| Here’s what happened in blockchain and crypto this week. The global cryptoasset market cap rose to its highest level since August 2022 amid an ongoing rally in tokens underlying alternative Layer 1 and scaling solutions. While Bitcoin (BTC) briefly hit a new 6-month high, it remains range bound. Despite this week’s Fed rate decision, BTC’s realized volatility decreased – a move that has typically been a catalyst for heightened volatility down the road. Publicly listed crypto companies had another strong week amid a rally in US technology stocks led by a big jump in Meta shares. In monetary policy news, the Fed raised interest rate by 25 basis points in line with expectations. After Fed chair Jerome Powell continued to push back on the idea that the US central bank is about to pivot – i.e. slow or pause its ongoing rate hikes – today’s strong US jobs data shows that the US labor market remains resilient despite ongoing rate hikes which makes an earlier Fed pivot increasingly unlikely. In other US macro data, the US ISM services PMI also came in stronger than expected, surging to 55.2 in January vs consensus expectations of 50.5 – the second-strongest monthly rise in the history of the survey. Although the US central bank decreased the size of its rate hikes for a second consecutive meeting, Fed chair Powell reiterated that “ongoing increases will be appropriate” and a pivot may not come as soon as many expected. The target range for the market interest rate now sits at 4.5% to 4.75%, its highest level since 2007. Futures markets are currently pricing in a 86% likelihood that the Fed also hikes by 25 basis points in March, and a 14% probability of the Fed leaving the federal funds rate unchanged at 4.50% to 4.75%. Today’s U.S. job growth data blew past expectations in January. Non-farm payrolls came in at +517,000 vs. expectations of +188,000 while the unemployment rate fell to the lowest level since May 1969. Unsurprisingly, the U.S. labor market’s resilience led to a broader sell-off in government bonds as investors are reassessing the Fed’s interest rate stance. In other US macro data, the US ISM services PMI also came in stronger than expected, surging to 55.2 in January vs consensus expectations of 50.5 – the second-strongest monthly rise in the history of the survey. Elsewhere, the Bitcoin mining sector had another busy week. In restructuring news, Core Scientific agreed to hand over 27,403 mining machines to NYDIG in order to pay down its outstanding debt of $38.6 million. Prior to the NYDIG announcement, the insolvent miner got the green light from a bankruptcy judge to move forward with a $70 million debtor-in-possession (DIP) loan from B. Riley. The new deal will give Core Scientific “up to 15 months of runway and significant flexibility”. Bitcoin mining firm TeraWulf raised $32 million from a public equity offering. The firm also reached a “binding agreement in principle” with its existing lenders to restructure its debt, which was subject to the equity capital raise. Meanwhile, Marathon Digital announced that it sold 1,500 BTC in January – its first sale ever – to cover some of its expenses. Marathon was among few remaining miners who continued to hold onto its mined bitcoin.
Market Overview The global cryptoasset market capitalization currently amounts to $1.12 trillion – up from $1.09 trillion on Friday last week, with bitcoin accounting for 40.2%. Among the Top 30 cryptoassets by market cap, Avalanche (AVAX) outperformed, gaining roughly 17% over the week. During the same period, the price of bitcoin (BTC) increased by 1.3% to $23,333 while the price of ether (ETH) rose 3.1% to $1,652. The total value locked (TVL) in DeFi is sitting at $49.2 billion – with Ethereum accounting for more than 59.5% of TVL.
This Week’s Headlines
Notable Deals and Fundraising
Manuel Trojovsky, Head of Crypto Investments & Research
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