SPIRIT Blockchain – Weekly Wrap-up

Insights

• January 14, 2023

Weekly Wrap-up

Here’s what happened in blockchain and crypto this week. Cryptoassets and publicly listed crypto and mining companies got off to a strong start in 2023. Bitcoin surpassed the $19,000 threshold for the first time since November 8. BTC is now up more than 14% in 2023, after dropping by 64% in 2022. The total cryptoasset market capitalization has gained more than $100 billion so far this year. Shares of publicly listed crypto firms have registered even even larger gains as the crypto rally continues. Given the recent uptrend, Grayscale’s GBTC managed to maintain its momentum as the fund’s discount to net asset value (NAV) has diminished after briefly trading more than 60% lower than the value of the underlying BTC. The strong gains across the board were partly triggered by investors’ renewed appetite for risk assets on the back of a slower pace of inflation. On Thursday, U.S. CPI came in at 6.5% yoy in December, suggesting that inflation has probably peaked. The decelerating pace of inflation could pave the way for the Federal Reserve to further reduce its pace of rate hikes to 25 basis points per meeting from 50 in December.
Bitcoin mining stocks have seen a spectacular start to 2023, with gains to the tune of 70% to 130% year to date. Publicly listed miners also got off to a busy start by focusing on recapitalization, raising funds and restructuring, among other things. Most firms had a rough 2022 and the fate of many players will not only be tied to the price of Bitcoin down the road but also depends on how well they can manage their debt. Core Scientific received a $17 million loan from BlackRock, the company’s largest shareholder. after the largest miner by hashrate had filed for Chapter 11 on December 2021. Other firms were proactive too: Marathon Digital paid off its revolving credit with Silvergate while Strongholdreached an agreement with noteholders and plans to convert $17.9 million of debt into equity. After a rocky 2022, Argo Blockchain announced that it will avoid filing for bankruptcy protection after it agreed to sell its Helios mining facility in Texas, to Galaxy Digital for $65 million. The company will also receive a $35 million loan from Mike Novogratz’s blockchain-focused financial services firm. Elsewhere, Bitfarms is reportedly seeking to modify a loan with bankrupt lender BlockFi to avoid default as the value of equipment plummets. Meanwhile, layoffs continue in crypto land amid new cuts by Blockchain.com, Coinbase, ConsenSys and Crypto.com. Crypto media outlet CoinDesk estimates that almost 27,000 jobs have been lost across the crypto industry since April. Coinbase, the US’s largest crypto exchange, has implemented another round of layoffs, affecting 950 employees. The move will and reducing its operating expenses by 25%. Coinbase had already cut 1,100 jobs in June 2022 which amounted to about 18% of its workforce at the time. CEO Brian Armstrong said, “It became clear that we would need to reduce expenses to increase our chances of doing well in every scenario.” Likewise, Ethereum software firm and MetaMask developer ConsenSys looks set to cut “upwards of 100 staff.” Today, Singapore-based payments and wallet firm Crypto.com announced a 20% reduction in its global workforce.

Market Overview The global cryptoasset market capitalization currently amounts to $953 billion – up significantly from the $845 billion at the end of 2022, with bitcoin accounting for almost 39%. Among the Top 30 cryptoassets by market cap, Avalanche (AVAX) outperformed, gaining roughly 33%. During the same period, the price of bitcoin (BTC) increased by 14.2% to $19,215 while the price of ether (ETH) rose 13.4% to $1,418. The total value locked (TVL) in DeFi is back above $40 billion – with Ethereum accounting for more than 60% of TVL.

This Week’s Headlines

FTX locates $5 billion in cash and liquid crypto, attorney says
Crypto lender Genesis owes creditors over $3 billion, looks to sell part of its venture portfolio, FT reports
Gemini terminates Genesis loans, officially ends “Earn” program
SEC charges Gemini and Genesis with unregistered securities offering
Coinsquare and WonderFi in talks to form largest crypto exchange in Canada, BNN Bloomberg reports
S&P downgrades Coinbase’s bonds to BB- from BB on weak profitability, regulatory risks
Avalanche forms partnership with Amazon’s cloud-computing platform AWS to help bring blockchains to enterprises and governments
Bank of International Settlements report outlines three approaches to addressing risks in crypto markets
Cosmos-based e-Money discontinues euro-backed stablecoin EEUR
Crypto venture firms say there is no launch date in sight for a large part of their token bets, The Block reports
Coinbase and Crypto.com each cut 20% of workforce, ConsenSys lays off 100 employees amid sector-wide layoffs
Indonesia plans to launch its own crypto exchange, Bloomberg reports

Notable Deals and Fundraising

Crypto market maker CyberX raises $15 million in a Series A round led by Foresight Ventures
Alkimiya raises $7.2 million to build decentralized capital markets for blockspace
DeFi startup Quasar Finance raises $5.4 million at a $70 million valuation
Aptos-based multisig wallet Msafe raises $5 million led by Jump Crypto
UAE investor groups launch $1 billion-dollar Web3 vehicle Venom Ventures Fund
Animoca halves fundraising target for Web3 fund to $1 billion, Bloomberg reports