MARKET WRAP

1. Cryptos Retain Color as Jobs Market Saves Economy

CoinDesk – August 8th, 2022 at 11:24am

This past week, Bitcoin ($BTC) rung in above $23,000 into the weekend, in spite of continued doubts cast upon the state of the global economy. Recently trading at around $23,300 and reaching up to $24,000 today, $BTC’s only minor decline in price occurred this past Friday, just after the U.S. Labor Department released its report on July’s job growth report, which soon recovered moving into Saturday.

A whopping 528,000 jobs added this past month is twice the expected number as indicated by many analysts. The overachievement of the labor department in this regard thus countered other indicators this past month that suggested a reduction in interest rates from the Federal Reserve, including negative GDP. 

As such, recession fears have yet again been assuaged for the time being, and investment appetites are certainly reflecting this. In the crypto world, bitcoin is performing better than expected, given its tumble earlier this year. According to Oanda Senior Market Analyst Americas, Edward Moya,

“If Bitcoin can hold onto the $23,000 level, that could be very promising for the medium-term outlook. Bitcoin has been stabilizing here and could see further bullish momentum on the break of the $25,000 level.”

Similarly, other large altcoins like Ether ($ETH) also saw good performance, trading around $1,700, which is 1% better than last week. Other big altcoins like Theta and $ATOM increased by over 7% and 6% respectively. 

Equities, like cryptos, finished the week on Friday down after the Labor Department’s job report came out, with the Nasdaq down 0.5% and the S&P 500 down 0.2%. However, both indexes performed better for the third week in a row.

Overall, July’s job report indicated that we certainly are not in a recession as our economy is strong in this regard, but we also aren’t totally safe from the possibility of one happening this year, either. According to Moody’s Analytics Chief Economist Mark Zandi, July’s CPI report would help the coming economic status “become clearer.”

Notably, the crypto world has seen its footholds spread into more traditional markets. Asset manager Brevan Howard has just completed funding its largest hedge fund ever, with over $1B in AUM (assets under management). And BlackRock has formed a partnership with Coinbase to make cryptos available to its institutional investors. As more established financial institutions dip their toes in the water, the crypto market may yet see better than expected performance throughout the rest of this bear market.

2. Brevan Howard Asset Management Raises Largest Crypto Hedge Fund in History

Blockworks – August 4th, 2022 at 2:23pm EST

This past week, BH Digital, the crypto trading arm of Brevan Howard, a European hedge fund management company specializing in the investment of alternative assets, completed funding its first digital asset-focused investment vehicle, the Brevan Howard Digital Asset Multi-Strategy Fund, with more than $1B raised, making it the largest crypto-focused hedge fund in history.

According to sources close to the matter, this fundraise by BH digital is large even when compared to many traditionally-focused hedge funds. Compared to digital asset funds prevalent in the industry to this point in time, this fund is “absolutely massive.”

On top of this, even in the face of a fast-hitting bear market at the beginning of this year, the fund lost a mere 4-5% of its total value through the end of June, according to another source. This is in the face of various crypto calamities this year that locked price action and liquidity into death spirals, including the downfall of Do Kwon’s Terra stablecoin $UST, the insolvency of big lenders like Celsius and Voyager, and the liquidation of other hedge funds like Three Arrows Capital (3AC).

“Their returns, relative to the market, are unbelievable.” 

While BH digital has yet to deploy all of its capital, partly due to its wise decision to stay away from venture-focused investments, which consist of only 10% of its total portfolio, it is now ready to back startups at some attractive valuations. Their strategies now, including quantitative trades and relative-value plays, are begin enacted by multiple “pods” of portfolio managers supported by analysts and over 20 external blockchain engineers, amassing over 60 total staffers compared to its 25 back in January. 

3. BlackRock Partners with Coinbase to Expand Further into Crypto

Bloomberg – August 4th, 2022 at 1:22pm EST

Coinbase Global Inc. has announced a new partnership with BlackRock Inc, one of the world’s leading investment, advisory, and risk management solutions, as well as the most powerful Wall Street fund with over $9 trillion worth in assets under management (AUM). 

According to Bloomberg, this new partnership is BlackRock’s latest foray into crypto, as they hope to make it easier for institutional investors to manage and trade Bitcoin ($BTC). This new partnership is substantial for Coinbase, as BlackRock’s total portfolio holds greater financial significance than the GDP of almost every single country, save China and the US. 

This partnership is evidence that the rapidly changing technological landscape is quickly becoming incomplete without blockchain projects and cryptocurrencies. Blackrock certainly comprehends this sociocultural transition. Through this new partnership, top BlackRock clients will be able to leverage BlackRock’s Aladdin investment-management system to gain exposure to alternative digital assets like Bitcoin, and other assets traded on the Coinbase exchange.

However, many wonder why BlackRock partnered with Coinbase given the current state of the crypto landscape. Blackrock indicated that it chose Coinbase due to its scale in the market and pivotal role in providing trading, custody services, prime brokerage, and reporting capabilities. A spokesman of BlackRock also affirmed that the partnership is the next step in a strategic expansion into the crypto space with the priority for Bitcoin and stablecoins to promote the user experience of its clients. 

4. Another Rug Pull: Dragoma ($DMA) Asymptotically Drops to Zero

CoinDesk – August 8th, 2022 at 3:28pm

Another month, another rug pull!

In this first week of August, a new GameFi protocol known as Dragoma saw its native token $DMA pump dramatically in price before its team’s holdings were unloaded, resulting in a total loss of $3.5M from its users. 

Dragoma was advertised as an adventure game based on Polygon. The project shared its designs of its own NFTs, which would provide utilities and earnings mechanisms for its in-game token $DMA once the game came online.

At the beginning of the month, however, the price of $DMA went for quite the ride, soaring from its original price of $0.20 to a peak of $1.80 – a 9X jump within a few days. This pump happened just prior to the listing of its $DMA/$USDT trading pair on the MEXC global exchange on August 7th. Apparently, the new liquidity that emerged from its token’s exposure on MEXC was exploited. The team offloaded its total holdings of $DMA, driving the price down by nearly 99.7%.

 

The stolen fund worth approximately $3.5M was siphoned into Centralized Exchanges afterward, according to blockchain analytics firm