Bitcoin and ether continued to edge higher this week amid a rally in US benchmark stock indices and sovereign bonds as the Fed and other central banks signaled a potential end to the interest rate hiking cycle that has weighed on financial markets. The S&P 500 had its best day in six months on Thursday and small caps even had their best week in more than two years after dovish remarks by Fed chair Jay Powell on Wednesday. The US central bank held rates unchanged for a second consecutive meeting. Although Powell left the door open for further hikes, it appears that the hikes are over. The dovish sentiment also resulted in the the biggest two-day drop in Treasury yields since early March, with 10-year yields falling to 4.56% after briefly hitting 5% last month. In economic data, US job growth slowed sharply in October while unemployment rose – a sign the US economy is cooling this fall. Similarly, the US ISM Manufacturing PMI came in lower than expected this week at 46.7% – thus below the critical 50.0% threshold that signals contraction. The US manufacturing industry has now spent the last 12 months in contractionary territory.
A number of crypto-focused companies including Coinbase and Block released quarterly earnings this week. Coinbase beat analyst estimates after reporting third-quarter revenue of $674.1 million vs. expectations of $651 million. The represents a decline of 4.7% from the previous quarter but an increase of 14.2% from the same period last year. The company posted a net loss of $2 million for the quarter vs. a loss of $545 million in the same period of last year. In a letter to shareholders, Coinbase stated that “While we have generated a net loss through Q3, we are on track to deliver meaningful positive Adjusted EBITDA for 2023, reflecting the direction we set at the beginning of the year to be a company that can generate Adjusted EBITDA in all market conditions.” The company generated $172 million in USDC stablecoin interest income during the quarter, up from $151 million in 2Q. Coinbase is considered an important bellwether for the state of the US crypto ecosystem.
Jack Dorsey’s Block reported a 37% rise in bitcoin revenue for Q3, generating $2.42 billion vs. $1.77 billion during the same period in 2022. Bitcoin gross profit for the financial services firm climbed by 22% year-over-year, totaling $45 million. Gross profit was $1.90 billion, up 21% year over year. Total net revenue was $5.62 billion in 3Q, up 24% year over year. Excluding bitcoin revenue, revenue in the third quarter was $3.19 billion, up 16% year over year. In its shareholder letter, Block said that the reported growth can be attributed to the increase in the price of bitcoin and an uptick in the volume of bitcoin sold to customers via its Cash App mobile payment service.
Market Overview
The global cryptoasset market capitalization currently amounts to roughly $1.34 trillion – compared with $1.3 trillion last week, with bitcoin accounting for almost 51%. Among the Top 30 cryptoassets by market cap, Solana (SOL) outperformed, gaining about 29% over the week. The price of bitcoin (BTC) rose by 1.4% to $34,726 while the price of ether (ETH) increased by 2.3% to $1,835. The total value locked (TVL) in DeFi is sitting at roughly $43 billion, with Ethereum (excluding Layer 2s) currently accounting for about 54% of TVL.
This Week’s Headlines
- Sam Bankman-Fried found guilty on all seven counts in FTX fraud trial
- PayPal hit with SEC subpoena over its PYUSD stablecoin
- Bitcoin is “exponential gold”, says Fidelity director of global macro
- ProShares launches first US short ether futures ETF
- Hong Kong sets out requirements for asset tokenization in light of “market demand”
- Bitfinex placed on UK financial regulator’s warning list of unauthorized firms
- Modular blockchain Celestia goes live on mainnet
- Worldcoin‘s crypto wallet claims more than 1 million monthly active users
- SafeMoon executives arrested after DOJ, SEC allege they misappropriated millions
- NFT marketplace OpenSea cuts half of employees as CEO announces new direction
Notable Deals and Fundraising
- Web3 firm Treehouse acquires Origins to expand NFT data offering
- Thai banking giant KBank acquires Satang exchange to grow crypto business
- Modulus raises $6.3 million to bring crypto security to AI
- ZK technology company Toposware raises $5 million in a strategic extension round
- Andreessen Horowitz planning to target $3.4 billion for next early-stage funds, Axios reports
