1. Summary of Industry Dynamics
Last week, the crypto market showed great resilience and elasticity. From Monday to Wednesday, Bitcoin rose 12% as the U.S. stock market rose. On Friday, it began to pull back with the U.S. stock market, but on Saturday, it withstood the pressure of the U.S. stock market's continued pullback and rebounded. It continued to rise slightly over the weekend and also completed a strong breakthrough on the weekly chart. The exchange trading volume continued to rise to 33 Billion USD. As of writing, Bitcoin closed at 24,901.2, up 13.47% on the week, with an amplitude of 17.83%; Ethereum closed at 1,696.07, up 12.08% on the week, with an amplitude of 18.55%. There was not much good news this week, but rather bad news. First, the SEC sued Paxos for issuing BUSD, claiming it was an unregistered security. Then Paxos announced the end of its partnership with Binance on BUSD, giving BUSD a year to be fully supported and redeemable until 2024. In addition, there were rumors that Binance would remove US-based Altcoins, but this rumor has been refuted by CZ. In response, Coinbase said in its official Twitter account that stablecoins are not securities, but a fairer and more efficient financial tool. Perhaps the current function and popularity of stablecoins have affected the fiat currency itself to a certain extent, which will be followed by greater regulation. Coinbase also welcomed dialogue between regulators and policymakers on this issue.
On the other hand, the US stock market had a sense of continuous rise in the first three days of this week, until the market began to dive on Thursday afternoon, and opened lower and fell on Friday. The market suddenly became unsatisfactory, and the news was suddenly pessimistic. However, the topic still revolved around the issue of interest rate hikes. The bears seized the handle of interest rate hikes and made articles repeatedly. The main argument was still the three major data released in February: employment data, retail data and CPI all pointed to the fact that the economy was still overheated. The CPI in January was quite satisfactory, higher than expected but lower than the previous value. Both bulls and bears had topics to talk about. In January, the US consumer price index rose by 0.5%, and the core CPI rose by 0.4%. It is speculated that the annual inflation level is still 5%, which shows that there is still a big gap with the target. At the same time, Eagle King Bullard jumped out in time to say that the interest rate hike in February should be increased by 50 basis points to reach the interest rate level that the FOMC believes is sufficiently restrictive as soon as possible. She said that the possibility of increasing by 50 basis points in March is not ruled out. At the same time, Cleveland Fed President Mester also made similar remarks. However, neither of them has the right to vote, and their speeches have become more like ammunition for the short sellers, being used as an excuse to suppress the market. If this excuse is used too much, its effect will become lower and lower in the absence of substantial fulfillment. The short sellers can only look for other uncertainties as new points of strength. So far this year, there have been an average of 20 days of gains and 10 days of losses in 30 trading days. The overall market is still positive, and an appropriate correction will also help to loosen up the chips and realize the profits.
Industry data
1) Stablecoins
As of February 19, 2023, the combined supply of the top four stablecoins (USDT, USDC, BUSD, DAI) was approximately 130.79 billion, with little change from last week, a slight decrease of approximately 230 million (-0.18%), and a small outflow of funds from the currency market.
Among the three major fiat stablecoins, the supply of USDT has increased significantly, increasing by about 1.977 billion (2.89%) this week, and the upward trend has continued. After 8 months, the supply has returned to above 70 billion. The supply of USDC has ended its continuous decline, increasing by about 509 million (1.23%) this week.
On the contrary, affected by US regulation, the supply of BUSD fell sharply this week, down 2.72 billion (-16.84%), mainly because Paxos was caught in a regulatory storm this week. The BUSD it issued in cooperation with Binance was identified as an unregistered security by the US SEC and will be prosecuted (see the agency dynamics below for details). Affected by this, users withdrew a large amount of funds or exchanged BUSD for other stablecoins such as USDT. For example, the address marked as "Justin Sun" withdrew 300 million BUSD from Binance and sent it to Paxos for destruction. Since Paxos has been banned from minting BUSD, the stablecoin market will maintain this trend of one rising and the other falling for some time to come.
This round of rebound has not yet attracted off-market funds to enter the market. From the data, the market is mainly driven by USDT, which represents European funds, while USDC and BUSD, which represent US funds, are decreasing. It is expected that the increasingly stringent supervision in the United States in the future may have some impact on the deposit of legal currency, affecting the liquidity of the currency market to a certain extent.
2) BTC Miner Balance
The BTC miner address balance shows the total BTC holding balance marked as miner addresses on the chain, including Foundry USA, F2Pool, AntPool, Poolin, Binance and other addresses.
This data is usually used to judge miners' interest in the current BTC price. When the miner's balance increases, it usually means that the chips are in a state of accumulation; when the miner's balance decreases, it indicates that miners are selling or pledging their BTC.
According to OKLink data, the miner balance has been in a slow downward trend in the past six months, but the overall change is not significant. Miners are still accumulating chips. As of February 18, the miner balance hit a new high this year.
3) ETH deflation data
As of February 19, according to ultrasound.money data, the supply of ETH this week has decreased by about 12,000 compared to last week. Since the completion of The Merge, the supply of ETH has decreased by 28,500 in total. Based on the data of the past week, the annualized inflation rate is -0.52%. Affected by the NFT transactions driven by Blur, ETH deflation has accelerated again.
Compared with ETH under the POW mechanism, the supply under the POS mechanism has been reduced by about 1.81 million coins, and the annualized inflation rate has dropped from 3.5% to -0.52%.
2. Macro and Technical Analysis
The market has basically returned to the previous platform. Since the overall macroeconomic situation is still bearish, there is still a downward trend. It is recommended to increase positions on dips and not chase highs.
Two-year U.S. Treasury bonds saw a wave of increases, and the market began to move in line with the FED's expectations.
The Nasdaq index is consolidating around the annual line
Arh999：0.66
MVRV:1.24
The number of addresses holding more than 100 coins is decreasing
The number of all addresses is basically flat
III. Summary of Investment and Financing
Investment and Financing Review
From February 13 to February 19, 2023, the crypto VC market disclosed 27 investment and financing events, with a cumulative financing amount of more than US$216 million; (https://www.rootdata.com/Fundraising)
During the reporting period, there were six events with financing amounts exceeding US$10 million:
Swiss digital asset company Taurus SA raised $65 million through equity financing, led by Credit Suisse Group and participated by Deutsche Bank, Pictet Group and others. Its products allow financial companies to store and issue digital assets and operate a regulated tokenized securities trading market.
Monad Labs, an EVM-compatible Layer 1 blockchain project founded by Keone Hon, former head of research at Jump Trading, has completed a $19 million seed round of financing led by Dragonfly Capital.
Crypto index platform Alongside has raised $11 million in funding, led by a16z and participated by Coinbase Ventures. Its first product, Alongside Crypto Market Index (AMKT), allows people to gain broad access to the entire crypto asset market through a single token.
Sending.Network has completed US$12.5 million in financing. It is a high-performance, open Web3 communication protocol designed to help developers build social decentralized applications and help communities access encrypted decentralized group chat platforms.
GrainChain announced the completion of a $29 million financing. To date, GrainChain's total financing has reached nearly $40 million. GrainChain's users are mainly small farmers in the United States or Latin America, providing farmers and buyers with a set of tracking data, inventory management, logistics and transaction management solutions from seeds to harvested crops.
Yield Guild Games (YGG) has raised $13.8 million through a token sale led by DWF Labs and a16z Crypto. YGG will use the new funds to further develop its soul-bound reputation token.
Organization News
4. Crypto Ecosystem Tracking & Latest Developments of Digital Non-Performing Assets
1. Latest developments in digital non-performing assets
BlockFi: Bankruptcy Tracking
BlockFi Inc, a cryptocurrency lending company with close financial ties to FTX, filed for U.S. Chapter 11 bankruptcy protection on November 28, 2022, becoming the first major digital asset company to file for bankruptcy since FTX. According to documents filed by the company with the U.S. Bankruptcy Court in New Jersey, the company's top ten creditors have claims of nearly $1.2 billion, and the total debt may be much larger.
According to the documents filed by BlockFi for bankruptcy reorganization, its total number of creditors exceeds 100,000, and its assets and liabilities are between $1 billion and $10 billion. On the liability side, BlockFi owes its largest creditor, Ankura Trust Company, $790 million, and its second largest creditor, FTX US, $275 million. BlockFi also owes the U.S. Securities and Exchange Commission (SEC) a $30 million fine. The total liabilities of the top 50 creditors exceed $1.3 billion. BlockFi currently holds only $256.9 million in cash, and platform services are still suspended.
Latest developments: On February 14, BlockFi released an official tweet and made a statement that BlockFi customers will be able to submit important information about the claim process proof (Proof of Claim, Account History, Account Statement, etc.) from BlockFi's claim agent consortium Kroll by mail or email. The deadline for submitting proof of claim is 17:00 on March 31, 2023, Eastern Time.
As of February 10, the reference price of BlockFi's debt acquisition price on the public trading website in the secondary market is about 14%, or 14 cents/dollar. It has dropped by more than 10 points from the highest point of 26% at the end of last year.
2. NFTs & Metaverse
(1) NFTs
NFT Market of the Week
Market Overview: The performance of the NFT blue chip index this week is very optimistic. After showing a downward trend for two weeks, it has had a small and stable increase since the beginning of last week. Compared with last week, it has also increased to a certain extent. The blue chip index has also returned to the position 30 days ago. As of February 17, the NFT blue chip market has a warming trend, and the market heat is also close to a neutral position for the first time in nearly six months.
NFT total market value: This week, the total market value of NFT has increased by 0.8%. After the total transaction volume rebounded last week, it continued to show a relatively strong upward trend this week, with an increase of 19.68% in 7 days. Looking at the total transaction volume in 3 months, there has also been a large increase, reaching 68.12%. Based on the performance of the data, we believe that the NFT market has shown a significant recovery trend in the near future, and we can also expect NFT market data to rise further in the next few weeks.
Market activity: This week, the number of NFT market holders increased slightly (+0.31%), and trader activity decreased compared to last week, -1.65%. Buyers increased by +4.15% year-on-year, while sellers decreased by -2.69% year-on-year. Overall, the changes were not significant.
The top three NFTs in terms of NFT market transaction volume this week are Otherdeed, MAYC, and BAYC. The floor price of BAYC has not changed much in the past week and is currently around 76ETH.
Overview of Metaverse Projects This Week:
The overall performance of the 10 leading blue-chip projects in the Metaverse sector this week was relatively stable, and the total transaction volume still showed an upward trend, with an increase of 8.21% in 7 days. It is worth mentioning that the floor prices of the three leading Metaverse projects have increased slightly, and the land price remains in the range of 0.9-2.02 ETH. In terms of total market value, the top three Metaverse projects are still Otherside, Decentraland and the Sandbox. This week's Metaverse Temperature Index also reached a relatively active range for the first time in several weeks.
3. GameFi Chain Games
(1) Overall review
In general, the Gamefi industry has seen a general rise, but the actual number of players and the amount of on-chain interactions have continued to decline, which is a "superficial prosperity" brought about by the overall market. From the perspective of Token prices, all of the top 10 blockchain games by market value have risen, with WEMIX PLAY leading the rise this week, up 69.23% in the past week (WEMIX PLAY tokens were listed on the new exchange coinone, and a series of positive factors such as token destruction and the release of quarterly financial reports were released. WEMIX PLAY is a blockchain game ecosystem that includes game platforms, data, defi, communities, media, etc.).
According to the on-chain contract interaction volume, 80% of the top ten active blockchain games have seen a decline in interaction activity in the past week. The blockchain games that entered the top ten in the past were short-lived, and the top ten list is still dominated by old games. It can be seen that although the token price has risen in the past week, the actual number of players has decreased, and the performance of new products is not impressive.
Data source: https://dappradar.com/rankings/category/games
2. Key project: Trident
Reasons for recommendation: Arbitrum is the second most popular blockchain game project after Treasure Dao; the narrative of Risk to Earn
Website: https://link3.to/trident
Product: Trident is a 2D MMO (massively multiplayer online) game. The main gameplay of Trident MMO is to explore the world, harvest resources, territory wars, bounty missions, poaching alien creatures, etc. It is still in the closed beta stage. Among them, Sprite Duels is a real-time pet battle game with relatively simple gameplay. There is also a Trident practice mode, Legacy Trident, which shoots bullets by moving up, down, left, right, jumping, and pressing the space bar.
Economic model: Trident adopts the R2E (Risk to earn) model, hoping to break the downward spiral of P2E. R2E stands for Risk to Earn. Players and coin holders can bet to earn profits, and the protocol will take a cut of the revenue and feed back the tokens.
For example: when one person loses a game and another wins a game, the winner receives a bounty of "Risk" from the loser. The staked tokens are either exchanged between players, or a small portion goes into the treasury and can be traded on the open market. Players do not increase the supply of tokens by playing games.
PSI is Trident's token and will be used in various games in its future versions. It can be used to purchase items, redeem NFTs, bet between players, etc., and Trident will charge a fee from each successful bet and then destroy it permanently.
Financing: On February 5, Trident announced that it had raised $3 million through a public token sale at a price of $1.4305 per PSI. The market value of PSI FDV reached 16.5 million USDC.
about Us
JZL Capital is a professional institution registered overseas, focusing on blockchain ecosystem research and investment. The founder has extensive work experience and has served as CEO and executive director of many overseas listed companies, and has led and participated in eToro's global investment. Team members come from top universities such as the University of Chicago, Columbia University, University of Washington, Carnegie Mellon University, University of Illinois at Urbana-Champaign, and Nanyang Technological University, and have served internationally renowned companies such as Morgan Stanley, Barclays Bank, Ernst & Young, KPMG, HNA Group, and Bank of America.
