Here’s what happened in blockchain and crypto this week.
We’re excited to announce that Spirit Blockchain has agreed to enter into a strategic partnership with Valour, a publicly listed (NEO:DEFI; OTC:DEFTF; FRA:MB9) blockchain-focused technology company that bridges the gap between traditional capital markets, Web3, and DeFi. Valour will also participate in the private placement of CSE:SPIR (see also press release).
In markets, US equities look set to end the week higher after a strong rebound on Thursday and Friday. The rally was in part triggered by comments from from Atlanta Federal Reserve President Raphael Bostic who favored a “slow and steady” rate hike moving forward and a pause by mid- or late-summer. In government bonds, the 2-year Treasury note hit a new cycle high on Wednesday, surpassing the 4.881% it reached on November 4. After its recent surge, the yield on the 10-year equivalent was hovering around the key 4% level on Friday. Bitcoin and cryptoassets ended the week lower on the back of warnings of key crypto banking partner Silvergate on its ability to survive. The lender’s stock suffered a sharp drop to the tune of 50% on Thursday while market participants are still digesting the news and its implications for the industry. Despite bitcoin’s 7% drop on the week, performance of cryptoassets has held up fairly well considering the idiosyncratic developments and the recent regulatory crackdown.
On Tuesday, crypto lender Silvergate (SI) said that it was evaluating its ability to continue as a going concern and delayed the filing of its annual report on Wednesday. The bank also said that it may be “less than well capitalized” and it needs an additional two weeks to complete the filing of its annual report. The news does not bode well for the crypto industry. Silvergate has been a key banking partner for both US and non-US crypto firms, in part due to its Silvergate Exchange Network (SEN) which allowed its customers to send U.S. dollars and euros 24 hours a day. The network had been a key driver of growth for the bank last year, handling over $560 billion in volume, according to data by The Block.
Silvergate was also directly affected from the fallout of the collapse of FTX given that the lender had roughly $1 billion in deposits from the former crypto exchange at the time of the unraveling. Accordingly, the California-based bank, which reported a $1 billion loss in the fourth quarter, has received regulatory and political scrutiny. Clients including Coinbase, Circle, Gemini and Paxos were among several companies to release statements that they were severing ties with the lender on some level.
For example, Coinbase said that the firm is no longer accepting or initiating payments to or from Silvergate: “In light of recent developments & out of an abundance of caution, Coinbase is no longer accepting or initiating payments to or from Silvergate & will be facilitating institutional client cash transactions with our other banking partners,” the company said. Michael Saylor’s MicroStrategy which took out a $205 million loan from Silvergate in March 2022 tweeted that it doesn’t have any assets custodied with the lender and that the loan would not accelerate in the event of a SI bankruptcy event.
After Silvergate’s announcement, the bank was downgraded to “underweight” from “neutral” by JPMorgan. In February, major companies including BlackRock (7.2% stake), Susquehanna Advisors Group (7.5%), Citadel Securities (5.5%) and StateStreet (9.32%) disclosed a stake in the beleaguered bank. While there might not be a silver lining yet for the company, SI stock price took a breather and gained up by more than 7% prior to market close.
Market Overview
The global cryptoasset market capitalization currently amounts to $1.075 trillion – down from $1.1 trillion on Friday last week, with bitcoin accounting for 40.1%. Among the Top 30 cryptoassets by market cap, tokens were down across the board. The price of bitcoin (BTC) decreased by 6.6% to $22,358 over the week, while the price of ether (ETH) fell by 5.2% to $1,566. The total value locked (TVL) in DeFi is sitting at roughly $48.3 billion – with Ethereum (excluding Layer 2s) accounting for more than 58.8% of TVL.
This Week’s Headlines
- EU keeps focus on NFTs in latest anti-money laundering bill draft
- France passes new crypto registration rules for firms with milder rules than originally proposed
- Visa denies Reuters report according to which the company is looking to slow down partnerships with crypto companies
- Digital Currency Group (DCG) reports loss of $1.1 billion in 2022, CoinDesk says
- Former FTX executive Nishad Singh charged by the SEC for defrauding investors
- Coinbase to halt trading of Binance USD (BUSD) for not meeting listing standards
- Mt. Gox creditors may start seeing their first bitcoin payments this month
- NFT trading volume on Ethereum rises to highest level since May
- Bored Ape Yacht Club creator Yuga Labs drops Bitcoin-based NFT collection TwelveFold
Notable Deals and Fundraising
- Coinbase acquires One River Digital Asset Management
- Layer 1 blockchain Conflux Network announces a $10 million investment from DWF Labs
- Decentralized exchange Mangrove closed a $7.4 million Series A fundraise
- Impossible Cloud raises $7 million to decentralize storage
- NFT startup Orange Comet raises over $7 million in new funding
- Liquid staking protocol Ether.Fi raises a $5.3 million round
- Connectivity layer Redeem raises $2.5 million to enable the transfer of NFTs over text message
- NFT finance protocol Insrt raises $2.2 million in a SAFT round
- Figment Capital reportedly targets $50 million for its second venture fund
- Hosts of “Bankless” podcast are reportedly raising a $35 million crypto venture fun
Manuel Trojovsky, Head of Crypto Investments & Research
Always be up to date on the market -> Subscribe here
