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Weekly Digital Assets Update - 2/22/2023



MARKET OVERVIEW BY JOSH BURKE, DEFI TRADER


Stagnation in the Markets

Crypto markets are trading weaker post-release of the Federal Open Market Committee (FOMC) meeting minutes as traders are pricing in a higher interest rate outlook in the near future. The US regulators have also taken certain actions to restrict the size of the industry in an effort to reduce the impact of any future missteps, such as Binance’s banking channels being cut off earlier this month. This has caused renewed concerns about the “security” of crypto assets, triggering a decline in Ethereum-Bitcoin (ETH/BTC) pair to its yearly low.


The most recent US Consumer Price Index (CPI) print is extremely important to determine the trajectory of the crypto market. The consensus forecast calls for a 0.5% and 0.4% month-on-month increase in headline and core CPI, respectively, and a 6.2% and 5.5% year-on-year increase, respectively. While an upside surprise of 0.6% on headline or core CPI would be expected to bring all markets back in line, a higher-than-expected number could further dampen the prospects of the crypto market.



NFT MARKET NEWS BY MATTHEW LINARES, SENIOR ANALYST


BLUR vs. Opensea: “The NFT Marketplace War”

The NFT trading market has experienced a surge in volume in the past week, and startup marketplace BLUR has overtaken OpenSea as the leading marketplace in terms of trading volume. This surge in volume is attributed to BLUR's unique marketplace model, which incentivizes bidding activity and rewards traders with the $BLUR token. This added incentive of active trading has resulted in participants trading NFTs more loosely, with BLUR generating $460 million in Ethereum NFT trades over the past seven days (2/13-2/20) (Source: Dune Analytics). This increase marks a 361% increase over the previous week.

According to data from DappRadar, BLUR's NFT trades have more than doubled during the past week, a significant increase compared to OpenSea's 12% increase in trading volume to $107 million during the same period. Clearly feeling the pressure OpenSea has responded to the surge in trading volume by completely cutting its 2.5% marketplace fee to 0% temporarily and cutting back on some creator royalty enforcement protections giving buyers the choice of how much in royalties they give to creators. This move was not expected by many and it shows Opensea is certainly feeling the increased marketplace competition by BLUR.

The surge in trading volume comes during a week where BLUR airdropped its $BLUR governance token to NFT traders who earned rewards through 3 different airdrop phases. In each phase, users were introduced to additional BLUR functionality. The BLUR token market cap peaked at just under $500 million over the weekend, and it appears that at least some NFT collectors poured their airdropped funds back into buying NFTs.

DeFi played a significant role in the growth of the Ethereum ecosystem in 2020, and now, through token rewards and gamification techniques, BLUR has incentivized traders to treat NFTs more like DeFi tokens. This new DeFi-like token farming approach has reinvigorated the NFT market in the short term. It will be interesting to see if Opensea will be able to slow down some of the momentum BLUR has captured or if this is the beginning of the end for Opensea.


LATEST NEWS BY SAM EISNER, ASSOCIATE


WELCOME FRIENDS: Hundreds of institutions and prominent individuals have invested directly in crypto, adopted the value thesis, or started building technology to support digital assets since Wave started tracking this metric in late 2020. Now the rise of the Metaverse, Decentralized Finance (DeFi), Non-Fungible Tokens (NFTs), and Decentralized Autonomous Organizations (DAOs) is driving mainstream adoption of blockchain technologies everywhere we look. We’re continuing to keep track of it every week here:

  • Sony Network Communications has announced it launched a web3 incubation program in conjunction with the Astar Network. Astar Network is a multichain smart contract platform, one of the Polkadot blockchain’s parachains. It has already collaborated with NTT Docomo and partnered with Toyota for a hackathon. The incubator will be run via Startale Labs, a Singapore company.

  • Google Cloud has partnered with the Tezos Foundation to grow its web3 application development and provide new services for its customers.


REGULATORY ROUNDUP: We're living through the era of regulatory recognition of digital assets. The legislation, litigation, and regulation happening today will dictate the entire future of our industry, and we have a historic chance to shape those changes by staying informed and exerting political influence.

  • The US SEC charged Terraform Labs and its CEO Do Hyeong Kwon over its algorithmic stablecoin Terra USD, which collapsed dramatically last year.


AWARDS: WBIG has been featured in BarclayHedge’s Monthly Performance Rankings ranking No.5 in the Cryptocurrency category for December 2022.



DISCLOSURE:

The opinions expressed herein are those of the author alone and do not represent Wave Financial, LLC or any of its affiliates. The author may hold investment positions in some of the assets discussed.


Nothing in this email or linked information should be interpreted as an offer or recommendation to buy, sell or hold any security or other financial product. Wave is federally regulated by the US Securities & Exchange Commission as an investment adviser. Registration with a federal or state authority does not imply a certain level of skill or training. Additional information including important disclosures about Wave Financial LLC also is available on the SEC’s website at www.adviserinfo.sec.gov. Or, learn more information about Wave Financial at www.wavegp.com.

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