1. Summary of Industry Dynamics

Last week, the crypto market began to pick up after a wave of historical gains. The trading volume fell by nearly 50% in a week, and the market trading volume was mainly concentrated in the Bitcoin market. Small currencies rarely had a market. The overall trend was similar to that of the U.S. stock market, and the trend during the week was lower than that of the U.S. stock market. As of the time of writing, Bitcoin closed at 27803.3, up 0.92% during the week, with an amplitude of 1.87%; Ethereum closed at 1762.85, down 1.71% during the week, with an amplitude of 1.63%. In recent weeks, the market seems to be thriving, but due to the limited overall market funds and continuous net outflows, funds can only rotate to one or several sectors. Although Bitcoin rose by nearly 1% last week, the overall crypto market value only rose by 0.3%, indicating that other currencies are relatively weak. Another index that reflects the market share of altcoins is the Alcoin Index, which is also an indicator of market sentiment. The lower the index, the more serious the blood sucking of Bitcoin. The current monthly index is close to the value in November 2020, which is the lowest in more than two years.

On the other hand, the Nasdaq outperformed the S&P 500 this week, rising 1.8% during the week. Friday's small positive line still closed above the annual line. Although the S&P also rose slightly by 1.3% this week, the K-line was stuck to multiple moving averages, and the trend was relatively weak. Last week, the focus was on the FOMC's interest rate meeting, with a 25bp interest rate hike to 4.75% - 4.5%, in line with market expectations. In the meeting statement, the Fed pointed out that it would still focus on controlling inflation, and downplayed the collapse of the banking industry. In terms of quantitative tightening, the Fed will continue to firmly implement the reduction of US Treasury bonds, institutional debt and MBS, etc., and will not be moved by bank failures. Even such a meeting statement caused a rebound in US stocks after 2 pm, and then fell back to wait for Powell's speech at 2:30. Powell gave the market a blow, and the market plunged after the speech and lost its previous gains. Powell first went to great lengths to explain that the Federal Reserve, the Treasury Department, and insurance companies have sufficient tools and measures to ensure the safety of bank deposits. In addition, Powell spent even more time saying that inflation is his main goal, and cited the CPI and PCE data in February to reflect that inflation has not returned to the Fed's target range. His speech, in line with the expectations of the dot plot, also made the market less hopeful about the rate cut at the end of the year. From the dot plot, we can see that the forecasts of most Fed experts are between 5% and 5.25%, but nearly 40% of experts still believe that there will be a higher rate hike. Therefore, the market will usher in at least another 25bp rate hike in May this year, which will bring greater pressure to the banking industry, because their bond assets have huge floating losses, and depositors who are unaware of the situation may run for bank deposits at the slightest sign of trouble, so it is still necessary to be cautious about the market outlook.

Industry data

1) Stablecoins

According to glassnode data, as of March 25, 2023, the total supply of the top five stablecoins (USDT, USDC, BUSD, DAI, TUSD) was approximately 128.511 billion, with little change from last week, a slight decrease of approximately 16 million (-0.01%), and the outflow of funds in the currency market has stabilized.

Among the fiat stablecoins, the supply of USDT continues to rise sharply. This week, USDT increased by about 2.72 billion (3.56%), and its market share has reached 60%. The recent increase in USDT supply is speculated to be due to the return of some funds after exiting through USDC and replacing them with USDT.

The supply of USDC has dropped again this week by about 2.34 billion (-6.45%). Since the Silicon Valley Bank incident, the supply of USDC has fallen sharply for three consecutive weeks, and its market share has fallen to 26%. As we expected, although the price of USDC has recovered, the damaged market confidence and sentiment seem to need more time to repair.

The supply of BUSD slowed down this week, decreasing by only about 210 million (-2.57%). Since Paxos has been banned from minting BUSD, it is expected that the supply of BUSD will continue to decline, and BUSD may be eliminated from history. As an alternative, TUSD's supply did not change much this week, with a small increase of 13 million (0.65%). After a significant increase of doubling in one month, TUSD's growth slowed down.

Overall, the net outflow of funds in the currency market has tended to ease, but with limited incremental funds, the market's rise requires the accumulation of more liquidity, and under the game of existing funds, structural market conditions will be the main focus.

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, as of March 26, compared with last week, the balance of miners has hardly changed. The market has encountered resistance and started to adjust sideways, but miners have not shipped out. From this point of view, the current sideways fluctuations may be more of a chip exchange and liquidity accumulation. Short-term traders with more profits have cashed out and left the market. After the market accumulates strength, it may try another round of upward attack.

3) ETH deflation data

As of March 26, according to ultrasound.money data, the supply of ETH this week decreased by about 2,831 compared to last week. Since the completion of The Merge, the supply of ETH has decreased by 68,000. Based on the data of the past week, the annualized inflation rate is -0.11%, which continues to decline from -0.24% last week. The on-chain activity is flat and the deflation rate is declining.

During the rising market in the first two weeks, BTC's market share and exchange rate increased significantly, relatively outperforming ETH. This week, the ETH/BTC exchange rate showed signs of stopping its decline and stabilizing. In the past two years, the ETH/BTC exchange rate has always maintained a wide range of fluctuations between about 0.05 and 0.08. After BTC trades sideways at a high level, ETH may usher in a compensatory increase.

Compared with ETH under the POW mechanism, the supply under the POS mechanism has been reduced by about 2.15 million coins. In terms of current US dollars, this part of the selling pressure is nearly US$3.8 billion.

2. Macro and Technical Analysis

After the market broke through 28,000, it fluctuated sideways, and the space below was larger than that above.

The two-year US Treasury bond fell to 3.773, mainly due to the market selling of US Treasury bonds

Nasdaq rebounds above 11,800

arh999：0.78

The number of addresses holding coins is basically flat

After the number of addresses holding coins jumped, it began to retreat this week

III. Summary of Investment and Financing

Investment and Financing Review

From March 20 to March 26, 2023, the crypto VC market disclosed 18 investment and financing events, with a cumulative financing amount of more than US$253.7 million; (https://www.rootdata.com/Fundraising)

During the reporting period, there were 9 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:

(1) An important development in FTX’s update last week

According to documents filed in the Delware district, FTX has reached an agreement with hedge fund Modulo Capital to recover more than $400 million in cash from the latter, according to court documents filed on Wednesday. Bahamas-based Modulo has also agreed to pay $404 million in cash to return to FTX and give up its ownership of assets worth $56 million held on the FTX exchange.

FTX-affiliated hedge fund Alameda Research began sending a total of $475 million in transfers to Modulo in May 2022, when FTX was losing money and was on the verge of bankruptcy. So this money is largely defined as illegal misappropriation of user assets and must be recovered. According to court documents, FTX founder SBF instructed Alameda to pay $25 million to purchase Modulo's equity and invested $450 million in an investment fund managed by Modulo. According to the documents, the agreement has recovered most of the payments and taken away the remaining 99% of Modulo's assets.

As part of the agreement, FTX and Alameda will drop all claims and disputes regarding Modulo’s ownership, and FTX also agreed not to pursue further investigations against Modulo principals Xiaoyun Zhang and Duncan Rheingans-Yoo regarding the payment.

(2) Overview of FTX’s asset balance sheet

FTX has previously recovered more than $5 billion in assets as it seeks to repay creditors, and said last week it was investigating $3.2 billion in payments and loan fees used to pay “founders and key employees.”

Although SBF is currently accused of stealing billions of dollars from FTX users to make up for the losses of Alameda Research and making millions of dollars in illegal political donations to expand his influence in Washington, D.C., he still denies his guilt and plans to make a final statement on October 2 to avoid jail time.

Last week, FTX applied to a US judge to extend the deadline for submitting a bankruptcy reorganization plan to September 7 and has been approved. They hope to extend it for another 6 months to improve and submit an implementable plan, and said that the company needs more time to continue to sort out its financial situation. At the same time, they also announced that they will soon announce the details of assets and liabilities. Last week, the average price of debt in the OTC market continued to show an upward trend, remaining in the range of 18-19%.

news:

Mysten Labs will spend $96 million to acquire an equity investment from FTX in its equity and SUI tokens.

Mysten Labs will spend $96 million to acquire its equity and token rights from the FTX bankruptcy estate. FTX Ventures invested $101 million in Mysten Labs just a few months before FTX founder Sam Bankman-Fried's company went bankrupt. Now, Mysten Labs has repurchased this equity and token rights for $96 million through the bankruptcy court.

The repurchase agreement marks FTX CEO John J. Ray III’s ongoing efforts to maximize creditors’ recovery of funds from Sam Bankman-Fried’s bankrupt crypto exchange, including the liquidation of multiple star projects in the FTX Ventures portfolio.

(Mysten Labs, which has yet to release its much-anticipated SUI token, submitted a letter of offer to the FTX estate on March 16 to buy back its assets. According to court documents, the FTX estate hired investment bank Perella Weinberg Partners (PWP) to solicit interest from other potential buyers and ultimately reached a deal with Mysten.)

5. Crypto Ecosystem Tracking

Data collation of each sector

NFT

Blue chip index: continued to fluctuate downward, ETH has returned to a position only slightly higher than the FTX crash in November last year

Market capitalization & trading volume: continued to fluctuate downward, with a more drastic decline last Friday as the market corrected

Top collection: cryptopunks, BAYC, and monkeyland rank in the top three. After problems occurred in the community, doodles has fallen out of the top ten and is still hitting new lows.

(The picture below shows the price changes of doodles in the past month)

Gamefi Chain Games

Overall review

Overall, the market value of the Gamefi industry has seen a significant correction this week.

From the perspective of token prices, 90% of the top 10 blockchain game tokens by market value fell, and most of them fell by more than 10%. Among them, only Sandbox maintained a positive growth, which may be mainly due to the Sandbox’s recent active promotion and the launch of a new game editor.

https://degame.com/zh/ranking/game/ALL_GAME

According to the on-chain contract interaction volume, among the top ten active blockchain games, the interactive activity increased by 60% in the past week. Among them, Iskra and Benji Bananas continued to rise, while Hunters, which rose nearly 9 times last week, fell 33.16% this week, continuing to question its sustainability.

Data source: https://dappradar.com/rankings/category/games

DeFi & Public Chain Track Data

As of writing, DeFi TVL is 49.05B, up slightly from last week. The top five protocols by TVL are: Lido, MakerDao, AAVE, Curve, Uniswap. Lido and Curve fell 3.81% and rose 2.18% this week, respectively.

https://defillama.com/

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 17.84% and decreased by 4.51% this week, ranking fourth and sixth respectively.

This week's key events & projects

RSS3 Open Web

Information distribution protocol RSS3 tweeted that it will launch the RSS3 AI open platform to provide an environment for developers to train GPT models using on-chain data. It provides an environment for developers to train GPT models and use on-chain data for training. Its goal is to enable the GPT model to process and reflect various information and events in the OpenWeb world, such as predicting Dapp creativity, predicting trends, guessing which NFTs will be popular, and so on. In this way, it is hoped that the boundary between DeFi and SocialFi can be broken.

Summarize:

The access to the gpt model increases the readability and availability of on-chain data, thereby lowering the entry threshold of the blockchain

One must be cautious when it comes to using on-chain data for price prediction, especially when considering the potential differences between using Transformer models, such as GPT, and using RNN models for time series-based predictions.

Aspects

Aspecta, an AI-driven, developer-focused digital identity ecosystem platform, has completed a $3.5 million seed round of financing.

Introduction:

Aspecta is an AI-driven digital identity ecosystem platform focused on developers. Its core product is Aspecta ID, a digital identity built on cloud and on-chain data and AI. Aspecta ID has started public testing and focuses on developers, with display, recording and exploration as its three core functions.

Investment:

Aspecta has completed a seed round of financing of US$3.5 million. This round of financing is divided into two phases, A and B. Phase A was completed in April 2022, with participation from ZhenFund, Qiji Chuangtan (formerly YC China), UpHonest Capital, Yale Alumni Fund and other institutions. Phase B was completed in November 2022, with participation from Foresight Ventures, HashKey Capital, SNZ Holding, Infinity Ventures Crypto and other institutions. In addition, Aspecta has also received strategic investment and donation support from project parties and ecosystems such as Galxe, Mask Network, CyberConnect, and P12.

Team situation:

Aspecta's founding team has backgrounds in world-class universities such as Yale, Tsinghua, Berkeley, and McGill. They have 7 patents and papers in the field of AI for large-scale language models and graph learning algorithms. In addition, Steve Liu, a member of the Canadian Academy of Engineering and former chief scientist of Tinder, is a member of the founding team and serves as chief scientist.

rc AI

Founded in 2018, rct AI is a service provider that mainly provides AI technology solutions for the gaming industry. Its core technology, Chaos Box, is an AI narrative engine based on deep reinforcement learning. It can help game producers generate intelligent NPCs, intelligent organisms, and intelligent environments with different behavior patterns and dialogues on a large scale. It currently serves more than 20 game studios including Yulong Zhiyu and Youmi Entertainment.

Based on AI technology, rct AI's overseas business has attempted to deploy Web3 game-related ecosystem projects:

Mirror World: It is a game matrix driven by an interoperability SDK layer, designed to help Web2 developers complete Web3 game development with low code. The Mirror World game matrix is ​​a virtual playground composed of multiple asset-interoperable crypto games, which will allow all users to obtain a variety of casual game experiences and crypto-real benefits at the same time; Mirror World mobile SDK is a set of cross-platform tools designed to help developers integrate blockchain technology more effectively, easily and economically. It raised $4 million in March 2022, and currently has a team of about 30 to 40 people in operation.

Delysium: A 3A blockchain game, it emphasizes diversity and 3A open world MMORPG experience, including combat, exploration, construction, cultivation, social and AI-driven MetaBeing games, pushing the blockchain game industry into the next stage. This project also raised $4 million in March 22, and the current team has more than 150 people. Delysium adopts a new distribution model. In this game, the game is divided into three levels: experience layer, data layer and incentive layer. The experience layer is the content of the game itself. Users generate data in the experience layer, which is transmitted to the data layer and finally to the incentive layer. In this model, the experience layer and the incentive layer are separated. Organizations in the game can attract users to the game on their own and set different incentive strategies and different token systems according to their localized characteristics. After obtaining the data generated by the user, the platform will return the data to the organization, and the organization will distribute tokens according to its own incentive rules. This is a game system that is constantly innovating itself.

AIGC related highlights:

By simply designing and adjusting different parameters, rct AI's Chaos Box algorithm can easily generate virtual characters with intelligent consciousness on a large scale in the game. Their behaviors and dialogues will not be repeated and are all dynamically generated. In the game scene, deploy intelligent NPCs with different personalities, and through dynamic interactions such as dialogue and behavior, increase the player's game time and provide new ways to monetize. Specifically, it includes personalized NPCs, confrontational AI, interactive AI, large-scale intelligent NPC deployment, intelligent retention and intelligent operation strategies.

At present, rct AI has helped more than 10 companies with its core technology Chaos Box to complete various types of projects including fighting games and virtual human casting. It has established in-depth cooperation with more than 20 game manufacturers around the world and reached more than 200 million users.

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.

【Disclaimer】The market is risky, so be cautious when investing. This article does not constitute investment advice, and users should consider whether any opinions, views or conclusions in this article are suitable for their specific circumstances. Investing based on this information is at your own risk.