- Bitcoin rallied to $24,400, many altcoins rallied 50-100% making many investors fall for FOMO.
- Fed raised interest rates by 0.75% for the second time, while the consumer confidence index in China plummeted.
- The Ethereum Merge is coming soon with many potential risks, whereas Solana and Avalanche ecosystem have been showing bearish signs in the last few months.
- The fundraising market was still very active last week, although the number was not as good as the previous one.
Market overview for week 30 2022
The market looked optimistic after the FED continued to raise interest rates to 0.75%. Bitcoin rallied to $24,400, many altcoins rallied 50 - 100% making many investors fall for FOMO.
The current situation is quite good for the market, it is expected that BTC can gain back to the area of $28,000 next week. Many tokens have x3 its prices from the last bottom, and will probably continue to increase for another period before retracing the accumulation zone.
Macroeconomics and Crypto in week 30 2022
The consumer confidence index in China plummeted
The consumer confidence index shows the level of optimism about the economy, income, and spending levels of people. In China, the index fell sharply in July 2022.
One of the reasons might cause this was that some banks in Henan, China froze people's assets and did not allow people to withdraw money as their system was being maintained. According to some sources, frozen deposits were worth more than $178 million, affecting hundreds of thousands of customers.
Fed raised interest rates by 0.75% for the second time
With the US experiencing the worst inflation in nearly 40 years, on July 27th, the US Federal Reserve (Fed) announced an increase in interest rates by 0.75% to reduce inflation. Currently, the interest rate is around 2.25% - 2.5%, the highest level since December 2018. Many economists predict interest rates will rise to around 3.25% - 3.5% by the end of 2022.
The Fed rate hike created volatility in the stock market as well as crypto. According to US Bank, the value of future earnings tends to fall when higher interest rates are predicted, making investors less keen to bid up stock prices. As stated by Forbes, higher interest rates are intended to slow the economy, which can stunt revenues for companies, thus potentially harming their growth and stock prices.
However, according to CNN Business, the current inflation situation is not as bad as it was in the 1980s when it reached 12.2% in late 1974 and reached 14.6% in April 1980.
The crypto market rose after the Fed raised interest rates by 0.25% in February 2022, but has been decreased continuously after the Fed raised interest rates in March 2022.
However, after the Fed raised interest rates in July 2022, the crypto market reacted positively. Specifically, the Bitcoin price increased by about 15% from $21,100 to $24,400.
Stablecoins in smart money & Bitcoin price
Below is a table comparing the correlation between stablecoins in smart money and the price of Bitcoin, according to Nansen.
Accordingly, when Bitcoin’s price increases, the stablecoin in smart money decreases. As the price of Bitcoin decreases, the stablecoin in smart money increases. From there, investors can monitor cash flow and make decisions for themselves.
Currently, stablecoins in smart money have decreased but Bitcoin price has not increased, which implies a high possibility that users have cashed out their money.
Highlights in DeFi Categories from week 30 2022
GHO, Aave’s Stablecoin
Last week, Aave created a proposal on AaveDAO to allow GHO minting on Ethereum Market V2 of Aave Protocol. Currently, the "Approve" vote is in the majority and if this proposal is approved, GHO will be officially voted on-chain. After being voted on chain, GHO will go through 2 more steps before the official launch.
Keep3r Fixed Forex
In the past week, Keep3r fixed forex proposed Curve DAO to allow the whitelist of keep3r's Treasury addresses to be able to lock CRV and have voting rights without having to create a wrap curve like Convex.
Currently, Keep3r fixed forex is looking to boost the liquidity of non-USD stablecoins on Curve through CRV emission. This proposal is currently being discussed and there is no official on-chain voting poll yet.
Besides Fixed Forex promoting non-USD stablecoin, Synthetix is also looking to promote synthetic assets when preparing to launch V3, with permissionless asset creation and veSNX tokennomics.
After Sushi used Stargate's technology to launch its cross-chain AMM and Radiant Lending protocol, the cross-chain category received a lot of attention. In there:
- Cross-chain solutions competed in the Uniswap proposal on using cross-chain technology for governance.
- Synapse launched Optimistic Rollup with Generalized Cross-chain Messaging Protocol.
Highlights from ecosystems in week 30
The Merge updates
On July 28th, Ethereum developers confirmed the perpetual date for The Merge on the Goerli testnet. This is the last test before The Merge officially launched on the mainnet in September 2022.
Many potential technical risks still exist as The Merge is approaching have made investors nervous and seek hedges to minimize risks. The recent growth of ETC is one of those options, as ETC developers think about forking ETH again to keep ETH PoW. In case The Merge is successful, the market still has the choice of ETH PoW or ETH PoS.
At the same time, Optimism is also gaining attention as ETH Merge is approaching as the most successful Rollups currently with the support from Vitalik Buterin. In the near future, some L2 solutions like ZK Rollup (like zk Sync) and Validium (like StarkNet)... will help Ethereum scale faster. This is also a challenge for other Alt-L1s such as Aptos, Sui, Solana... in the near future.
Most developers on Solana have moved to Aptos or Sui to build projects (big projects on Solana such as Solrise and Saber). Looking at TVL, it fell from $12 billion to $2.5 billion. Magic Eden only has a trading volume of $2-3 million per day.
Solana's other protocols also had security issues when Wormhole was hacked for $300 million, Cashio was hacked for $60 million, Crema was hacked for $8 million, and Nirvana was hacked for $3.5 million in the last few months.
With such facts, the Solana ecosystem is in a bear market similar to Ethereum in 2018 when the ICO trend passed. Protocols that can survive this time (predicted until next year) could become one of the key projects in the Solana ecosystem in the next season.
After the narrative "subnets" for gaming failed (DFK & Swimmer), Avalanche is struggling with the development of the ecosystem. Looking at the top protocols on Avalanche are Multi-chain protocols, such as Aave, Curve. The two native protocols TraderJoe and Platypus are both having bad indicators.
Platypus: Stablecoin AMM underdeveloped
Platypus's liquidity dropped from $700 million to $200 million, while trading volume fell more sharply from $140 million to $4 million per day.
TraderJoe was no better when its TVL dropped from $860 million to $213 million, its daily trading volume decreased from $340 million to $27 million per day.
Fundraising market for week 30
The fundraising market was less active this week, witnessed $409 million raised, which is significantly lower than last week ($600 million raised). The number of deals this week (32 deals) is also lower than that of last week (53 deals).
In the DeFi sector, there were only 4 deals this week, while there were 8 deals in the Infrastructure sector, and 12 in the GameFi & NFT & Metaverse sector. Clearly the market is paying more attention to the GameFi & NFT & Metaverse and Infrastructure categories, whereas showing less interest in DeFi projects.
In this part of the article, the colleration between the number of deals and the BTC price would be given, and more insights about the fundraising market in the last 7 days.
Colleration between the number of deals and BTC price
Although the price of BTC fluctuated during the last 4 years, the number of deals from some biggest VCs in the crypto market was always going up. Deals were densely populated in H2 2021 and H1 2022, even when the price of BTC experienced a downward trend.
As the amount of money that big VCs invest in the crypto market is significantly increasing, the crypto market is well-developed in the last few years.
KuCoin exchange raised $10M in strategic round
Kucoin exchange is a centralized exchange established in 2014. This is one of the CEX representatives from China, next to Binance and Huobi. Compared to other exchanges, Kucoin also has full features from Spot trading, derivatives, to many other extra features such as lottery, Staking, etc.
The only investor in this deal was SIG. This is a privately held technology and commerce company. SIG consists of a number of affiliated entities that specialize in trading and investing exclusively in equities, private equity, and venture capital.
The capital will be used to upgrade the infrastructure for KuCoin, expand business types, and recruit new employees. Besides, KuCoin will also use it to find and invest in promising crypto startups on KuCoin's KCC ecosystem.
However, the amount of money raised from this deal was not large for Kucoin. As SIG is a big company, the main advantage for Kucoin in this deal could be the connection with people behind SIG.
Hashflow (HFT) raised $25M in Series A
Hashflow is a protocol that allows users to trade multiple tokens. This is also an unlimited cross-chain bridge with the advantages of fast processing speed, MEV-resistance and extremely low gas fees. Hashflow brings a new standard in trading on DeFi with many outstanding advantages such as low fees, no slippage, MEV solution… Last week, Hashflow successfully raised $25M at a valuation of $400M.
Jump Crypto, Electric Capital, Dragonfly Capital participated in this round with many other VCs. The amount of capital will be used to expand products, human resources and processes.for the next structured launching of Hashflow.
In 2022, the fundraising market in DeFi sector was very inactive. This deal was a quite big one in the DeFi category, as many big VCs participated in a “bearish” market, which helps Hashflow stand out from the rest of DeFi projects.
As the market had a rally, investing opportunities are appearing in many sectors. However, the longer trend of the market is still going down, as the macroeconomics are not supporting the “bullish” view (as Fed raised interest rates). Investors should be careful with their investments in this period, as big fluctuations are expected to come in the next few weeks.