*All on-chain data is dated as of 12:00 a.m. EST on Sunday, October 1st.
Welcome back to LBank Labs Weekly Digest! Here we list all you need to know about crypto market in the past week(Sep.24–30).
Author: LBank Labs Research team — Hanze, Johnny
Keywords: #PCE #ETF #Layer2
1 Macro Market Overview
U.S. Stocks Wrap Up Another Weak September. According to WSJ, a recent surge in longer-term government bond yields has given investors options to earn returns without as much risk as in the stock market. That helped push stocks lower for the week, month and quarter ending Friday. Stocks initially rallied Friday morning after encouraging data on inflation. The central bank’s preferred inflation measure, the personal-consumption expenditures price index, rose a seasonally adjusted 0.4% in August from the previous month. Core prices, which leave out food and energy, rose 0.1%, the weakest monthly increase since 2020.
However, stocks have broadly fallen since last week’s Federal Reserve meeting, when central bankers raised their interest-rate forecasts for next year. Technology stocks have been hit hard by the climb in rates. Apple shares fell 8.9% in September, while Nvidia shares tumbled 12%. Those stocks remain up 32% and 198%, respectively, in 2023. Some investors view technology stocks as particularly vulnerable because they tend to be valued based on earnings expected to arrive further in the future, and those profits are worth less when investors can get an improved risk-free return by holding government bonds to maturity. At the same time, higher bond yields and borrowing costs could cause a recession, which could do greater damage to companies outside the tech sector.
Overall, with a focus on technology stocks, Nasdaq declined by 1.31% last week, Dow increased by 0.11%, and S&P 500 experienced a 0.7% decrease. Web3-related stocks performed relatively well last week, with only MARA experiencing a 2.2% decline. COIN and MSTR, on the other hand, recorded gains of 5.8% and 1.6% respectively. Notably, MicroStrategy announced last week that it added approximately $147.3M worth of Bitcoin to its holdings, purchasing 5,445 BTC at an average price of $27,053 per BTC.
In August, the U.S. Personal Consumption Expenditures (PCE) Price Index increased by 0.4% on a monthly basis, slightly lower than the market’s expectation of 0.5%. On an annual basis, it rose in line with expectations by 3.5%. However, when excluding food and energy prices, the core index increased by 0.1% on a monthly basis, falling short of the expected 0.2%. On an annual basis, the core index narrowed to 3.9%, meeting market expectations and marking the first time it has dropped below 4% since September 2021.
Last Friday, the U.S. Dollar Index (DXY) concluded the day at 106.174, rose by 0.55% on a weekly basis, marking its 11th consecutive week of gains, establishing its longest winning streak in nine years. This month and this quarter, it has seen increases of 1.8% and over 3%, respectively.
According to WSJ, traders now assign a 50% probability that the Fed will cut its benchmark rate below the current level by its meeting next June, according to CME Group’s FedWatch tool. That is down from 77% a month ago. At the time of writing this article, the probability of the Federal Reserve maintaining the interest rate at 5.25% to 5.50% in November increased to 81.7%, compared to 81.7% from a week ago. The probability of a 25 basis point rate hike to a range of 5.50% to 5.75% stands at 18.3%.
Previously, the Federal Reserve decided to maintain the benchmark interest rate within the range of 5.25% to 5.50%, which was consistent with what the market had anticipated.
The yield on the benchmark 10-year U.S. Treasury (US10Y) note settled Friday at 4.575%, up from 4.090% at the end of August. That was its largest one-month yield gain since September 2022, according to Dow Jones Market Data.
A stronger-than-expected U.S. economy has led some investors to bet that the Fed will leave interest rates elevated, either to keep fighting inflation or because it sees no pressing need to take them much lower. That has helped push bond yields higher. The 10-year Treasury yield ticked up over 4.625% last Wednesday, its highest level since October 2007
Valkyrie Gets Approval to Start Buying ETH Futures for Its Existing Bitcoin ETF. Asset manager Valkyrie started buying Ether (ETH) futures contracts, after getting approval to convert its existing bitcoin futures ETF to a two-for-one investment vehicle. The fund’s new strategy to combine both ETH and BTC futures contract into one ETF will be formally effective on Oct. 3 and the name will be updated to Valkyrie Bitcoin and Ether Strategy ETF, while the ticker will remain BTF.
Previously, according to ETF analyst Eric Balchunas from Bloomberg, it’s been heard that the SEC is looking to expedite the launch of Ethereum futures ETFs because “they want it off their plate before shutdown.” Analysts also mentioned that while the spot market for Ethereum remained uncertain, there was a high likelihood (90% odds) that Ethereum futures ETFs would start launching in early October.
Currently, various companies have collectively submitted a total of 9 Ethereum futures ETF applications (including 4 that combine Bitcoin and Ethereum futures). Assuming the SEC accelerates their review process before a government shutdown, these ETFs could potentially be launched as early as next Monday.
2 Crypto Market Pulse
The cryptocurrency market cap remained relatively stable last week after experiencing some fluctuations. Last week, the cryptocurrency market experienced a significant uptrend. Positive factors, primarily driven by ETFs, influenced the cryptocurrency market. This led to $BTC starting to rise from Wednesday and closing at $27,050 per coin as of 12:00 AM on October 1st. $ETH currently sits at $1,675, marking a 5.2% increase over the week. The total market capitalization of the cryptocurrency market has risen by 2.5% to $1.08T. Furthermore, Bitcoin’s market share in the overall market stands at 48.9%, reaching $528B, while Ethereum’s market share is currently at 18.6%, totaling $201B.
$GMX, $MKR, and $PEPE emerged as Top 3 gainers, while $TON, $LEO, and $GT were Top 3 losers.
$GMX emerged as the top gainer this week, with a remarkable 21% increase over the past seven days. This surge is widely attributed to the recent launch of GMX quests as part of the Arbitrum Odyssey campaign, introduced just a few days ago. The upward trend in $MKR’s price can be attributed to its ongoing accumulation of real-world assets, further bolstered by the year’s dominant theme of Real World Assets (RWA) in the cryptocurrency market. This has contributed to the sustained increase in the price of $MKR. $PEPE, being a purely meme coin, may have established a foundation for future upward movement in the past few months overselling. Some whales might be considering buying into this meme coin again at a lower price. On the other hand, when looking at the top losers, most of them haven’t suffered significant losses in the current overall rebound cryptocurrency market environment. The majority of the declines can be attributed to short-term corrections.
Last week, the overall market capitalization of stablecoins experienced a slight decline. The supply of stablecoins returned to net outflows after a brief period of net inflows over a few days. Additionally, exchanges witnessed significant net outflows in their holdings within a short timeframe. Both of these data points indicate that users have reduced their selling sentiment towards cryptocurrencies and are now holding onto them. This reflects a broader market trend of rebounding sentiment.
In the derivatives market, the total open interest for futures contracts of both $BTC and $ETH saw a slight increase last week, indicating the entry of new funds into the market. Market activity peaked on September 28th, aligning with the rapid price increases of both $BTC and $ETH on that day. Furthermore, the liquidation outcomes for these two tokens showed some differences. The long and short plays in the $ETH market appeared to be more active, and the coexistence of bullish and bearish sentiments in the current market still persists. This once again highlights the volatility and uncertainty in the market.
In the DeFi market, the TVL remained relatively stable last week, currently standing at $385.5 billion. The seven-day trading volume for DEX reached $10.2B, showing a slight increase of 4.3% compared to the previous week. Additionally, the market share gap between DEX and CEX has slightly widened and now stands at 12%. Furthermore, among the top 10 blockchain platforms ranked by TVL, all platforms except Cronos continued their previous growth over the past 7 days. Notably, Tron’s rapid growth from previous weeks slowed down last week, marking the end of its double-digit percentage growth.
Last week, the NFT market stabilized after a prolonged decline, remaining relatively flat. The market capitalization experienced a modest rebound of 2.1%, reaching $4.51B. Additionally, the trading volume decreased by 3.9% over the past seven days. Blue-chip NFT collections like Bored Ape Yacht Club (BAYC), CryptoPunks, Mutant Ape Yacht Club (MAYC), and others saw a slight recovery in floor prices, but the overall NFT market still appears subdued.
3 Major Project News
[Ethereum] Ethereum’s Holesky Testnet Goes Live After Initial Failed Attempt. EthHub co-founder sassal.eth has announced on the X platform that the Ethereum Holesky testnet has been relaunched. Holesky joins the existing Goerli and Sepolia testnets, which function as copies of Ethereum’s main blockchain primarily for testing new applications and smart contracts.
Earlier, Ethereum core developer Tim Beiko raised concerns about the Dencun testnet’s schedule. He mentioned that if developers couldn’t ensure the release of Dencun on a public testnet before the Ethereum developer conference Devconnect in November 2023, it’s highly likely that the mainnet activation of Dencun wouldn’t occur this year. Tim Beiko suggested launching Dencun sequentially on the Holesky, Goerli, and Sepolia testnets.
[Layer2] zkSync and Code4rena Bring the Largest Competitive Audit to Web3. zkSync will conduct a security audit competition with a total prize pool of $1.1M on Code4rena. The competition will start on October 2nd at 16:00 Eastern Time and run for 21 days, concluding on October 23rd at 16:00 Eastern Time. The scope of the audit encompasses smart contracts, circuits, and virtual machine (VM) implementations for both L1 and L2 systems, with a total prize pool of 1.1M $USDC tokens.
[Polygon] Google Cloud has joined the Polygon PoS network as one of its validators. Polygon Labs has announced on the X platform that Google Cloud has become a part of the Polygon PoS network’s decentralized validator set, which now consists of over 100 validators.
Validators on the Polygon network contribute to network security by operating nodes, staking MATIC tokens, and participating in the PoS consensus mechanism.
[BSC] IBC is Finally Landing on BSC. The cross-chain bridge TOKI has introduced interchain communication (IBC) on the BNB Chain and is building unified cross-chain liquidity on top of the messaging layer to enable applications connecting BNB Chain and Ethereum via IBC.
This cross-chain bridge will facilitate the following use cases: 1) Cross-chain swaps: Exchange Ethereum tokens for tokens on PancakeSwap. 2)Cross-chain lending: Deposit Ethereum tokens on BNB Chain to borrow stablecoins, for example, through the Venus Protocol.
[Service] Circle Launches ‘Circle Research’ to Advance Open Source Development Across Crypto, Blockchain, and Web3. Circle has announced the establishment of Circle Research with the aim of accelerating and expanding technological innovation in the fields of cryptocurrency, blockchain, and Web3 through open-source research.
Furthermore, Circle Research has introduced an open-source smart contract code library called Perimeter Protocol, intended to serve as the foundation for building tokenized credit markets. This protocol can support various credit use cases, including invoice factoring, salary advances, merchant instant settlements, and institutional investor credit transactions. The whitepaper for this protocol is publicly available, allowing developers to freely replicate the code library and build products on top of it.
Additionally, native USDC will launch on Polygon PoS on October 10th, which will kickoff a transition away from bridged USDC for ecosystem apps, developers, and users. This transition will also coincide with a discontinuation of support for deposits and withdrawals of bridged USDC via Circle Account and its APIs on November 10th.
4 Key Fundraising Data
Last week witnessed a total of 14 financing events, raising a substantial amount of over $77.8 million*. Financing activities have seen a slight decrease in activity compared to the previous week, with both the total financing amount and the number of events showing a decline. Last week, the blockchain service sector garnered the most attention, accounting for 25.6% of the total fundraising activities, with a total financing amount of $46.9M, representing 60.3% of the total fundraising amount. The largest fundraising activity last week occurred in the service sector, led by the SupraOracles project, which raised $24M. SupraOracles is bridging real-world data to automate, simplify, and secure the smart contracts of financial markets. Further details are below.
*3 events of unknown amount are included, which have been excluded from the remaining data.
Below, we listed the most noteworthy fundraising deals for you:
Supra is helping to facilitate the massive migration of Web2 to Web3 by turbo-charging oracles, cross-chain communication protocols, and their cutting-edge consensus mechanism to build a more secure and interoperable future. Supra has raised over $24M in private investment rounds, and received investment from several multi-billion dollar prominent VCs including Animoca, Coinbase Ventures, HashKey, Prosus Ventures, Razer, United Overseas Bank Venture Management, Valor Equity Partners, among many more.
Supra is developing an innovative cross-chain oracle and “bridgeless” communication network that aims to achieve sub-2 second finality with security guarantees that are projected to be over 10x more secure than incumbent bridges using their bespoke consensus algorithm, “Moonshot Consensus.”
- Official Link: https://supraoracles.com/
IYK, a web3 startup that provides tools to brands like Adidas and Johnnie Walker to help bridge the physical and digital worlds, has raised $16.8M in seed funding led by A16z Crypto. Other investors in the round included 1kx, Collab Currency, Lattice Capital and gmoney, IYK said Thursday. IYK was an alumnus of a16z Crypto Startup School, the venture capital giant’s accelerator program that typically invests $500,000 in participating startups in exchange for 7% equity, according to its website.
It is unclear when IYK began raising for the seed round and when the firm closed it; co-founder Ryan Ouyang declined to comment. He also declined to comment on the structure of the seed round and valuation.
- Official Link: https://www.iyk.app/
Rated Labs, the company behind Rated, has raised a $12.888M Series A round to accelerate our mission for greater transparency and rich context in Web3 infrastructure data. The financing round was led by Archetype, with participation from seed investors Placeholder, 1confirmation, Cherry and Semantic, as well as new backers Robot Ventures, Chorus One, Factor and Maelstrom among others.
With the new funding they will power through expanding the capabilities to multiple new Proof-of-Stake networks, as well as new agent sets beyond validators (e.g. builders, sequencers etc), while bolstering their investment and commitment to Ethereum and its ecosystem.
- Official Link: https://www.rated.network/
LBank Labs, the trailblazing blockchain venture fund, has proudly announced its strategic investment in Bubblemaps, an innovative platform aimed at making blockchain data transparent, accessible, and engaging. Joining hands with esteemed investors including Stake Capital, INCE Capital, V3ntures, Nicolas Bacca, Owen Simonin (aka Hasheur), and others, this collaboration seeks to revolutionize the way users interact with blockchain information.
Nicolas Vaiman, CEO of Bubblemaps, is optimistic about the collaboration, expressing, “I’m excited to have Lbank Labs as part of our journey. Their commitment and expertise in our round will help redefine on-chain data interaction.”
- Official Link: https://bubblemaps.io/
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.