DigitalX Funds Weekly Wrap - 30 Sept to 7 Oct 2022

Weekly Price Action

*All figures below are in USD unless otherwise specified.

Week in review

Market Updates

• Private jet charter company TapJets files application to support Ripple in the SEC case.
• Global payment company I-Remit, Inc. files application to support Ripple in the SEC case.
• Coinbase announces a documentary about its company and cryptocurrency.
• Binance opens two new Brazil offices.
• Elon Musk renews bid to purchase Twitter: Reports.
• Genesis is no longer acting as an authorized participant for Grayscale's crypto trust products.
• NYDIG’s CEO and President to step down as crypto changing-of-the-guard continues.
• Hedge fund titan Ray Dalio steps down as co-CIO of Bridgewater Associates.
• Solana back online following latest network outage.

The Shift List

• Former Google chief executive and billionaire Eric Schmidt has said Chainlink has "better technology" and "scales better" than other cryptocurrencies.
• BlackRock launches blockchain ETF.
• Ground-breaking SWIFT innovation paves way for global use of CBDCs and tokenised assets.
• McDonald’s starts to accept Bitcoin and Tether in Swiss town.
• Brevan Howard and Morgan Creek lead web3 gaming startup's $40 million Series A: Bloomberg.
• T-Mobile parent Deutsche Telekom launches Ethereum Validator, staking support.
• UK investment giant Abrdn joins Hedera Governing Council to advance tokenization goals.
• CME Group set to launch three new crypto reference rates later this month.
• CFTC Commissioner – “Ethereum is a commodity, even with Proof-of-Stake”.
• Japan to invest in Metaverse and NFT expansion.
• Uber, Amazon vets raise $14 million in Paradigm-led seed round to build DeFi platform.
• The world's largest banks are exposed to about 9.4 billion euros (US$9 billion) of crypto assets.
• Spain’s largest telecom company Telefónica now accepts Bitcoin, crypto payments.
• NYDIG's institutional Bitcoin fund has raised $719.9 million to date.
• Two Sigma Securities becomes a Chainlink network data provider.
• Mastercard pushes deeper into crypto with new tool for combating fraud.
• Hugo launching collection of 3D NFTs.
• Kids enticed by web3 projects with plush toys, adorable avatars.
• Tiger Global seeks $6 billion raise to invest in tech companies: Axios.
• MakerDAO initiates $500 million investment in US treasuries, corporate bonds.
• Polygon and OCEEF bring deep sea exploration to Web3.

Macro/Regulatory Updates

• Stock market losses wipe out $9 trillion from Americans’ wealth.
• Reserve Bank of Australia increases official cash rate by 25 basis points to 2.60 percent.
• Eurozone inflation hits record high 10%, raising pressure on ECB.?
• U.N. calls on Fed, other Central Banks to halt interest-rate increases.
• Fed's Williams says central bank has more work to do to cool inflation.
• US national debt surpasses $31 trillion for the first time in history.
• Despite call for Congress to act, new crypto laws look unlikely this year.
• EU’s Russian crypto ban confirmed as Bloc tightens sanctions.
• Saudi Arabia lowers oil prices for Europe but raises them again for the US.

In the spotlight?

The social media status quo could soon be disrupted with the launch of Diamond which is one of the first platforms ever to host its content and social graph on a decentralised blockchain. By publishing content to a decentralised blockchain like DeSo, writers, and creators can own and control their content the same way they own and control their Bitcoin. For example, posts on Diamond can be minted as NFTs, earn crypto tips, and launch social tokens allowing their audience to invest in their success.?

Regulatory developments?

The European Union has agreed upon the full legal text of its landmark legislation known as the Markets in Crypto Assets Regulation (MiCA), alongside a further law to reveal the identity of those making crypto payments. MiCA introduces the first-ever licensing regime for crypto wallets and exchanges to operate across the bloc and imposes reserve requirements on stablecoins that are intended to avoid Terra-style collapses.?

Macro View

Quarter to date, the S&P 500 and Nasdaq wrapped up their first three-quarter losing streak since 2009, losing 5.3% and 4.1%, respectively. The Dow dropped 6.7% in the third quarter and saw a third-straight losing quarter for the first time since 2015.

Altcoins

Uniswap (UNI)

Uniswap is in the early stages of raising significant funds to further expand its decentralised finance offerings, according to a new report. Uniswap Labs, a DeFi startup contributing to the Uniswap Protocol, is engaging with a number of investors to raise an equity round of $100 million to $200 million, TechCrunch reported on Sept. 30.

Polygon (MATIC)

Shopping.io is integrating MATIC as a form of payment on its platform as well as offering a 2% discount for the first thirty days and free shipping for the first seven with every use of the token. From October 4th, MATIC will be added to Shopping.io’s payment processor; Shopping Pay, allowing holders to purchase goods through some of the world’s biggest retailers such as Amazon, eBay, Walmart, and Home Depot.?

?itcoin (BTC)

Figure 1: Bitcoin Chart in USD from 30 September - 7 October 2022 https://coinmarketcap.com/currencies/bitcoin/

The Bitcoin hash rate hit a new all-time high above 245 EH/s on Oct. 3, but at the same time, BTC miner profitability is near the lowest levels on record. With prices in the low $20,000 range and the estimated network-wide cost of production at $12,140, Glassnode analysis suggests “that miners are somewhat on the cusp of acute income distress.”

Ethereum (ETH)

Figure 2: Ethereum Chart in USD from 30 September-7 October 2022 https://coinmarketcap.com/currencies/ethereum/

Telecom giant Deutsche Telekom, parent company of T-Mobile, has announced that it will run a validator to support Ethereum staking. The German company said Thursday that its T-Systems Multimedia Solutions (MMS) division is working with proof-of-stake app and DAO StakeWise to operate a pool, allowing customers to take part in validating transactions without having to run a validator themselves.?

CFTC Commissioner Christy Romero reiterates that the Commodity Futures Trading Commission still considers Ethereum as a commodity even after the proof-of-stake (PoS) transition.

“When we look at Ethereum and all these other products, we are looking to see what is a commodity. The CFTC has long taken the position that Ethereum is a commodity. The definition of commodity is very, very broad. I continue to take the position that Ethereum is a commodity, even with proof-of-stake.”

CEO Comment

Swift is the word of the week at DigitalX - with circa 5 trillion transactions a day the impact of their presence is literally mind blowing for our space - it has led to a new catch-phrase for Chainlink - the Google of decentralised data. We see a huge future for them regardless in the role they play in the validation of real world assets? – for those who have watched the financial revolution in Africa lead by Safaricom and M-pesa would see the implications of Spain’s largest telecom company Telefónica now accepting Bitcoin; we could be one step away from atomic, bankless, transactions in a whole new way. Let’s not underestimate McDolanld’s now taking payments in Bitcoin in a Swiss town - we are moving closer and closer to the medium of exchange narrative being a reality.?

Also huge is the CFTC Commissioner stating? “Ethereum is a commodity, even with Proof-of-Stake”. As mentioned previously the declaration of Ethereum as a security could have far reaching implications for the industry. From a mainstream moment context it was an honour to be part of the first Australia Bloomberg Crypto panel this week.

Again the Macro environment has dominated with the Australian RBA producing an interesting development surprising the market by not raising as much as expected - this will have broader implications for the AUD.? It seems to be stating the obvious we will continue to see market volatility as we watch where rates will settle and as we run the gauntlet of an unprecedented stagflationary world (inflation with slowing growth// technical recession)

This week we also saw the “gap” starting to close with BTC outperforming the NASDAQ by 4.1% though we could attribute this to many causes. We also believe there is a perception shift going on in the market as many are losing faith in how? some central banks have operated over the volatility. We are watching this shift in trust with interest - it is literally why bitcoin was created. “What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party” or we like to think of it as cryptographic trust.

Lisa Wade (she/her) , CEO DigitalX

About DigitalX

DigitalX Ltd (ASX:DCC) is a leading ASX-Listed Bitcoin and digital asset funds management business. The Company has an 8-year track record of securely managing Bitcoin and digital assets and is led by an experienced team of finance professionals and digital asset specialists. DigitalX Asset Management is the investment manager of digital asset investment products that provide qualified investors with highly secure and streamlined access to digital asset exposure. To learn more contact the team at [email protected] or visit our website https://digitalx.fund/.