ETC Group Crypto Minutes Week #20
Bitwise Europe (formerly ETC Group)
Crypto ETPs backed by Crypto Specialists
US sleepwalking into European and Asian crypto supremacy
There's a famous quote from the Chinese premier Zhou Enlai, who served the country from 1956 until 1974. When asked about the impact of the French Revolution 200 years earlier, Enlai paused briefly before declaring it was “too soon to tell.”
While politicians may wring their hands over the impact of Bitcoin, crypto and blockchain on their domestic economies, the fact is that it is not “too soon to tell”.
By offering crypto companies standardised rules of the road with April's MiCA (Markets in Crypto Assets) - the first continent-wide crypto regulations - Europe has opened up a significant lead over the United States.
Testament to this fact is the searing growth of European VC crypto startup funding and the rapid decline of the same in the US. While the EU's share of funding for new and early-stage crypto businesses jumped by 700% between Q1 2022 and Q1 2023, the US share dropped by 46%.
Businesses in any industry will always go where they are supported, not demonised or penalised.
The language and political stance of the US has turned increasingly hostile in recent years, beginning with regulators like the SEC and continuing through President Biden's White House.
But the current political party's particularly bellicose attempts to diminish US Bitcoin mining are highly counterproductive for three reasons.
So while FoundryUSA is the world's largest single mining pool with 27% of hashrate, other jurisdictions are quickly climbing the ranks.
Despite China's official protestations to the contrary, the fact is that Chinese mining pools such as ViaBTC and Poolin lead the globe in total hashrate, and rake in hundreds of millions of dollars a year from mining Bitcoin.
As a reminder, a Bitcoin mining pool is a group of miners who share computing power and are rewarded pro rata, depending on how much energy each contributes. This setup helps to make revenue generation more predictable.
Further to this point, on 9 May, Marathon Digital (NASDAQ: MARA), the largest US Bitcoin miner by market cap, announced it was?partnering with?Abu Dhabi-based Zero Two for the first industrial-scale Bitcoin mining operation in the Middle East.
So while political careers wax and wane, and some fret that it is “too early to tell” of the impact of Bitcoin, crypto and blockchain, it is clear that the technology has no borders and will outlast them all.
Investors hunt Metaverse gains with Apple VR launch incoming
The world's most valuable company is just weeks from launching its first entry into VR. Rumours have been swirling for months that the $2.7T behemoth Apple (NASDAQ: AAPL) will debut the Reality Pro headset at this June's Worldwide Developers Conference.
The Reality Pro is pitched as a direct competitor to Meta (NASDAQ: META), whose Quest headset has dominated retail VR markets since the IP was?owned by startup tech firm Oculus, a company since subsumed into Mark Zuckerberg's empire.
Ming-Chi Kuo, an analyst covering Apple for TF International Securities, suggests two versions of the Reality Pro: a cheaper mass-market version and a higher-grade headset for wealthier customers. Kuo wrote that a second-generation Reality Pro will go into production in 2025, with shipments expected to be ten times larger than the 2023 version.
The performance of metaverse-related stocks has surprised mainstream analysts this year and defied projections of a collapsing tech sector in the wake of macro uncertainty.
With Q1 2023 earnings now essentially complete, standout performers include Roblox (NYSE: RBLX), which has seen its shares surge 40% in the year to date.
Despite a downdraft from its pandemic-era upswing, Roblox showed 22% user growth to reach more than 66 million daily active users. Results also showed an average compound annual growth rate of over 60%.
领英推荐
Some regard Roblox as a preliminary metaverse - an online user-generated game creation platform filled with?live-streamed concerts?and fan-led interactive experiences.
Their recent integration of?generative AI scripting?has also been a boon for automating game creation's most technically challenging elements. Users are now testing how ChatGPT can be used to create more immersive and reactive?non-player characters alongside the kinds of awe-inspiring photorealistic graphics capabilities of Unreal Engine 5.
Despite its much-publicised VR?overspending, Meta's share price has rocketed 91% in the year to date.
A surprisingly impressive Q1 performance saw earnings per share of $2.20, beating analyst expectations of $2.03, while daily active users reached 2.04 billion. Meta leadership has also reassured shareholders that the metaverse remains a?long-term priority?for growth.
Ordinals boom makes millions for Bitcoin miners.
The rapid rise of Bitcoin Ordinals - the original blockchain version of NFTs - has increased revenue generation for Bitcoin miners.
Companies such as Marathon Digital and Riot (NASDAQ: RIOT) are experiencing unprecedented revenues from transaction fees as the craze around Ordinals continues its parabolic growth.
Ethereum and other smart contract-based platforms once held a total grip on the non-fungible token market because it was considered impossible to create them on Bitcoin, given coding limitations.
But in late 2022, Bitcoin researcher Casey Rodarmor debuted a new invention to ‘inscribe' the individual satoshis that make up each Bitcoin with text, audio or video content.
As ETC Group noted in comments published in Business Insider, Bitcoin?broke its all-time record?for daily transactions on 2 May. This was largely down to the searing growth of Ordinals.
And the figures are trending exponentially higher. While it took more than four months for the first million Ordinals to be inscribed, it took just three days to rise from 4 million to 5 million Ordinal creations between 6 May and 9 May.
Since February, Bitcoin mining companies have been rewarded more than $36m in transaction fees.
Markets
The blue-chip digital assets, Bitcoin and Ethereum, have shown resilience in the face of macro uncertainty, with slight falls of 3% and 4% over the last fortnight.
BTC has been in a holding pattern around the $26.5k-$27.5k range, while ETH rebounded from a fall below $1.8k to recapture that price point by 14 May.
Among the top 20 altcoins, Solana (SOL) remains the most potent growth story of the year, with a 2% fall in the last two weeks not making much dent in its 125% year-to-date gains.
Other Ethereum competitors, such as NEAR (-8%) and AVAX (-14%), have not fared so well.
With the most prominent smart contract blockchain enabling staking withdrawals last month, Ethereum has regained much of the market share it had given up. At the same time, traders anticipated the mass derisking around the Shapella hard fork.
Whether Ethereum's biggest rivals can iterate on their development just as quickly remains to be seen.
Disclosure?| Copyright ? 2023 ETC Group. All rights reserved