September 2023 Digital Asset Market Commentary – CKC.Fund
CKC Fund: Offshore Crypto Fund Manager
Boutique offshore digital asset investment fund management || Upside-driven blockchain growth & development studio
Key Takeaways
Overview
The crypto markets cooled in September, a month that has historically been one of the worst for Bitcoin (BTC) as well as for other markets such as the stock market. Major cryptocurrencies drifted lower in recent weeks as the Federal Reserve hinted at another interest rate hike and suggested that interest rates could remain higher for longer than previously expected. The U.S. Securities and Exchange Commission (SEC) also once again delayed decisions regarding the approval of Bitcoin spot exchange-traded funds (ETFs), even after members of Congress sent the SEC a letter urging the regulator to approve BTC ETFs.?
There has been a substantial decrease in venture capital funds allocated to blockchain projects, with $500 million deployed in September 2023, representing a drop from the $1.9 billion and $2.7 billion allocated in September of 2022 and 2021, respectively.
Despite a 4% positive performance in September, both spot and front 3-month BTC futures on CME were down in monthly volume -47.3% and -20.0%, respectively. The market saw a capital outflow of -$102.6 million from select BTC ETPs. Continuing from the negative outflows of August, there have been two consecutive months of BTC outflows.
September price performance for Ether (ETH) ended the month with an increase of +1.6%, with the Market-to-Relative Value shifting up +6.6% during the month, similarly to BTC. Both spot and CME front 3-month futures volumes were down -25.5% and -9.7%, respectively. While BTC saw a -7.1% decrease in front 3-month futures in U.S. dollar (USD) value, for ETH the month marked an increase of +20.4%, indicating that market sentiment is drifting away from BTC.
This is noteworthy, since BTC has historically tended to outperform altcoins in cooler markets. The various factors at play –?such as regulatory uncertainties, declining venture capital investments, and contrasting performance between Bitcoin and Ethereum pointing to the evolving dynamics and challenges within the cryptocurrency space – all underline the need for continued vigilance and adaptability by market participants in this emerging asset class.?
ETH: A Year Since the Merge
The Ethereum network has seen some gradual changes since the activation of The Merge on September 15, 2022. The total ETH staked has increased 121.8% since The Merge, with daily net deposits continuing to increase even after withdrawals were enabled as part of the Shapella upgrade. Whilst total ETH staked is up +4.3% over the month, the pace has been slowing as can be seen by the -30.2% decrease in net ETH staked on a monthly basis — a consecutive two-month decrease. Total ETH burnt and total validator revenue over the month were also down -38.6% and -11.5%, respectively. This is a direct result of decreased transactional activity, with a -30.4% reduction in total validator revenue collected from priority fees in September (Source: Coinmetrics).?
The Ethereum network's post-Merge trends, like slower ETH staking growth and reduced transactions, emphasize the ongoing challenges in its shift to proof-of-stake, stressing the need for ongoing adaptation and monitoring.
Blockchain Applications and Digital Asset Updates
Stablecoins and CBDCs
PayPal introduced their stablecoin PayPal USD (PYUSD) which can be accessed and used via PayPal and Venmo. PayPal has also expanded its integrations with major crypto wallets, including MetaMask and Ledger — further strengthening the fiat on- and off-ramp connections between traditional finance (TradFi) and decentralized finance (DeFi).
In a similar move, Visa also revealed support for sending and receiving USDC settlement payments via the Solana blockchain. This enables Visa to send USDC-denominated payouts to Worldpay and Nuvei through Visa's Circle Account. The global payments platform MoneyGram announced the launch of a non-custodial wallet to help its users move funds between fiat currency and USDC, a stablecoin pegged to USD. Mastercard is also looking to support central banks with its central bank digital currency (CBDC). Its partners in this endeavor include Ripple, Consensys, Fluency, and Fireblocks.?
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On the wholesale side of the market, the European Central Bank (ECB) commenced its exploration of how financial transactions on DLT platforms could be settled under the New Technologies for Wholesale settlement - Contact Group (NTW-CG). With the participation of 55 financial market participants, the main objective of this group is to consolidate work by individual eurozone central banks and examine different solutions such as wholesale CBDCs.
The recent initiatives by PayPal, Visa, MoneyGram, and Mastercard to embrace blockchain technology and stablecoins, along with the European Central Bank's exploration of wholesale settlement on DLT platforms, collectively signify a growing convergence between traditional finance and the emerging world of digital assets, highlighting the increasing relevance of blockchain in the global financial landscape.
Tokenized Deposits
Citi debuted a token service that’s part of a broader push to offer digital assets to institutional clients. The product — known as Citi Token Services — will transform customers’ deposits into digital tokens that can instantly be sent anywhere in the world. With a focus on improving cash management and trade-finance capabilities, Citi tested this service with Danish shipping company A.P. Moller-Maersk A/S to demonstrate the programmable features of digital tokens.
J.P. Morgan is exploring a blockchain-based deposit token for cross-border payments. They already offer their JPM Coin for payments within their bank. This solution could enable payments to clients of other banks.
Citi has predicted that the tokenization of financial and real-world assets using blockchain technology is expected to grow to a value of $4-5 trillion by the year 2030, with other organizations such as the WEF putting estimates above the $10 trillion mark in the same timeline. The introduction of Citi's Token Services and J.P. Morgan's exploration of a blockchain-based deposit token signify a major step forward in the adoption of digital assets and blockchain technology within the institutional banking sector. These innovations have the potential to revolutionize global payment systems, enhance cash management efficiency, and facilitate cross-border transactions, making financial services more efficient and accessible for institutional clients worldwide.?
New Digital Asset Vehicle for Accredited Investors
In September 2023, CKC.Fund, a private fund-advisory firm specializing in digital assets, launched a new private crypto investment fund vehicle for accredited investors. The fund focuses on risk mitigation, yield generation, and fundamental analysis of digital assets. The approach is designed to generate returns by investing in a diversified portfolio of digital assets with a focus on long-term growth. CKC.Fund’s management team has extensive experience in the digital asset industry and is committed to providing a high level of transparency and governance. Accredited investors within the organization's network who are interested in learning more about the fund can contact CKC.Fund directly.
Stay in Touch
Navigating the ever-changing landscape of digital assets can be a challenge. That's why we’ve created this newsletter to help bring clarity to the complexity. In addition to a monthly summary of the most important crypto news, we layer in insightful commentary from insiders and experts who understand the cryptocurrency market.
If you’re interested in enhancing your understanding of this rapidly evolving space, we kindly suggest you follow us on LinkedIn. Stay one step ahead in the world of digital assets with us. You are also welcome to reach out to us at [email protected] if you would like to know more.
The CKC.Fund Team
This content is intended for general informational purposes only. CKC.Fund does not render or offer personalized financial, investment, tax, legal, security, or accounting advice. The information provided in this content is provided solely as general information and to provide general education. No information contained herein should be regarded as a suggestion to engage in or refrain from any investment-related course of action. This content may contain certain statements, estimates and projections that are "forward-looking statements." All statements other than statements of historical fact in this content are forward-looking statements and include statements and assumptions relating to: plans and objectives of management for future operations or economic performance; conclusions and projections about current and future economic and political trends and conditions; and projected financial results and results of operations. These statements can generally be identified by the use of forward-looking terminology including "may," "believe," "will," "expect," "anticipate," "estimate," "continue", "rankings," “intend,” “outlook,” “potential,” or other similar words. CKC.Fund does not make any guarantees, representations or warranties (express or implied) about the accuracy of such forward-looking statements. Forward-looking statements involve certain risks, uncertainties, and assumptions and other factors that are difficult to predict. Viewers are cautioned that actual results referenced in this content could differ materially from forward-looking statements; and viewers of this content are cautioned not to view forward-looking statements as actual results or place undue reliance on forward-looking statements. Past performance is not indicative nor a guarantee of future results. No content in this content shall be viewed as a guarantee of future performance.
Husband & Father | Mortgage Leader | Adventurer | Documentary Film Producer
1 年Lots of valuable information here, CKC.Fund: Boutique Offshore Crypto Fund Advisory. I’ll have to unpack this one with a little depth over the weekend. I appreciate you sharing.
Leader of the Genuine Connections Revolution | Helping Service Providers, Entrepreneurs, and Sales Professionals Build Authentic Relationships | Author of "No More Cringe” | Changing the Way We do Business on LinkedIn
1 年I'm always learning with you; thank you. It is quite interesting that Visa, Mastercard, PayPal are engaging, too.
Consultant: PMO and Project Management | Sales | Operations | Training | Smartsheet Solutions I Semiconductor | Renewables | Manufacturing | Field Service | PMP | MBA | West Point Grad | Army Vet | Bald Guy ??
1 年Insightful September commentary from CKC.Fund ??. It's evident the digital asset market is undergoing dynamic shifts, especially with regulatory uncertainties and evolving BTC-ETH sentiments. Great to see major institutions embracing blockchain. Kudos to CKC.Fund for launching a new investment vehicle!
Sustainability Professional - ESG Data Management, ESG Strategy, Carbon Calculations, Biodiversity Conservation, Sustainable Community Development
1 年thank you for this crypto assessment, great information for investors
Digital Marketing Manager | Social Media Strategist | SEO Specialist | Proven Expertise in Boosting Brand Visibility & Engagement
1 年Fascinating insights in the September 2023 Digital Asset Market Commentary! The challenges and evolving dynamics underscore the need for adaptability in the cryptocurrency space. Thanks.