Here’s what happened in blockchain and crypto this week.
Bitcoin and cryptoassets had a volatile week on the back of an increase in leveraged trading and a Mt. Gox alert sent out by analytics firm Arkham. Bitcoin dropped about 7% within an hour on Wednesday amid the news but fully recouped losses on the following day on news that the Arkham alert was sent out in error. US tech stocks ended the week higher boosted by better-than-expected Q1 earnings and revenues by Alphabet, Amazon, Meta and Microsoft, among others. Jitters in the US banking sector continue after another sharp drop in First Republic Bank’s share price and reports of an FDIC takeover and potential sale. The bank’s earnings report showed that it had seen a collapse in its depositors base. In macroeconomic news, first estimates of 1Q23 US real GDP came in at 1.1% qoq, down from 2.6% in 4Q22. Ahead of next week’s FOMC meeting, the market expects a final 25 basis points rate hike by the Fed.
On Wednesday, BTC dropped sharply to the tune of 7% within an hour to below $28,000 on the back of an erroneous Mt. Gox alert sent by blockchain analytics firm Arkham. The company acknowledged on Twitter that the alert was sent out in error and that it was caused by a bug fix “related to Bitcoin alerts” on its systems. The company initially reported that wallets linked to defunct crypto exchange Mt. Gox and the US government had moved significant amounts of BTC. Later, Arkham CEO Miguel Morel told crypto news outlet Decrypt that the wallet movements were not connected, meaning that the US wasn’t necessarily the one moving or selling assets related to Mt. Gox. The broader crypto market followed suit after the sharp drop in the price of bitcoin, with most high-market cap tokens selling off alongside BTC before rebounding. However, on late Wednesday, Arkham revised its findings yet again, denying that its alerts were to blame for the selloff, stating that the “alerts were sent accurately in this case.”
In corporate crypto news, Coinbase has sued the SEC, thus asking a court to compel the agency to respond to a rulemaking petition that the company filed in 2022. The latter sought to receive clarity on the SEC’s position on whether certain cryptoassets are securities or commodities. Last week, SEC Chair Gensler failed to answer a direct question from Financial Services Committee Chair Patrick McHenry on whether ETH constitutes a security or commodity as part of hearing. This week, Coinbase also responded to a Wells Notice received from the SEC, offering a fiery response to the agency’s threat of enforcement action. Coinbase chief legal office Paul Grewal wrote in a blog post that the SEC staff’s analysis to justify an enforcement action “appears to rest on superficial and incorrect analogies to products and services offered by others.”
Market Overview
The global cryptoasset market capitalization currently amounts to $1.26 trillion – up from $1.21 trillion a week ago, with bitcoin accounting for 45.2%. Among the Top 30 cryptoassets by market cap, the Internet Computer (ICP) token outperformed, gaining 17.4% over the week. The price of bitcoin (BTC) increased by 7.4% to $29,330 and the price of ether (ETH) rose by 2.3% to $1,900. The total value locked (TVL) in DeFi is sitting at roughly $49.3 billion – with Ethereum (excluding Layer 2s) accounting for more than 58% of TVL.
This Week’s Headlines
- PayPal to extend crypto transfers to more than 60 million Venmo customers, including to on-chain wallets
- Regulators in Hong Kong urge banks to provide much-needed services to crypto companies
- UK Treasury opens tax policy consultation on DeFi staking and lending
- Genesis creditors reject previously agreed bankruptcy restructuring plan, DCG says
- Visa is hiring software engineers for its “ambitious crypto product roadmap”
- JPMorgan is moving forward with tokenization of traditional financial assets
- Franklin Templeton bets big on Ethereum by putting fund on Polygon
- Epic Games alum Mike Seavers to join Web3 firm Yuga Labs as CTO
Notable Deals and Fundraising
- Standard Chartered-owned crypto storage provider Zodia Custody raises $36 million from SBI Holdings and others
- DeFi protocol Thetanuts Finance raises $17 million for expansion
- Animoca’s edtech company TinyTap raises $8.5 million in new funding
- Crypto wallet Giddy raises $6.9 million in funding to further self-custody adoption
- Coinbase and S&P-backed Credora raises $6 million in bid to fix crypto lending
- DeFi protocol DFlow raises $5.5 million to bring payment-for-order-flow model to crypto
- Blockchain infrastructure firm Cata Labs raises $4.2 million to develop bridging software
- Bitcoin lightning network data analytics startup Amboss raises $4 million
Manuel Trojovsky, Head of Crypto Investments & Research
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