1. Summary of industry trends
The overall trend of the crypto market last week was similar to that of the U.S. stock market. It fluctuated and fell in the middle of the week due to the expected impact of non-agricultural data. On Friday, it fell sharply with the U.S. stock market due to factors such as Silicon Valley Bank and the unexpected non-agricultural data. However, the trading volume was still relatively active. The market was in a few days. There was a strong bargaining sentiment in every integer position. Even after the USDC de-anchoring crisis occurred at the weekend, the market did not show panic. Except for USDC de-anchoring, the mainstream currencies did not fall significantly. On the contrary, Bitcoin The position of 20000 has been supported. As of writing, Bitcoin closed at 20308.21, down 9.28% during the week, with an amplitude of 13.67%; Ethereum continued to perform due to Bitcoin, closing at 1463.46, down 7.21% during the week, with an amplitude of 13.78%. The main negative effects last week still came from the traditional market. Whether it was non-farm data, bank bankruptcy, or Biden’s announcement of a 25% minimum tax on the rich in the United States, they all had negative effects to varying degrees, but what followed should be the Fed’s 3 The interest rate hike in March will be determined at 25 basis points, otherwise the multiple blows to the market will easily have an unpredictable impact. Then there is the impact of the bankruptcy of Silicon Valley Bank on USDC and Circle. As the second consecutive savings bank to fail, we have to question Circle’s caution in selecting reserves. In addition, due to the influence of USDC, the price of USDT against USD has soared. Currently, USDT in the OTC market is about 7.1 yuan, while USD is only 6.91. More information about stablecoins will be introduced below.
The market continued to fall last week, and the situation is not optimistic. The S&P has fallen below the upward trend line. From a technical perspective, it has ended the upward trend since October last year. In the short term, the S&P head and shoulders top has been formed. Looking down on the right shoulder, you can see around 3750 points, which is already close to this position. The trend of the Nasdaq is relatively volatile. It has been fluctuating widely in the past few months. Now it has fallen back into the shock range. A better expectation is that it will continue to fluctuate. Originally, last week was the non-agricultural market, and the non-agricultural data also greatly affected the market trend. Last week, non-agricultural employment was 311,000, which exceeded expectations. Although the market expectation was raised from 200,000 to 220,000, it was still much higher than expected. Leisure and hotels The industry still tops the list. We have seen technology giants lay off employees, but employment is very hot, provided by the leisure and hotel industry, with 105,000 job opportunities, accounting for 1/3 of new employment. Of course, the negative impact of last week’s non-farm payrolls is still not as bad as another black swan event, which is the collapse of Silicon Valley Bank in the United States. This is also the main clue whether the market will take a turn for the worse this week. After Silicon Valley Bank experienced major operating risks, investors began to worry about the 2008 thunderstorm. The Man Moment has arrived again. Whether this incident will cause a chain reaction in the future, causing a large number of banks to encounter runs and have to sell assets or bonds to realize cash, has become an issue that requires close attention in the next few weeks. At the same time, this is also the largest bank failure since 2008, so investors' concerns are normal. Although the FDIC announced that it has taken over Silicon Valley Bank, depositors covered by the insurance will be able to withdraw the 250,000 deposits protected by the insurance starting on Monday morning. US dollars, the FDIC will compensate for the excess through the collection and sale of bank assets and the recovery of claims, but whether it will be contagious to the market and cause systemic risks is still unknown. We will pay close attention to developments this week.
Industry data
1) Stablecoin
According to glassnode data, as of March 11, 2023, the total supply of the top four stablecoins (USDT, USDC, BUSD, DAI) is approximately 121.276 billion, a sharp decline from last week, a decrease of approximately 8.03 billion (-6.21%). There was a huge outflow of funds from the currency market.
Note: In the glassnode data, the supply of DAI is inaccurate and inconsistent with the data on the chain (DAI contract address: 0x6B175474E89094C44Da98b954EedeAC495271d0F). Excluding the data disturbance of DAI, the total stablecoin supply of the three major legal currencies decreased by 4.1 billion (-3.36%) compared with last week.
Among the three major fiat stablecoins, the supply of USDT continued to rise sharply. USDT increased by about 1.356 billion (1.9%) this week, and the upward trend continued, with a market share of more than 55%. However, the sharp rise in USDT this time is likely to come from the replacement of USDC. When FUD sentiment appears in the stablecoin market, short-term data fluctuates violently and has limited guiding significance.
BUSD supply continued to fall this week, but at a slower pace than the previous two weeks, with a decrease of approximately 710 million (-7.8%). Since Paxos has been banned from minting BUSD, BUSD will continue to fall for some time to come.
The supply of USDC dropped significantly this week by approximately 4.817 billion coins (-11.03%), mainly affected by the bankruptcy of Silicon Valley Bank. The market was worried about the risk exposure of USDC. Panic caused the price of USDC to unanchor, with the lowest falling to around 0.88. However, currently It has rebounded to around 0.96. For hedging or arbitrage considerations, institutions and large investors have chosen to withdraw funds or exchange for other assets, including market makers (including Jump Trading, Wintermute), Justin Sun, investment institutions Hashed, Spartan Group, etc. It is worth noting that Vitalik uses actions as a USDC platform. The data on the chain shows that the address vitalik.eth exchanged 500 ETH into 400,359 USDC and 27,179 DAI. The last currency Vitalik "called" on Twitter was SOL. In the following month, SOL rose nearly 200%.
According to Circle’s disclosure, USDC’s reserves include approximately 11.1 billion US dollars in cash, 32.4 billion US dollars in short-term treasury bonds (due within 3 months), and 3.3 billion US dollars in its cash reserves are stored in Silicon Valley Bank, accounting for approximately 8% of the circulation. .
Assuming that the above disclosed information is true, and based on the assumption of extreme risk conditions (Reserve Bank bankruptcy + run), the following speculations can be made:
Circle's cash dispersed in seven banks all suffered losses due to bank bankruptcy. The recovery rate is assumed to be 80%, and this loss is US$2.2 billion;
Assuming a large-scale run occurs (exceeding its cash reserves), Circle is forced to sell off all short-term government bonds in the short term, with a maximum loss of about 10% due to liquidity impact (the discount loss on short-term bonds is small), and this loss is US$3.2 billion.
The corresponding reserve balance of USDC is 38.1 billion US dollars, so the lower limit of the value of USDC is approximately 0.87 US dollars per coin.
According to Circle’s announcement, it initiated a transfer last Thursday to transfer Silicon Valley Bank’s deposits (theoretically it would be executed on Monday); in addition, if there are any losses, they will be replenished by Circle’s corporate resources and external capital.
Based on the above information, we initially believe that the problem is not serious. The price of USDC was in the range of 0.877~0.96 over the weekend. The market has basically digested the bad news and re-priced the price of USDC.
Overall, the growth of USDT this week is difficult to offset the outflows of USDC and BUSD. The currency market is still experiencing a net outflow trend. This trend has lasted for three weeks. With poor liquidity, the market situation is unlikely to improve. In addition, although the problem of USDC is not serious, its negative impact on sentiment and regulation is significant. The market is already illiquid. This incident may continue to reduce external inflows, causing the bear market to last longer and triggering more Many black swan events.
2) BTC miner balance
The BTC miner address balance indicates the total BTC holding balance marked as a miner address 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 miners' balances increase, it usually indicates that chips are stacked; when miners' balances decrease, it indicates that miners are selling or pledging their BTC holdings.
Compared with last week, miner balances decreased slightly. Although the absolute value change was not large, this single-week increase made up for the largest decline since December 2022. As one of the representatives of Smart Money, miners began to be more vigilant before the current decline (February 28) and partially cashed in their profit chips; but remained on the sidelines during the subsequent decline until March 8, as BTC began to It fell sharply and accumulated chips again, without being affected by negative market events.
3) ETH deflation data
As of March 12, according to ultrasound.money data, the supply of ETH this week has decreased by approximately 16,533 pieces compared with last week. Since the completion of The Merge, the supply of ETH has decreased by a total of 60,800 pieces. Based on data from the past week, the annualized inflation rate is -0.7%, and the deflation rate is increasing again. This is mainly affected by the USDC de-anchoring incident. DeFi transactions such as Uniswap and Curve are active, burning a large amount of ETH.
Compared with ETH under the POW mechanism, the supply under the POS mechanism has been reduced by approximately 2.01 million pieces, and this part of the selling pressure is nearly US$3 billion in US dollars.
2. Macro and technical analysis
After the emergence of silvergate and svb black swans, the market fell rapidly and fell below the support level. The overall market still needs time to repair.
Two-year U.S. Treasury bonds plummeted after a black swan event in the market
The Nasdaq also fell below support
arh999：0.49
The number of currency holding addresses has basically not changed much.
The number of currency holding addresses jumps
III. Summary of Investment and Financing
Investment and Financing Review
From March 6 to March 13, 2023, there were 20 investment and financing events disclosed in the encryption VC market, with a cumulative financing amount of more than US$195 million; (https://www.rootdata.com/Fundraising)
During the reporting period, there were a total of 6 incidents in which the amount of financing exceeded US$1,000,000:
Institutional dynamics
4. Dynamic tracking of non-performing assets
The latest developments in the FTX digital distressed asset debt market:
Currently, FTX is still under bankruptcy protection for 120 days. The deadline is March 11th. The original hearing time was last Wednesday, March 8th. However, due to the confusion of FTX’s balance sheet, the hearing was postponed after coordination with the court. The next hearing is tentatively scheduled for April 12, so FTX US and FTX International have not publicly disclosed any substantial progress.
At present, the debt price in the over-the-counter market still remains in the range of 15-20%, still showing a slowly rising trend.
2. FTX sold its stake in Sequoia Capital to Abu Dhabi Investment Department for $45 million to repay creditors
Alameda Research has reached a $45 million cash deal to sell its stake in Sequoia Capital to the Abu Dhabi investment arm Sovereign Wealth Fund, according to court documents.
The deal, which is subject to approval by a Delaware bankruptcy judge, comes as FTX attempts to sell off its early investments in cryptocurrency and technology businesses to repay creditors. The agreement may be completed as early as March 31, but FTX’s transaction will be subject to strict judicial review.
FTX Group filed for bankruptcy protection in November last year, and Chief Judge Dorsey approved FTX in January this year to sell some assets that are easier to separate. These include derivatives unit LedgerX, stock settlement platform Embed, and subsidiaries in Japan and Europe. But FTX management still said that there is still a huge gap in the company's balance sheet.
3. News:
(1) Silvergate Bank initiates voluntary liquidation process
Silvergate Capital Corporation (SI) announced that it will wind up operations and commence the voluntary liquidation of Silvergate Bank in accordance with applicable regulatory procedures.
Voluntary liquidation is when a company liquidates its assets and closes the company. It is when the debtor and creditors reach an agreement and liquidate the company privately without going through the formal bankruptcy process (chapter 7). Voluntary liquidation can avoid many bankruptcy costs, and creditors can also receive a higher proportion of repayment.
Silvergate Capital Corporation said in the announcement: In light of recent industry and regulatory developments, Silvergate believes that an orderly winding up of the banking business and the commencement of voluntary liquidation proceedings are currently the best path forward. **The bank’s winding up and liquidation plan includes the full repayment of all deposits located at the bank. **The company is also considering how best to resolve claims and preserve the residual value of its assets, among other things. Silvergate's stock price fell more than 28% in after-hours trading on Wednesday in the U.S., closing at $2.44 on Friday. Its market value has shrunk to only $80 million. SI's current situation is mainly caused by the mismatch of bank duration.
(2) Silicion Valley Bank - SVB Silicon Valley Bank collapsed on Friday
This is also the second consecutive U.S. regional bank to fall into bankruptcy crisis last week, after Silvergate Capital Corp. announced a voluntary liquidation of its banking business, triggering a sell-off in banking stocks and concerns about unease in the market.
Panic caused by the Silicon Valley bank liquidity crisis spread across the financial world. SVB Financial, the parent company of Silicon Valley Bank, plunged as much as 68% in pre-market trading on Friday and was halted at around 8:30 a.m. ET on Friday. Nasdaq said later that it was suspending trading in Silicon Valley Bank Financial Group's shares and that Silicon Valley Bank would remain suspended until it meets a request for more information.
Therefore, the thunderstorm of Silicon Valley Bank is likely to cause other U.S. banks to follow suit and sell off securities assets one after another, starting a series of chain reactions and accelerating the thunderstorm of the U.S. financial market. If the inflation problem is not under control and interest rate hikes continue, then a major bear market and black swan events are likely to follow.
(3) The MT.GOX Bitcoin theft incident is coming to an end
More than nine years have passed since the Mt. Gox Mentougou incident. According to Mt. Gox’s public balance sheet in 2019, the exchange held approximately 142,000 BTC, 143,000 bitcoin cash, and 69 billion daily yuan (approximately US$510 million) in cash. Since then, according to information disclosed by the market, Mt. Gox’s balance sheet has not changed much. As of March 6, the latest data shows that Mt. Gox holds more than 137,000 Bitcoins, worth a total of US$3.08 billion.
According to the announcement on the Mt. Gox official website, creditors who want to receive compensation must register and choose the corresponding repayment method before March 10, 2023. The deadline for the first batch of compensation is September 30, 2023. If registration and registration are not completed within the deadline, these creditors will not be able to obtain the earliest one-time repayment, and will lose the rights to some cryptocurrency claims, bank transfers, payment and other services. However, according to the latest court documents last Thursday, the deadline for claim applications was once again postponed to April 6, and the repayment date was also postponed to October 31. As Mt Gox’s repayment time has been repeatedly postponed, the court this time It also states that unless there are force majeure factors, this date will be the final date.
Mt.Gox offers two types of payment options to creditors:
Basic reimbursement: The first 200,000 yen (approximately US$1,500) allowed for each creditor's claim under the basic reimbursement portion will be paid in Japanese yen
Proportional repayment: Proportional repayment provides creditors with two options.
"Early one-time repayment": only allows creditors to receive partial compensation, that is, the portion exceeding 200,000 yen can allow creditors to choose a mixture of BTC, BCH and Japanese yen or pay the entire amount in legal currency, which is currently selected by creditors The ratio is roughly 71% cryptocurrencies and 29% cash.
"Interim repayment and terminal repayment": get more repayment than the previous method
Interim payments can be paid on October 31,
The final payment will be paid in the next few years. Some creditors can continue to wait for the results of the lawsuit to get a higher proportion of the payment, which means they will have to wait longer to receive the payment. It is estimated that this process may take an additional five to nine years.
At present, the amount of the first compensation, creditors and the specific number of Bitcoins are still unknown, and it is expected that it will take some time for Mt. Gox to complete all data statistics, and as mentioned just now, mtgox has set up a variety of different compensations. path, which means that the release of these Bitcoins may not be very concentrated and will not cause too much selling pressure and market impact.
Reference: Bitcoinica and MGIF, the two largest creditors of Mt. Gox, chose an early one-time payment plan, and chose to obtain compensation mainly in the form of Bitcoin rather than legal currency. The two largest creditors accounted for approximately all the claims. 20%.
Another point to note is that creditors must use any exchange to receive their compensation, and each exchange has different speeds in processing payments, so the time for creditors to receive compensation is also different. For example, BitGo will Payments are made within 20 days, Kraken's payment process may take up to 90 days.
5. Encrypted ecological tracking
Data collation of each sector
NFT
Blue chip index: The NFT blue chip index fluctuated downward this week, and big blue chip NFTs are facing a double kill of both graphics and currency.
According to the ETH standard, the total market value of NFT is basically the same, while the trading volume has dropped by more than 20% due to market influence.
Holder situation: Holders increased by 0.9% year-on-year, and traders increased by 2.58% year-on-year, but with the market decline, the number of traders can be seen to drop sharply
Metaverse
From the perspective of land prices, the total market value fell by 11% year-on-year, transaction volume shrank severely, and shareholders were basically the same.
Gamefi chain game
Overall review
Overall, the Gamefi industry has been significantly affected by the broader market this week. The overall market value has fallen sharply, but the number of players has increased against the trend.
Judging from the token prices, the top 10 chain game tokens by market value have all fallen, and the declines have all been more than 10%.
Judging from the amount of on-chain contract interaction, among the top ten active chain games, the interaction activity increased by 60% in the past week. Among them, the number of players of Trickshot Bliz has increased significantly, up 49% (a casual billiards game, this week due to some publicity and launch of new gameplay, the number of interactions has increased).
DeFi & public chain track data
As of writing, DeFi TVL is 44.97B, and it continues to decline due to multiple black swan events this week. The top five protocols by TVL are: Lido, MakerDao, Curve, AAVE, Convex Finance. Lido and Curve fell 7.25% and 7.04% respectively this week.
From the perspective of public chains, the top three chains in TVL this week are: ETH, BSC and Tron. Arbitrum and Optimism grew by -17.12% and -9.14% respectively this week, ranking fourth and sixth respectively.
Key events & projects this week
Web2 Giant’s Road to Entering the NFT Market
Starbucks
The first paid NFT Siren Collection was released at 4 a.m. on March 10, mint price $100, quantity 2k, sold out within 18 minutes, and the floor price once exceeded $600
The Siren Collection is an art collection based on its Siren logo and will earn you 1,500 points upon purchase
Official description: Each stamp features a Starbucks Siren as you've never seen it before, along with a variety of our artwork from the past fifty years. Each design depicts our love for coffee through legend, myth and adventure with beautiful, layered artwork, each one unique
Benefits: Jointly launched a podcast called The Starbucks Daily (built into the Starbucks App) with the podcast curation platform Hark Audio. Through a selection of 2-6 minutes of audio every day, it enhances the user's coffee drinking experience. In addition, the CMO said that special events will be provided for members, such as the opening ceremony of the new Empire State Building.
Lifestyle Brand: Built around a series of content, including Odyssey, Starbucks Daily and Event, Starbucks continues to increase opportunities to interact with members. When members buy coffee, their interaction with Starbucks does not end: they can listen to podcasts in Odyssey Earn NFT and participate in events at night**. In these scenarios, more categories can be added, its commercial space can be improved, and it can be upgraded to a lifestyle brand**
Amazon’s NFT marketplace is about to launch
The official expected launch time is Q2 of this year.
The specific implementation method is speculated to be launched through core users, and the 167 million existing Prime members in North America may be notified before going online.
Prime is Amazon's most important user asset. In the past, many important new businesses, such as online video and local fresh food, were also launched by adding benefits to members.
web2 is friendly and supports credit card purchases with existing accounts (non-harvesting web3 existing user logic). The specifics of whether physical sales are combined with NFT or gaming have not been disclosed (many game companies have been contacted for research)
From an investment perspective, the infrastructure chosen by Amazon will be a great benefit (refer to the trend after ins chose ar). The specific public chain has not yet been announced, but in January AWS also announced its cooperation with Ava Labs, but did not confirm the issued chain.
ERC6147 protocol
Ethereum improvement proposal EIP-6147 has been moved to the final version (Final)
Introduction: This standard is an extension of ERC-721, which separates the holding rights and transfer rights of NFT and SBT, and defines a new "guardian" role that can set the expiration time, which can make NFT anti-theft, lending, Leasing, SBT, etc. are more flexible
Solve the problem: In the current NFT lending, the NFT owner needs to transfer the NFT to the NFT lending contract. The NFT owner no longer has the right to use the NFT during the loan period. This is a problem of property rights coupling. This is actually related to us. In reality, when purchasing a real estate and then mortgaging the real estate in exchange for liquidity, the situation of not occupying the right to use the house is very different under non-risk conditions.
Technical principle:
ERC-6147 defines a role called Guard
For NFT with Guard set up, the original holder will only have the right to hold it and not the right to transfer (i.e. the right to use). Other Dapps can still query that the owner of this NFT is the original user, but the original user cannot drive it. It transfers.
about Us
JZL Capital is a professional institution registered overseas that focuses on blockchain ecological research and investment. The founder has rich experience in the industry and has served as CEO and executive director of many overseas listed companies, and has led the global investment in eToro. Team members come from top universities such as the University of Chicago, Columbia University, Washington University, Carnegie Mellon University, University of Illinois at Urbana-Champaign, and Nanyang Technological University, and have served at Morgan Stanley, Barclays, Ernst & Young, KPMG, and HNA Group , Bank of America and other internationally renowned companies.
[Disclaimer] There are risks in the market, so investment needs to be cautious. This article does not constitute investment advice and users should consider whether any opinions, views or conclusions contained in this article are appropriate for their particular circumstances. Invest accordingly and do so at your own risk.
