Crypto Daily Sentiment, Vibe, Topic of the Day -
Weekly tl;dr
Monday, February 14th: Mildly green morning, mostly noise. Super Bowl crypto ads ended up being a non event for crypto. Ukraine invasion hot topic of discussion. Lots of macro uncertainty. Markets close hesitantly green.
Tuesday, February 15th: Green morning on Russia might not invade Ukraine gossip news. No discernable CT trend. Markets close strong.
Wednesday, February 16th: Volatile morning. CT getting antsy over miscellaneous issues.
Thursday, February 17th: Market turns bloody. Bitcoin at critical support. Bearish takes popping up on the timeline. Rumblings of a US presidential executive order start spooking people even though it’s about issuance of a CBDC. Geopolitical tensions continue. x2y2.
Friday, February 18th: Bloody. Market can’t catch a break.
Saturday, February 19th: Bitcoin flirting very uncomfortably with 40k level. Eth Denver talk/roasting some mfer named Ken/wife. Opensea/x2y2/phishing email exploit causes mayhem, looksrare gets attention.
Sunday, February 20th: Bitcoin bleeds lower to ~ 38k as 40k lost. CT sentiment feels pretty bearish.
End of Week Thoughts: reminiscences of an anon
none of this is finanshy advice. these are just my thoughts and opinions.
The sentiment this week continues to be heavy and geopolitical tensions continue to weigh on financial markets. Bitcoin is struggling to hold the 40k region which if lost, would likely lead to further downside considering we’ve been in a brutal downtrend since November and the trend is currently still down at the moment. I can’t predict what will happen in the coming weeks and months, however I can start by reviewing some of the events we’ve had over the past 2 years to help put into perspective where we are now. Then by viewing things from a rational point of view, attempt to make reasonable trading and investing decisions. I’m interested in exploring what I consider to be issues and deficits in the crypto and blockchain space as these should be areas of interest going forward since money that has flowed out of the market recently should logically flow back to these key sectors when risk on conditions resume.
The macroeconomic environment has been rough post-covid for those paying attention. Lockdowns, high unemployment, riots, protests, global supply shocks, Chinese property developer Evergrande debt default which could signal further economic effects, record high inflation since 1982, various regulatory fud from different governments and organizations and now rising tensions between the Ukraine and Russia are putting market participants on edge. I’m not an expert, these are simply things that have happened recently. Looking at the bitcoin chart and you can see that market participants started going risk off in November and the crypto markets have been in a brutal downtrend since with any bullishness sold down quickly and expeditiously. Crypto twitter has been antsy and distracted with various issues of the day and drama. In recent weeks and months however there was still money to be made in alt L1 narrative plays such as avalanche, foan ( fantom, one, atom, near), the curve wars narrative and a variety of here and there gaming plays like dfk, crabada, magic, dcau and a recent NFT resurgence. What they call the rotator game. All of these narratives were hot until they weren’t. And they weren’t real quick. Time for some harsh reminders which all participants in these markets should be aware of and hopefully already know, especially if you’re for some reason reading this random substack. We are operating in a brutal pvp zero sum game where the average retail user is at a serious disadvantage in almost every way. Asymmetrically disadvantaged in information, purchase price and opportunities, technology, experience and up against armies of gigabrains. The game is set against retail with many predatory practices such as VC-retail bukkake tokenomics, questionable/illegal influencer behavior, insider trading knowledge channels and the many exploits, hacks and rugs as well which all result in retail losing money. Crypto is chaos. However in my opinion, there is merit as to why certain narratives picked up steam. The underlying issues are important to take note of and when money eventually starts flowing back into the market, it should be reasonable that these sectors and areas, more so than any specific coin, will be where money flows. It’s also important to take special care to not get too caught up in the tech or marry any one idea or project as this can be a promise of a future that may never come. Best not to end up a bag holder. Instead I like looking at human psychology, trends, momentum, culture and use/adoption. It’s important to not get caught up in the shilling as that’s what most of this space is and it’s designed to make other people rich at the expense of the masses. Lot’s of bullshit in crypto. However I don’t believe it to be all rubbish and one of the most common analogies that is also one of my favorites is that of “gold rushes”. In rushes like this, you should be focusing on attempting to sell picks and shovels, that is to say, to sell the tools to all the hopeful souls looking to strike it rich, instead of being one of the poor souls. Bit of a heavy thought. What sorts of picks and shovels will crypto and blockchain users be needing? Well, high Ethereum gas fees made the network unusable for most participants and therefore cheaper L1s were a natural choice as a meta narrative for people eager to find gains. The fight for stablecoin liquidity in DeFi is a serious issue in this space and it produced a series of protocols aiming to solve this issue with complex, intricate and sometimes questionable mechanics and token design. And gaming will be huge going forward, that’s simply all there is to say about it. Gaming culture is in and will only grow bigger. These are just a few of the meta narratives that stand out but there are many more such as scaling solutions, modular blockchain design, privacy, infrastructure, etc. I’d like to get to that all in good time.
So that’s where we are now, let’s focus on some more positive things. Despite numba go down only, there are a ton of positive developments going on each and every single day. This last week has seen over $1 billion of crypto venture deals. Incredible. Everyone and their grandmother can’t help but want a piece of the pie and to get skin in the game. I like to keep track of the various fund raises and news events to get a sense over time of what trends are emerging and where the money is going. Monitoring the players and how they position themselves on the board. The money is unsurprisingly flowing into the gaming, NFT and metaverse sector. Follow the money. But, despite all this money flowing in, it feels too much like a money grab, messy and awkward. Current P2E games are simply lame and boring, despite being profitable in certain cases for early investors and players, it’s nowhere near the level it needs to be for real mass adoption yet. Real gamers are also often staunchly opposed to the introduction of NFTs in their games as they see this as game makers trying to squeeze more money out of players instead of adding actual value or real, genuine, necessary and wanted use cases. NFT jpegs in their current iteration are simply not particularly interesting at this point in time to the average person unless they’re a trader or speculator. It won’t last long. Certain brands and collections will stand the test of time for their cultural and historical significance, eg. CryptoPunks and Bored Apes. People will value those the way others do baseball cards, pokemon cards and beanie babies. That’s understandable. Others will find success as status symbols of the rich. The rich will always want to flex and certain projects are hard at work garnering brand recognition to accomplish this. However no one can convince me that normal users will be interested in purchasing pictures of who cares for what for lots of money just so they can say they own it on something they can’t see called the blockchain. Things will need to feel organic, effortless and incite a sense of interest in the millions of casual users it will take for crypto to be cemented as “mainstream”. Everything will most likely have to be mobile and extremely user friendly which crypto is currently still not. I’m not particularly blown away by anything yet but I am keeping my eyes open for the eventual time when something really does pique my interest. This doesn’t mean that I’m anti-NFT as I see them having much more interesting use cases in the future when it comes to things like DeFi, real estate, credentials, records, collectibles, music, movies, and social experiences. Eventually somehow integrating seamlessly into gaming experiences and real life. Honestly, not sure what it’ll actually look like but the momentum and trend is in that direction. Not fading human psychology sounds like a good idea though. Humans are social creatures who crave connection and have become disconnected from each other. Many live life through their screens. There’s opportunities for all of this to be done right and wrong, it’s going to depend on the people involved.
The crux of the issue will be finding builders and teams who understand the dynamics of this space and are able to read the sentiment to ensure their games and products result in true user mass adoption and not just junk cash grabs as has been the case. This includes an understanding of tokenomics design which I’d also like to explore in the future just like pretty much everyone else around here. How teams implement this properly will be very interesting. Other thoughts while I’m at it that often cross my mind are all the various exploits and hacks we’ve seen recently. There is a lot of inevitable regulatory framework in the coming years and I often wonder what the state of crypto will be when it finally comes due to all this negative publicity being easy fuel for the anti crypto people. I’m talking things like stablecoin regulation, DAO regulation, KYC requirements, central bank digital currencies,
taxes (凸( •̀_•́ )凸). Not fun but it is what it is and we’ll tackle it head on. In my opinion, despite the current uneasy atmosphere we find ourselves in, the macrotrend for crypto is up, and for those participants willing to put in the work, there should be promising financial opportunities. One of my approaches will be to focus on problems that need solving in this space and identify who is attempting to solve those problems, how are they doing it, how does it compare to others who are also doing it or have done it and combine all this with an understanding of the cruel, harsh zero sum game we’re playing to attempt to carve out that covetous edge. Risk management will be the name of the game going forward. Everyone wants to make money but not losing money is just as important. Stay safe.
- Time moves differently in crypto. Crypto is an intricate game filled with various players operating across multiple time frames and with varying agendas. Day in, day out, the pieces are moving all across the board. Sometimes for the better and sometimes for the worse. It can be difficult to keep up with so many events so here’s a glimpse of the past few days in our little crypto bubble -
Feb 17th-20th, 2022
News:
The Financial Action Task Force, or FATF, recommended to participating regulators across the globe that virtual asset service providers, or VASPs, adopt certain guidelines related to anti-money laundering (AML) and anti-terrorist financing (ATF). The guidelines, which many refer to as the “Travel Rule,” aims to prevent users of crypto firms and exchanges from using digital assets for illicit purposes by recommending they provide details on both the sender and recipient to their counterparts for certain transactions of $1,000 or more - source
Twitter enables users to give and receive Ethereum tips natively. Users will still need to provide a full Ethereum address however as ENS domains have not yet been integrated. In September 2021, Twitter enabled Bitcoin payments as the first cryptocurrency payment option available via its tipping jar. On Wednesday, the social media platform added a slew of fresh payment services to these existing tipping options, including Ether (ETH) - source
International oil and gas giant ConocoPhilips is dipping its toes into Bitcoin (BTC) mining as a way to eliminate the wasteful practice of flaring. According to a report from CNBC, the company is currently operating a pilot scheme in the oil-rich region of Bakken, North Dakota. Instead of burning excess gas, a byproduct of oil-drilling known as flaring, the company is selling it to a third party Bitcoin miner to be used as fuel - source
Bitcoin miners selling stock and BTC as returns halve since November. Miners are starting to get strapped for cash and need a boost since BTC has dropped in price since November and revenue has fallen even further due to increased competition. Data from on-chain analytics firm Glassnode shows that Bitcoin miners have become net sellers after being net hodlers for months. Since Nov. 9, the return from mining 1 BTC has decreased by an average of 50.5% for the two most popular mining devices, the Antminer S9 and the S19, according to data by blockchain research firm Arcane Research - source
Brisbane-based crypto exchange Swyftx has penned a major three-year sponsorship deal with the Australian National Rugby League (NRL). Swyftx is registered in Australia and New Zealand and offers trading services for around 300 digital assets. The firm was founded in 2018 and the NRL deal marks another major milestone for promoting the local crypto and blockchain sector to sports fans, with the Australian Football League women’s competition already signing with Crypto.Com for $25 million over five years - source
Tax Day can be important to crypto prices. After the three previous big run-ups – 2013, 2017, and 2020 – and this one, 2021 – bitcoin peaked 35 days before Tax Day and then declined to a local trough as investors sold off assets to cover taxes accrued in 2020 - source
Jobless Data Makes March Rate Hike More Likely. Though analysts say impact of interest rate rise is priced in - source
Former presidential and NYC mayoral candidate Andrew Yang is aiming to launch a DAO to get lobbying dollars and the lawmakers they influence on board with Web3. Yang announced the initiative, called Lobby3, in a Twitter post Thursday. After its lobbying infrastructure is built, a portion of the proceeds will fund a DAO. The minting of Lobby3 tokens is set for Feb. 28 - source
U.S. Deputy Attorney General Lisa Monaco has announced that the Federal Bureau of Investigation will be increasing efforts to address enforcement in the digital asset space with the formation of a new team. Speaking at the Munich Cyber Security Conference on Thursday, Monaco said the FBI was creating a “specialized team dedicated to cryptocurrency” called the Virtual Asset Exploitation Unit. The unit will include crypto experts and as well have the means for blockchain analysis that may eventually be used to track and seize illicit funds - source
USD Coin (USDC) operator Circle has seen its valuation double to $9 billion after the company revised its merger agreement with Concord Acquisition Corp, a special purpose acquisition company (SPAC) founded in 2020. Circle announced Thursday that it had terminated its previous business combination terms with Concord and reached a new agreement that is expected to be finalized by December 8, 2022, with the possibility of it being extended to January 31, 2023 - source
The White House will reportedly be issuing an executive order as early as next week directing government agencies to study different aspects of the digital asset space with the goal of creating a comprehensive regulatory framework. The directive from President Biden would reportedly order the Office of the Attorney General, the State Department, and the Treasury Department to study the potential rollout of a U.S.-issued central bank digital currency - source
Ukraine Passes Law Legalizing Crypto as Threat of War Looms. The Verkhovna Rada — Ukraine’s parliament - passed its crypto bill with majority support from 272 of its 450 members, according to an official statement. Amendments to the bill, which was first introduced in September, will see the National Commission on Securities and Stock Market installed as the primary regulator for crypto - source
Mining difficulty reached a new high of 27.97 trillion hashes. This is now the second time in three weeks that Bitcoin has hit a new all-time high (ATH) in terms of difficulty. On Jan. 23, difficulty reached 26.7 trillion when hash rates were at 190.71 exahashes per second (EH/s). Higher difficulty means there is more competition among miners to confirm a block and extract a block reward. As a result, miners have recently begun selling off coins or their company’s stock in order to keep their cash reserves intact. Most notably, Marathon Digital Holdings filed on Saturday to sell $750 million worth of company shares - source
U.S. banking giant JPMorgan Chase has unveiled research on a Quantum Key Distribution (QKD) blockchain network that is resistant to quantum computing attacks. QKD utilizes quantum mechanics and cryptography to enable two parties to exchange secure data and detect and defend against third parties that are attempting to eavesdrop on the exchange. The technology is seen as a viable defense against potential blockchain hacks that could be conducted by quantum computers in the future - source
On Thursday, Ontario Superior Court Justice Calum MacLeod issued an order freezing all the digital assets and bank accounts associated with “Freedom Convoy,” a series of ongoing protests against COVID-19 vaccine mandates and restrictions. Kraken’s CEO admitted that the firm could be forced to freeze some wallets by the police, advising to move crypto out of exchanges - source
In a Friday announcement, the FOMC said that starting on May 1, senior Federal Reserve officials already working at the agency would have one year to “dispose of all impermissible holdings,” while new officials would have six months to do so. The new rules specify that Fed senior officials, which include Reserve Bank first vice presidents and research directors, FOMC staff officers, the System Open Market Account manager and deputy manager, Board division directors who regularly attend Committee meetings, individuals designated by the Fed chair, and their spouses and children under 18 are: “Prohibited from purchasing individual stocks or sector funds; holding investments in individual bonds, agency securities, cryptocurrencies, commodities, or foreign currencies; entering into derivatives contracts; and engaging in short sales or purchasing securities on margin.” - source
After a month-long fight against an ongoing exploit, cross-chain router protocol Multichain announced the recovery of nearly 50% of the total stolen funds, worth nearly $2.6 million of cryptocurrencies. The team has also released a compensation plan to reimburse the users’ losses - source
Metaverse:
Internet detective and Youtuber Coffeezilla published a new video documenting how he, along with members of the blockchain community, took down an alleged $20 million nonfungible tokens, or NFT, scam before it could come to fruition. As told by Coffeezilla, a lot of user hype previously existed for a novel crypto project called "Squiggles," which had an NFT drop scheduled for Feb. 10. At the time, Squiggles had amassed over 230,000 followers on Twitter - source
OpenSea smart contract upgrade to delist inactive NFTs on Ethereum. The NFT listings created before Feb. 18 will automatically expire by Feb. 25 by 2 PM ET - source
Despite reports that Melania Trump herself won an auction for her first NFT, the former first lady is rolling out another set of digital collectibles. “POTUS NFT Collection” will “recognize important moments in [America’s] history,” such as NFTs (non-fungible tokens) depicting Mount Rushmore, the White House and Air Force One, Trump said in a statement. Up for sale: 10,000 solana NFTs priced at $50 - source
OpenSea Investigating ‘Exploit Rumors’ as Users Complain of Missing NFTs.Emails purporting to be from the NFT marketplace about a planned smart contract migration may have been a phishing attack - source
DAOs:
Syndicate protocol helps create 450 new DAOs in just three weeks. The milestone in Syndicate’s journey may indicate that DAO governance structure will become more common in blockchain and beyond. Will Papper, co-founder of Syndicate explained to Cointelegraph today that the project had created 450 investment clubs as DAOs, which is just a little bit over 10% of the “best estimates” of 4227 DAOs in existence, based on DeepDAO’s metrics and figures reported in Forbes - source
KuCoin Labs, the investment and research arm of crypto exchange KuCoin, has released its annual report, predicting that decentralized finance (DeFi) will still be a significant trend in the crypto industry in 2022 and governance will be run through decentralized autonomous organizations (DAOs). With the DeFi ecosystem continuing to be plagued by criminal whales, the risks of financial loss within the sector are becoming more apparent. Because of this, calls to regulate decentralized finance began taking flight in 2021, and the sector has started to face enforcement actions over the past year - source
Terra injects 450M UST into Anchor reserve days before protocol depletion. The move is designed to maintain the stablecoin savings protocol's lucrative yield of approximately 20% per annum. Do Kwon, founder of Terraform Labs, the entity developing the Terra Luna (LUNA) and Terra USD (UST) stablecoin ecosystem, announced the injection of 450 million UST ($450 million) into the Anchor protocol's reserves. The proposal passed a vote by the Luna Foundation Guard on Feb.10. Anchor serves as the flagship savings protocol of the Terra ecosystem, offering users up to 20% interest per annum on their UST deposits, paid for by borrowers - source
Raises:
Decentralized data network Ceramic has raised a $30M Series A co-led by Multicoin Capital and Union Square Ventures. Placeholder, Reciprocal Ventures, CoinFund, Jump Crypto, Figment, Hashed, Metacartel Ventures, Edge & Node, Digital Currency Group, Variant Fund, Dapper Labs, Animoca Brands, Protocol Labs, Coinbase Ventures, ConsenSys, The LAO, Dialectic, Zee Prime are among investors - source
Stronghold Capital Launches With $100M Fund for Web3, Blockchain and Fintech. Payments and financial infrastructure firm Stronghold has launched a venture capital arm to expand into early-stage startups across three areas: The fund will target investments in founders from underrepresented groups such as women, Black and Indigenous people - source
Venture capital firm Castle Island Ventures has announced a $250 million raise for its latest crypto fund focused on startups building out monetary networks, internet infrastructure and financial services. Its latest raise follows from its previous $50 million fund last year, focused exclusively on public blockchains. The company’s first fund debuted back in 2018 and was valued at $30 million - source
Berlin-based venture capital firm Cherry Ventures has launched the $34 million crypto fund, named Cherry Crypto I. The fund has already quietly invested in staking platform Lido, lending protocol optimizer Morpho and NFT investment Decentralized Autonomous Organization (DAO) BlackPool - source
Sequoia Capital will bet on tokens through its new crypto fund worth $500-600 million. The VC firm will also actively manage tokens, from staking them to providing liquidity to participating in governance - source
Venture capital firms allocated $25.2 billion towards blockchain and cryptocurrency projects in 2021, the highest on record - source
Digital Currency Group, Multicoin Capital, Reciprocal Ventures, gumi Cryptos Capital, NGC Ventures and HashKey launch a $205 million ecosystem fund to accelerate the growth and development of projects on The Graph, an indexing layer for Web3 and blockchain data. Additionally, the funds will provide support from a “host of areas” and provide guidance for projects - source
Maverick Protocol, a permissionless derivatives protocol, has announced its $8 million strategic fundraising round, led by Pantera Capital. Other investors: Altonomy, Circle Ventures, CMT Digital, Coral DeFi, Gemini Frontier Fund, GoldenTree Asset Management, Jump Crypto, LedgerPrime, Spartan Group, Taureon, and Tron Foundation - source
Shade Protocol has recently closed a $5,000,000 private raise to build privacy-preserving DeFi applications on Secret Network - starting with Silk, a privacy-preserving stablecoin pegged to a basket of global currencies and commodities. This $5M in capital will be used to support core protocol contributors and developers to continue their mission of bringing DeFi to privacy on Secret Network — unlocking untapped potential in the world of stablecoins, synthetics, and DeFi. Investors: SCRT Labs, Figment Labs, Composable Labs, AW3 Labs, NGC Ventures, Sky Vision Capital, A41 Ventures, SkyBridge20 Ventures, 0xVentures, Bison Fund, Citadel.One, Shima Capital, Momentum6, Basics Capital, Taureon, Divergence Capital, Boring DAO, Quant Capital, AVentures - source
Bullieverse, an Open Metaverse developed for the community of players and creators, has raised $4 million in its strategic funding round. Bullieverse is an ecosystem of crypto-centric arcade games: it brings a layer of immersive experience into Metaverse-themed GameFis leveraging unique 3D Metaverse technology Unreal Engine. OKX Blockdream Ventures led the round while Mike Dudas' 6thMan Ventures, C² Ventures, GravityX, LD Capital, Rainmaker Games, Genblock Capital, Spark Digital Capital, Roark Fund, Good Games Guild, Shima Capital, ExNetwork, Mintable, DWeb3 and Gate Labs also backed the start-up in its fundraising efforts
Ethereum-focused multi-chain network SKALE set up a $100 million grant program to fund the future of blockchain-based gaming. The Network of Decentralized Economics (NODE) will kick-start the program with $5 million to creators focused on blockchain gaming, play-to-earn gaming and the metaverse - source
Helium has raised a $200 million Series D at a $1.2 billion valuation. Tiger Global and FTX Ventures have reportedly joined existing backers such as Khosla Ventures and Multicoin Capital. Previously, the company held a $111 million token sale led by Andreessen Horowitz (a16z) - source
Data:
There are currently ~275k daily active entities on the Bitcoin network. This level of activity is far below bull market highs, indicative of tepid demand from new users. However, the activity floor continues to climb in bearish markets, reflecting longer-term network effects - glassnode
(sauce: glassnode)