1. Summary of Industry Dynamics
Last week, the market followed the U.S. stock market and fell back, and the trend was weaker than that of the U.S. stock market. After Bitcoin touched the 25,000 resistance level several times at the beginning of the week, it began to fall continuously on Tuesday. The trading volume of centralized exchanges also fell back slightly, but The Block's statistical caliber is a 7-day moving average, so the current trading volume pullback more reflects that the trading volume of Bitcoin has declined in the period of 24,000-25,000 for several days last week. As of writing, Bitcoin closed at 23,254.69, down 4.24% on the week, with an amplitude of 10.48%; Ethereum closed at 1,606.8, down 4.35% on the week, with an amplitude of 9.68%. Last week, Coinbase emphasized in its official tweet that the 23rd was an important day, but the actual news was that they launched their own 2-layer network - Base. Base is a 2-layer network protocol based on Optimism, which aims to develop a secure, low-cost ecosystem that can conduct cryptoeconomics with 1 billion users. Currently, Base can interact with the protocol through the Ethereum test chain Goerli, and can mint commemorative NFTs on its main network. Although Base has claimed that it has no plans to issue tokens, the interaction with Base on the test chain is still in full swing.
On the other hand, the US stock market closed with four consecutive negative lines last week due to President's Day on Monday. The important long-term moving averages and important integer levels were lost and regained, resulting in a short-term empty pattern. Although the four days were negative lines, only the first day actually had a significant decline. The remaining days fell in the morning and rebounded in the afternoon, forming several K-lines with long lower shadows. Therefore, the probability of a rebound this week is relatively high. PCE data was released before the market opened last Friday. Among them, core PCE rose by 0.6% month-on-month in January, with an expected value of 0.5%, and rose by 4.7% year-on-year, with an expected value of 4.4%. Both month-on-month and year-on-year growth exceeded expectations, causing some panic in the market. CME's forecast for a rate hike in March last week was 73% with a probability of 25 basis points, and 27% with a probability of 50 basis points. The probability of a 50 basis point increase has increased significantly (only 2.8% a month ago), and the market will definitely re-price this expectation. Including the peak rate hike will also be raised from the previous 5.5% to 6%. Some institutions have already started to take precautions. For example, the head of trading at Citibank suggested that the peak interest rate of the Federal Reserve may be raised to 6%, and risk assets such as stocks may be further outflowed. In the past week, the net outflow of stock funds was 7 billion US dollars. Michael Harnett, chief strategist of Bank of America, also said that bonds have received net inflows for 8 consecutive weeks, which also shows that institutional investors are still continuing to increase their investment in bonds. Although this week's FOMC meeting minutes basically offset the probability of 50 basis points at the caliber level, the macro data that has not been improved for a long time is still a sharp sword hanging over the market, and it may also affect the decision-making of officials.
Industry data
1) Stablecoins
As of February 25, 2023, the combined supply of the top four stablecoins (USDT, USDC, BUSD, and DAI) was approximately 129.672 billion, a significant decrease from last week, a decrease of approximately 1 billion (-0.77%), and a large outflow of funds from the cryptocurrency market once again occurred.
Among the three major fiat stablecoins, the supply of USDT and USDC has increased as expected. USDT increased by about 420 million (0.6%) this week, and the upward trend continued, with a market share of over 52%. USDC supply increased by about 638 million (1.53%) this week, reversing the downward trend.
Affected by regulation, the supply of BUSD fell sharply again this week, decreasing by 2.076 billion (-15.68%). 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.
Overall, in this week's data, the growth of USDT and USDC is difficult to offset the outflow of BUSD, and the cryptocurrency market funds are still in a net outflow trend, which may be related to the macro uncertainty brought about by the European core CPI data and the US PCE data.
The rebound in cryptocurrency prices this year has not attracted off-market funds to enter the market. The rebound height of large-cap cryptocurrencies may be relatively limited, or they may maintain wide fluctuations until incremental funds enter the market.
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, compared with last week, even though BTC failed to hit the 25,000 mark and turned into a pullback and fluctuation, the miner balance remained unchanged.
3) ETH deflation data
As of February 26, according to data from ultrasound.money, the supply of ETH this week has decreased by about 9,500 compared to last week. Since the completion of The Merge, the supply of ETH has decreased by 38,000 in total. Based on the data of the past week, the annualized inflation rate is -0.41%, and the deflation rate has slightly decreased compared to last week.
Compared with ETH under the POW mechanism, the supply under the POS mechanism has been reduced by about 1.88 million coins. In terms of US dollars, this part of the selling pressure is about US$3 billion.
2. Macro and Technical Analysis
The market has entered a period of adjustment. We judge that the short-term adjustment trend is difficult to change. It will take a certain amount of time and macro-economic conditions before the market can further enter an upward trend.
Two-year U.S. Treasury bonds rose as the market no longer expected a rate cut at the end of the year
Nasdaq index enters correction range
arh999：1.58
The number of addresses holding more than 100 coins is stable
The number of addresses holding more than 100 coins began to decline
III. Summary of Investment and Financing
Investment and Financing Review
From February 20 to February 26, 2023, the crypto VC market disclosed 37 investment and financing events, with a cumulative financing amount of more than US$209 million; (https://www.rootdata.com/Fundraising)
During the reporting period, there were 8 events with financing amounts exceeding USD 10 million:
Organization News
4. Dynamic tracking of non-performing assets
The latest developments of FTX’s digital distressed asset claims market:
FTX debt trading market dynamics: Currently, non-performing asset acquisition funds can acquire FTX debt in the OTC market at a price of around 20 cents/dollar (20% of the face value).
Last November, when FTX filed for bankruptcy protection, the price of the debt was only 5-8%. Within three months, the price has tripled. The expected return rate of the distressed asset acquisition fund in five years is around 45-50%. There are still many factors to consider when acquiring debt, and most of them are conducted privately, so the "quality and due diligence results" of each debt are also taken into account in the final transaction value.
And because the FTX website is currently paralyzed, it is difficult for creditors to produce the most complete information to prove the asset certificates they own on the FTX exchange. Therefore, the quality and proof of the current creditor's claims play a relatively important role in the final asset pricing.
FTX’s debt ratio
In the last few days before declaring bankruptcy, FTX CEO SBF tried to raise funds for the last time. The balance sheet he sent to potential investors was disclosed by the Financial Times, showing that the exchange had nearly $9 billion in liabilities and just over $1 billion in liquid assets. In addition to current assets, $5.4 billion in assets were marked as "illiquid" assets, and many of these "illiquid" assets may have completely lacked liquidity. Another $3.2 billion was marked as "illiquid."
According to this balance sheet, the total amount of liquid assets and illiquid assets is $6.3 billion, which is still not enough to equal the $8.9 billion in liabilities, of which there is still about $2.5 billion in assets missing. The latest total liquid assets to liabilities ratio is 1:6.5.
As of February 17, the current FTX debt acquisition price is approximately 16-20% of the reference price on the debt trading platform, and it has maintained a steady upward trend.
news:
(1) FTX requires parties who received political donations to return the funds before February 28
Before FTX collapsed in November last year, SBF provided tens of millions of dollars in campaign donations to politicians. According to debtors’ estimates, FTX donated as much as $93 million to multiple lawmakers in Washington, D.C. and across the political spectrum, and one-third of the current members of the U.S. Congress have received funding from SBF.
With FTX’s top executives now facing a slew of criminal charges for their alleged multibillion-dollar fraud, many beneficiaries have sought to dispel the fallout from the scandal by making matching donations to charity. But debtors warn that such efforts will not stop FTX debtors from seeking recovery.
On February 6, 2023, FTX Group said on Sunday that it is currently sending confidential letters to politicians, other political beneficiaries of SBF, his deputies, and his companies, asking them to return the political donations they received from SBF by the end of the month. In a press release, the debtors said they reserve the right to force repayment through court proceedings with interest.
(2) New progress in Celsius bankruptcy and reorganization case:
Celsius, a cryptocurrency lender that filed for bankruptcy reorganization last July, officially announced on February 15 that after reviewing several other bidders, Celsius chose digital asset investment company Novawulf Digital Management to acquire and reorganize Celsius. This also indicates that Celsius' bankruptcy case is likely to have some new changes.
The restructuring plan was proposed entirely by the "Celsius Debtors" with the full support of the Official Unsecured Creditors Committee (UCC). According to the agreement reached by the two platforms, NovaWulf will create a newly formed company that will handle the debts owed by Celsius. Under Celsius' proposal, most creditors will receive a one-time crypto payment. NovaWulf will also provide a cash investment of $45 million to $55 million directly to the new joint venture, and Celsius is likely to allocate more new equity to the company's larger creditors as compensation.
Celsius’ debtors have also publicly stated that they chose NovaWulf because their plan provides Celsius’ debtors with the best solution for crypto asset liquidity while maximizing the value of the debtors’ illiquid assets.
Celsius also estimated that more than 85% of its customers would be able to recover about 70% of their claims in the form of cryptocurrency, but this does not include Ethereum stored in the form of pledged collateral.
Under the new company's system, NovaWulf will allocate $50 million to support Celsius' mining business, which will benefit shareholders. The mining department of the new company will have more than 120 mining equipment and will pay dividends to shareholders. With the participation of NovaWulf and Celsius debtors, the two parties will work out a binding agreement in the next few days. The agreement must also be approved by the Bankruptcy Court for the Southern District of New York at the next hearing. Overall, although there are still many things to deal with in this bankruptcy case, Celsius's debtors are currently very positive and are committed to completing the transaction with NovaWulf as soon as possible.
As of February 17, the reference price of Celsius debt acquisition price on the debt trading platform is approximately 19-20%, and there has been no significant change in the past three months. We will also pay close attention to the adoption of Celsius' bankruptcy reorganization proposal by the U.S. Bankruptcy Court for the Southern District of New York. If accepted, the debt price may rise significantly.
5. Crypto Ecosystem Tracking
Data collation of each sector
NFT
NFT Market of the Week
Market Overview: The NFT blue chip index performed relatively stably this week. After a slight increase last week, the index reached a relatively neutral position in the past three months. This week, the blue chip index fluctuated at this position and was relatively stable overall. It suddenly fell on February 24.
The main reason here is actually inseparable from Blur and Machi.
Blur's bid mechanism (directly use ETH as its own bid pool, the liquidity of a pool can try to bid all NFTs) + airdrop combination is more and more beneficial to NFT liquidity, especially making the floor price of blue chip NFT more stable and not plummeting, and then it is less likely to be liquidated when it is used for lending on platforms such as Bendao. When blue chips can be borrowed at low risk and there is more ETH in the market, the NFT bull market will begin.
What happened in the market this week confirmed this point from the opposite side.
In order to get the Blur airdrop, Maji created a BID pool of thousands of ETH, based on which he bid for multiple blue chip projects.
Ovie Faruq and Mike Anderson, two seed investors of Yuga labs, directly issued 72 BAYCs, almost all of which were taken by Maji, which further drained Maji's liquidity on blur. The basic price was 76-78 ETH.
Next, Maji sold 136 BAYC at 58-65 ETH, which directly caused the price of BAYC to crash.
This continued to Benddao, triggering 224 repayments on 2/24, and 10+ BAYCs are on the verge of liquidation.
This also further reflects the liquidity problem of the NFT market, making NFT prices very easy to manipulate, especially in Blur, where the depth of bids is much greater than the number of assets actually owned by users. It is prone to a death spiral, with too many bids for NFTs, resulting in a lack of liquidity, and the sale of NFTs to supplement liquidity, causing prices to fall rapidly due to insufficient liquidity.
NFT total market value: This week, the total market value of NFT has increased by 0.68%. The total transaction volume continued the strong upward trend of last week, with an increase of 130.19% in 7 days. Looking at the total transaction volume in 3 months, there has also been a large increase of 120.55%. The NFT market has shown a good recovery trend recently. This week's performance is in line with our prediction, and it is expected to continue to be hot in the next few weeks.
Market activity: This week, the number of NFT market holders increased slightly (+1.74%), and the activity of traders increased significantly compared with last week (+7.49%). Buyers increased by 4.11% year-on-year, and sellers increased by 12.36% year-on-year, which is a large increase.
In addition, OpenSea was forced to launch 0 transaction fees last week under the pressure of Blur, which will undoubtedly have a significant promoting effect on NFT transactions.
The top three NFTs in terms of NFT market transaction volume this week are BAYC, CryptoPunks, and Otherdeed. The floor price of BAYC has dropped significantly in the past week and is currently around 67ETH.
Metaverse
Overview of Metaverse Projects This Week:
This week, the 10 leading blue-chip projects in the Metaverse sector have seen a large overall growth, with total trading volume rising rapidly by 77.13%. Worldwide Webb's trading volume has jumped to second place, surpassing The Sandbox, NFT Worlds and Decentraland. At the same time, Worldwide Webb's floor price has risen significantly, while Decentraland and NFT Worlds' floor prices have risen slightly, and Otherside has fallen slightly. In terms of total market value, the top three Metaverse projects are still Otherside, Decentraland and the Sandbox. The Metaverse Temperature Index has fallen this week, but it is still relatively active.
Among them, the Worldwide Webb project is different from traditional metaverse projects. It is essentially a combination of sandbox and beacon. It is a pixel-style gamefi game that can be followed up in the future.
Gamefi Chain Games
Overall review
Overall, the Gamefi industry continues to be cold, but there are some small hot spots. From the perspective of Token prices, 40% of the top 10 blockchain games by market value have risen. This week, WEMIX PLAY continued to lead the rise, rising 29.69% in the past week (WEMIX PLAY continues to disclose partners, launch new exchanges and other positive news. WEMIX PLAY is a blockchain game ecosystem that includes game platforms, data, defi, communities, media, etc.).
According to the on-chain contract interaction volume, among the top ten active blockchain games, the number of interactions that increased or decreased in the past week was evenly split. Among them, the number of players of Oath of Peak increased significantly (MMORPG game, a relatively new game, the token has not yet been listed, and a lot of marketing promotion has been done in Brazil, bringing in many new users. You can keep an eye on such blockchain games with actual user growth).
DeFi & Public Chain Track Data
As of this week, DeFi TVL is 49.84B, and the top five protocols by TVL are: Lido, MakerDao, Curve, AAVE, and Convex Finance.
From the perspective of public chains, the top three chains in terms of TVL this week are ETH, Tron, and BSC. Arbitrum and Optimism increased by 16.93% and 11.16% respectively this week, ranking fourth and seventh respectively.
This week's key events & projects
(1)MechMinds
MechMinds uses flash loans to facilitate an NFT transaction for 125,000 ETH
On February 21, MechMinds tweeted that it helped coordinate the sale of MechMin#7689NFT for 125,000 ETH, the most expensive NFT transaction on the Ethereum chain. The project did this to attract users' attention, and the purchase was completed using a flash loan.
Introduction: MechMinds is an AI concept NFT project. The project has issued a total of 8,192 NFTs, each with a unique personality and wisdom. The project uses OpenAI's ChatGPT model, and holders can interact with the Robot they own.
Personality settings: MechMinds are defined by five traits: openness, conscientiousness, extroversion, agreeableness, and emotional stability.
IQ: The robot's IQ setting range is 0-300, and the IQ level determines the overall intelligence of the robot.
Artistry: Each MechMind is an AI-generated oil painting portrait of the robot, reflecting its personality and intelligence.
Gameplay and Mechanics: MechMinds is a deflationary model with a total supply of 8192. The initial MechMind robot has an IQ between 0-80. Two robots of the same Gen can be merged to become a smarter robot of the next generation, and the original NFT will be destroyed. The final supply will be merged to 128, 8192 → 4096 → 2048 → 1024 → 512 → 256 → 128
Trading situation: MechMinds was launched on February 14th. The trading volume increased rapidly on the 20th, reaching 125,196 ETH on that day. The floor price rose to a maximum of 0.077 ETH on the 21st, and then the trading volume returned to normal levels. The floor price currently remains at around 0.06 ETH.
(2) Go sleep
GoSleep is a Web3 lifestyle app with a sleep-to-earn mechanism at its core, combining elements of HealthFi, GameFi, and SocialFi. GoSleep aims to revolutionize health by incentivizing users to prioritize their health.
Gameplay
(1) Get Gosleep NFT to play:
Players who join Gosleep for the first time will receive a free room NFT. This NFT represents a virtual room in the Gosleep game, which players can use to earn tokens.
(2) Set sleep goals:
Players can set sleep goals, such as waking up and sleeping schedules, and GoSleep calculates a score based on the quality of their sleep and how close they are to their pre-determined goals.
(3) Performance rewards:
Rewards for game tokens are determined based on the rarity and properties of the NFTs a player owns, as well as their sleep score.
(4) About GoSleep NFTs:
GoSleep has a variety of NFTs that can be upgraded to higher levels and higher rarity. There are 5 different NFT rarities: Free, Common, Rare, Epic, and Legendary. The higher the rarity, the more tokens are generated. And Gov Token ZZZ can only be generated by high-rarity NFTs such as Epic, Legendary, etc. Different types of NFTs can be combined to form a new NFT like Lego blocks. For example, a bed NFT plus two pillow NFTs and a bedspread NFT create a brand new fully equipped bed NFT in a virtual room. Players can combine these NFTs to create their own virtual bedroom.
When NFT reaches level 30, a sleep bonus can be added and you can choose between generating NGT or ZZZ; before reaching level 30, you can only generate NGT. (Later upgrades require ZZZ governance tokens)
Team Information
（1）Indream，CEO
Former tech entrepreneur, current software architect. Over 10 years of experience in the tech industry, from tech giants like Microsoft and Workday to new startups.
（2）Jonathan，CMO
Jonathan is a blockchain pioneer and has been the market leader of several blockchain star projects such as Marlin Protocol, Abeatsgame and Realymetaverse. He has rich experience in NFT and blockchain communities, as well as KOL and media resources.
（3）Frank，CTO
More than 8 years of experience as a senior software engineer in large technology companies such as Microsoft. He has been involved in multiple web3 projects in the past few years, including social networks, NFTs, and blockchain infrastructure.
Financing history: Foresight Ventures (The official website lists many institutions, but no investment information can be found except Foresight. It is speculated that it was incubated by Foresight Ventures)
The impact of Arbitrum: In February 2023, Gosleep migrated to Arbitrum, and the popularity of Gosleep increased after the migration
(3) Web3 social application Towns completed a $25.5 million investment led by a16z
The Web3 social application Towns under Here Not There Labs has completed a $25.5 million financing, led by a16z, with participation from Benchmark, Framework Ventures and others. Towns adopts the concept of a town square, combining community, NFT and games. The product is built on the Ethereum blockchain.
The team said, “The team’s vision is to create a digital city square where members can define boundaries, set rules, and build the world they want, which can only be achieved through decentralization and web3.
6. Team News
On March 4, JZL GARDEN Banyuetan will invite Ma Weiwei and Web3.0 female executives to discuss contemporary women in the workplace. Everyone is welcome to participate.
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.
