continued negative pressure.
Top 10 Gainers & Losers (Data: CoinMarketCap, LBank Labs)
The total supply of stablecoins saw a continuous slight decrease to $119.5 billion within a week. The contraction in stablecoin supply peaked last Friday, aligning with broader macroeconomic trends. Concurrently, exchanges’ net positions shifted from net inflows to net outflows in the latter part of the week, further reflecting investors’ preference for risk-averse environments, with net capital outflows from crypto assets.
Stablecoins Market Cap (Data: Glassnode)
In the derivatives market, the total open interest in Bitcoin and Ethereum futures contracts showed significant growth last week, indicating new capital inflows into the crypto market. Market activity peaked around October 11th, coinciding with a period when both Bitcoin and Ethereum prices were in a declining trend. Clearing results also revealed a significant disparity between long and short liquidations, with a substantial number of long positions getting continuously liquidated starting around the 10th, further illustrating the current market’s volatility and uncertainty.
Left: BTC & ETH Open Interest, Right: BTC & ETH Total Future Liquidations (Data: Glassnode)
In the DeFi market, the Total Value Locked (TVL) saw a slight decline of 0.48% last week, currently standing at $367 billion. Over the past seven days, the trading volume on DEXs was $10.8 billion, representing an 11.3% decrease from the previous week. Additionally, the market share gap between DEXs and CEXs has reduced and now stands at 13%. Furthermore, among the top ten blockchain platforms by TVL, all experienced a decline in TVL over the past 7 days. Polygon and Base were notably affected, witnessing declines of 12% and 10%, respectively.
Left: TVL & Volume, Right: Top 10 chains (Data: DefiLlama)
Last week, the NFT market continued to experience a slight decline. The total market capitalization decreased by 5.4% to reach $4.2 billion. The seven-day trading volume fell by 9.8%, currently standing at less than $40 million. Blue-chip NFT collections like Bored Ape Yacht Club (BAYC) and Mutant Ape Yacht Club (MAYC) saw declines in their floor prices and average prices. The floor price and average price of BAYC dropped by around 5% each, while MAYC experienced decreases of 5% and 3% in their floor price and average price, respectively.
Market Cap & Volume, 7D (Data: NFTGo)
LBank Lab’s Recap
Crypto market sentiment has shown signs of improvement towards the end of the week, driven by the SEC’s decision not to appeal Grayscale’s recent court victory in its quest to transform its trust into a Bitcoin ETF. While this development does not guarantee immediate approval for a spot ETF, it suggests a gradual shift in the SEC’s stance.
Moving forward, we are adapting our market outlook section to provide concise insights, including research findings on small-market-cap tokens. It is crucial to note that the information provided here does not constitute financial advice.
BTC has found substantial support around its current price level. Persistent liquidation activity has been observed around the $26,400 and $26,000 marks, yet the market is steadfastly avoiding these levels, underscoring its robust momentum.
ETH continues to experience a decline in market dominance, partially attributed to recent sales of ETH by the Ethereum Foundation. Historical data suggests that this marks a critical juncture for the long ETH/BTC trading pair.
Trading activity for Upbit’s native exchange token has exhibited the most substantial growth, coinciding with notable surges in the value of altcoins primarily originating from the Korean exchange.
Notably, a significant portion of the circulating supply of LOOM is still held by a single whale address, accounting for 47.5%. Presently, trading opportunities appear limited due to a negative funding rate of -3% on Binance.
Regarding LQTY and TRB, market manipulation persists, making it challenging to predict price movements or discern clear market trends.
MKR, a leading project in the realm of Real-World Assets (RWA), continues to attract traders’ attention. US treasury bonds remain a favorable asset choice, further bolstering MKR’s appeal.
ICP has seen a notable uptick in trading activity and increased social mentions, hinting at the potential for further upside in its price.
The sentiment surrounding RPL indicates a prevalence of short positions over long ones, resulting in a continued price decline, despite intermittent pumps. This suggests that market participants remain bearish on RPL.
Please exercise caution and conduct thorough research before making any investment decisions in the volatile crypto market.
- BTC price optimistic: $27500 — $29500
- BTC price neutral: $2600-$27500
- BTC price pessimistic: $24000 — $26000
3 Major Project News
[Ethereum] Ethereum All Core Developers Execution Call #172 Writeup. Galaxy Research Vice President Christine Kim summarized the 172nd Ethereum All Core Developers’ Executive (ACDE) conference call, which covered the KanKun/Deneb (Dencun) test and Ethereum Virtual Machine Object Format (EOF) development. Barnabas Busa, DevOps engineer at the Ethereum Foundation, emphasized that developers are still working to address “major issues” in the Dencun testing process. Devnet #10 will not be rolled out until these issues are resolved, making it potentially the last Devnet before Dencun is activated on public Ethereum testnets like Goerli.
Core developer Tim Beiko inquired whether developers would be willing to upgrade the Goerli testnet after the release of Devnet #10. Busa suggested waiting for the results of Devnet #10 before deciding on the next upgrade testing step.
[Layer2] Scroll zkEVM Launches, Blockchain Data Shows, Competing With Polygon, Matter Labs. Scroll, a layer 2 scaling solution to the Ethereum blockchain, appears to have launched its main network, according to blockchain data. Led by co-founder Sandy Peng, Scroll has been building a so-called ZK rollup — a layer-2 network built using zero-knowledge cryptography — that is compatible with the Ethereum Virtual Machine computing environment, or EVM. The compatibility makes it easy for developers to redeploy applications built for Ethereum onto the new “zkEVM” network.
Scroll’s debut adds to the competition among rival providers of zkEVMs, including Polygon and Matter Labs. Etherscan, a blockchain explorer tool, showed the main Ethereum blockchain interacting with the “Scroll: L1 Gateway Router Proxy” over the past couple days, following a “Contract creation.” On Dune Analytics, a blockchain analysis platform, a dashboard was launched to track the new Scroll zkEVM. As of last Thursday, some 370 ETH ($565,000 worth) had been bridged to the network, the dashboard shows.
[Layer2] zkSync Era has open-sourced two components: the Block Explorer and Portal (Bridge). Explorer and Portal (Bridge). These components are now entrusted to the core contributor community, and Matter Labs will gradually reduce its role in the ongoing zkSync technical development and ecosystem management. Community users can now seamlessly bridge tokens by running zkSync Portal on their own, and both users and developers can explore transactions, blocks, and contracts through the fully open-source Block Explorer, which supports local deployment and integrates Blockscout and L2scan for accessing on-chain data. A dedicated resource page is currently being launched to assist users and developers in adopting these alternative solutions and other bridges and exchanges.
[Sui] Sui: An additional 40 million SUI tokens will be added to the ecosystem growth fund, bringing the total to 157 million SUI tokens. On October 14, Sui’s official announcement on social media stated that, in addition to the previously announced 117 million SUI tokens, an extra 40 million SUI tokens have been transferred from an external market maker to support ecosystem development and the community. This increases the total SUI tokens driving ecosystem growth to 157 million.
Furthermore, on October 12, the Sui mainnet has been upgraded to version V1.11.2, along with a Sui protocol upgrade to version 27. The main upgrades include changes in Gas fee settings for high-level transactions to improve Gas consumption speed, without affecting previous transactions, ensuring efficient resource utilization. There are also improvements to the output of Sui client object commands, making it more understandable and browsable, with standard JSON output available using the “ — JSON” flag. Additionally, the disassembly of Move bytecode now displays constants and attempts to show deserialized strings, among other updates.
(Source: Twitter@SuiNetwork, github.com)
[Cosmos] Cosmos will undergo the Gaia V13 upgrade. Cosmos Hub has announced the Gaia V13 upgrade, scheduled for block height 17,380,000, expected to occur around 16:40 on October 11th. There may be brief downtime during the network upgrade, potentially causing delays in transactions and transfers. This upgrade involves two key updates: the removal of the old Gravity DEX liquidity module code from the Gaia codebase and an update to the chain-interaction security provider module for Cosmos Hub.
[Avalanche] Avalanche Cortina 12 is out. Ava Labs Engineering Director Patrick O’Grady posted on the X platform, announcing the release of Avalanche Cortina 12, version V1.10.12. This version is backward compatible with V1.10.0 and includes key upgrades such as Chits high voting, dual Alpha support (not enabled), and configurable MerkleDB branch factor.
[Polkadot] Astar Network: The zkEVM testnet is set to be launched and is open for early registration. Astar Network, the smart contract platform within the Polkadot ecosystem, has revealed the progress of the Astar zkEVM environment. Currently, the zkEVM staging environment and the Sepolia staging bridge have been completed, with the cross-chain bridge user interface in development. The Astar zkEVM testnet is about to be released, and early registration is now open.
4 Key Fundraising Data
Last week witnessed a total of 12 financing events, raising a substantial amount of over $65.4 million*. Compared to the previous week, there was a slight decrease in financing activity. The Service sector attracted the most attention with 5 financing events, accounting for 41.7% of the total fundraising activities, amounting to $33.9 million, which is 51.8% of the total funding. The largest fundraising event of the week also occurred in the Service sector, led by the Membrane Labs project, which raised $20 million. Membrane is a technology platform offering enterprise-grade trading and lending applications for crypto. More detailed information is provided below.
*2 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:
Membrane Labs, a cryptocurrency-focused trading and lending platform, has raised $20 million in a Series A funding round, with participation from big names like Brevan Howard Digital and Point72 Ventures. The capital will be used to help build the type of grown-up trading infrastructure the crypto space needs in order to avoid further disasters. Other notable names included in the round were Jane Street, Flow Traders, QCP Capital, Two Sigma Ventures, Electric Capital, Jump Crypto, QCP Capital, GSR Markets, Belvedere Trading, and Framework Ventures.
Membrane started out by building a clearing, netting and settlement engine, explained the firm’s CEO Carson Cook. This enabled institutions to choose where and how they custody their funds, whether that’s a custodian or multi-party computation MPC wallet, and then separately have their front office determine where and how they execute trades.
- Official Link: https://membranelabs.com/
Singapore-based wallet provider Account Labs announced a $7.7 million funding round led by investors including Amber Group, MixMarvel DAO Ventures, and Qiming Ventures. The strategic investment comes in tandem with the launch of their consumer-centric application, UniPass Wallet, a self-custody wallet focused on peer-to-peer (P2P) stablecoin transfers.
The wallet will also leverage account abstraction to improve its user experience. “Essentially, account abstraction develops smart contracts into wallets, and because the smart contract is programmable, developers can then program more functionalities into it,” Lixin Liu, CEO of Account Labs said that. “In contrast to traditional self-custody wallets like MetaMask, UniPass wallet is a smart contract wallet that harnesses Ethereum’s account abstraction technology.”
- Official Link: https://www.accountlabs.com/
Tokenized real-world asset (RWA) marketplace Untangled Finance went live Wednesday on the Celo network after securing a $13.5 million venture capital boost to bring tokenized private credit to blockchain, the company told CoinDesk. The lead investor was London-based asset management firm Fasanara Capital, which has also opened two credit pools on the platform, handling off-chain operations and underwriting loans.
Untangled also announced plans to expand to Ethereum (ETH) and layer 2 network Polygon (MATIC) via Chainlink’s (LINK) Cross Chain Interoperability Protocol, making the platform a multichain and interoperable RWA credit protocol.
- Official Link: https://www.untangled.finance/
Several prominent investment firms participated in this funding round, including OKX Ventures, 6th Man Ventures, Arcane Ventures, CMS Holdings, Comma3 Ventures, DeFine Ventures, Enjin, FBG Capital, HTX Ventures, Mirana Ventures, Oracles Investment Group, Signum Capital, Sora Ventures, and UOB Venture Management.
The raised funds will be used to build the REPUBLIK platform and develop cutting-edge Web3 creator tools on blockchain. Currently, REPUBLIK’s web application, iOS application, and Android application are still in the testing phase but have gained significant momentum, offering creators new interactive ways to earn rewards by contributing to the platform.
- Official Link: https://republik.gg/
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.