M3TA Recap

Weekly Report: August 15 – August 21, 2022
Sorry we're late! Fed hawkishness leads to the biggest drop in prices we've seen in over a month. Read on for the latest headlines and market updates!

Author

Clara Lee

Published

23 Aug 2022

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The Fed Is Keeping A Close Eye On The Volatility Of the Crypto Market -  CoinCu News

 
MARKET WRAP
  1. Month-Long Crypto Rally Ends in Sell-Offs Amidst Fed and FUD

CoinDesk – August 22, 2022 at 08:43pm EST

Bitcoin ($BTC) finally dropped from its near-high of $25K down to just above $21K this Monday afternoon after recent news from US Federal Reserve Chairman Jerome Powell. This drop, the greatest in the past two months, coincides with traditional markets, given the Fed’s re-energized approach to fighting inflation.

Recently trading at $21,100, $BTC has dropped over 10% over the past five days, since the release of July’s Federal Open Market Committee (FOMC), which indicated it would maintain its 75-basis point interest rate hikes. Many investors may have forgotten that this was what they themselves had expected since June, despite Bitcoin’s momentum and Ethereum’s optimistic fervor amidst news of the Merge occurring this coming September. 

This coming week, Powell himself is slated to speak at the Fed’s annual Economic Symposium in Jackson Hole, Wyoming, where many expect to learn more about the Fed’s intended direction.

“Bitcoin momentum has evaporated as risky assets soften ahead of the Jackson Hole Symposium. Too much of Wall Street expects inflation to take two years or longer for the Fed to get inflation under control.” – Oanda Senior Market Analyst Edward Moya.

Ether ($ETH) has seen similar risk-off investment behaviors – perhaps to a greater degree. As $ETH excitement has dwindled – and a rumor that venture capital firm Jump Capital may dump a large supply of $ETH before the Merge has traversed the grapevine – $ETH saw its price drop below $1600, dropping 25% over the past week.

Despite this drop, Arca Chief Investment Officer Jeff Dorman indicates that “while ‘long $ETH’ is certainly a crowded and telegraphed trade, it is likely still one of the best risk/reward investment opportunities in digital assets right now.” 

Notably, equities have been roughly correlated with cryptos, with the Nasdaq and S&P 500 dropping over 2% each and the DJIA dropping almost that much. In crypto land, futures saw over $800M in liquidations since Friday, and moving forward, $BTC may see a lack of support at the $20K price level if the US dollar continues to gain strength as it has this past week.

 

  1. Almost 3B $aUSD, the Stablecoin of Acala, Were Burnt

The Block – August 17, 2022 at 12:50pm EST

A security bridge from the Acala protocol allowed a hacker to maliciously mint almost 3B Acala USD ($aUSD) in the Polkadot parachain. The scheme involved 16 addresses that simultaneously exploited an error in Acala’s smart contract on Sunday, August 14th, which we covered last week here.

However, according to Acala’s protocol, the majority of $aUSD minted were still circulating within the Acala network, making it possible for the team to abruptly halt the entire blockchain and freeze the stolen assets in the process.

One day after the incident, 1.292B $aUSD were recovered and promptly burned following a speedy governance vote. The second batch of retrieved stolen funds amounted to 1.682B $aUSD and was reclaimed on August 17th; this brought the total recovered sum to 2.974B, out of the 3.022B $aUSD that was illegitimately minted.

Acala’s team is still working on tracing and reversing the outstanding $48M in stolen funds. Unfortunately, a part of this sum has been swapped and exited to other blockchains, making it harder to trace and retrieve.

The stablecoin $aUSD is now trading at 99.7 cents on the dollar, almost regaining its stablecoin status.

Readers can follow the investigation at the official Acala blog post here.

 

  1. Genesis Crypto Says Farewell to 20% of its Workforce, including the CEO

CoinDesk – August 17, 2022 at 2:55pm EST

Genesis has announced a large restructuring of its business by trimming down its current workforce by 20%, with one of its departing employees being Michael Moro, the incumbent CEO.

The firm has been among the longest-lasting players in the crypto landscape since its wild-west origins as the first, over-the-counter crypto trading desk in 2013. Over almost a decade, the firm has gradually built up its reputation and emerged as one of the biggest lenders during the Defi summer of 2020.

The subsequent booming market of 2021 allowed Genesis to leverage its lending operations dramatically. At its peak, there were $131 billion of loans issued by the company, sevenfold compared to the previous year.

However, as winter came for the crypto industry in 2022, Genesis was not immune to the bleak weather. On top of the crash of Terra Luna and the fall of Voyager and Celsius Network, which all hit Genesis’s operations, directly and indirectly, the firm was hurt further by the downfall of 3ACresulting in losses of $1.2B. This exposure was announced publicly in Genesis’s quarterly report

“Our parent company DCG assumed the liability related to losses on these loans, leaving our balance sheet healthy so Genesis could continue to be a source of strength for our clients.”

 

  1. Blockdata Research Illuminates Traditional Firms’ Quickening Journey into Crypto

Daily Hodl – August 17, 2022

According to a new research study by Blockdata40 corporations in the traditional business world have invested in the crypto space with renewed fervor, from September 2021 through mid-June 2022. The report reveals that with an approximate combined investment of $6B, the crypto market stands even more desirable to traditional organizations than one might expect in a bear market riddled with the bones of crypto organizations that have since passed, like the “Black Swan” Terra Luna and the bankruptcy of 3AC and Celsius. 

The blog of Blockdata described the size of investments and the risk appetite of the most active investors in blockchain companies.

In the chaotic landscape, Google's parent company, Alphabet, is reported as the biggest adopter in the crypto space, with $1.5B worth of investments in Voltage, DCG, Dapper Labs, and Fireblocks.

The “Alpha Wolf of Wall Street,” BlackRock, is the next prominent company that has invested more than $1.17B in FTX, Circle, and Anchorage Digital. Meanwhile, JP Morgan placed third on the list with $1.1B.

The electronic titan of Korea, Samsung, has risen as the most active company with over a dozen investments in crypto startups. Among the group, Samsung tends to distribute its fund widely to over 13 crypto companies in different categories, including NFT, Gamefi, Metaverse, Layer 1, and Defi.

Although it is not on the list of leading investors, MasterCard is still actively participating in inorganic technology integration and development. Until now, MasterCard has mainly conducted incubator and accelerator programs for four blockchain startups. Back in 2021, it also acquired CipherTrace, a crypto intelligence company, to bolster its cybersecurity solutions to stay on top of digital assets.

In all investments, 12 firms are marketplaces for trading of NFTs. Eleven projects provide NFT gaming services. There is considerable attention to NFT solutions, marketplaces, and gaming. Meanwhile, only seven blockchain services companies have been offered the highest funding of ConsenSys ($450M from Microsoft) at the time of writing.

Traditional corporations (Samsung, Microsoft, etc.) already support the blockchain landscape, as indicated by the funding trend over the years. Now, it is a matter of finding innovative companies and portfolios that add value to their core business growth and consolidation. Like banks, corporations may want to look away from standalone trends and focus on segments that can provide them with synergistic growth.