Communications

Crypto bulletin

February 16th, 2022

Crypto Bulletin – Week 218

The theme of the week once again seems to be the metaverse. Indeed, the largest bank in the United States, JPMorgan, has taken a giant step into this virtual world, opening a popular blockchain-based Decentraland lounge. In the process, the institution sees the sector as a $1 trillion opportunity.

 

 

The Onyx lounge, named after JPMorgan’s internal blockchain payments system, was unveiled alongside a report from the bank detailing the types of business opportunities companies can expect to find in the metaverse. The report states that “the metaverse will likely infiltrate every industry in some way in the coming years, with the market opportunity estimated to be more than $1 trillion in annual revenue,” while noting that $54 billion is already spent on virtual goods each year – twice the amount spent on buying music. The report notes that the average price of virtual land doubled from $6,000 to $12,000 between June and December of last year, and predicts that in-game ad spending will reach $18.4 billion annually by 2027.

 

 

“Eventually, the virtual real estate market could begin to see the emergence of services similar to those in the physical world, including credit, mortgages, and leases” the JPMorgan report said. “We believe that the current virtual gaming landscape – each virtual world with its own population, GDP, game currency, and digital assets – has parallel elements to the existing global economy. This is where our long-standing core competencies in cross-border payments, foreign exchange, financial asset creation, trading and custody, in addition to our consumer-scale footprint, can play a major role in the metaverse.”

Another giant, Disney, has promoted a framework to lead its metaverse efforts. The CEO said he was blown away by the company’s work so far in the field, adding that the virtual universe is the next great storytelling frontier. “It’s called the metaverse, which I believe is the next frontier of great storytelling and the perfect place to pursue our strategic pillars of storytelling excellence, innovation and audience focus,” brand CEO Bob Chapek wrote in an internal email. “Teams across the company are exploring this new canvas, and I was blown away by what I saw.” In November, he told investors that the company was preparing to create “its own” metaverse. The company also recently posted job openings for NFT experts, signaling potential integration with the upcoming metaverse.

We elaborated last week on the anti-censorship features of bitcoin in relation to crowdfunding campaigns following the suspension of the GoFundMe trucker convoy campaign in Ottawa a few weeks ago. Monday marked the first time the federal government invoked the Emergency Measures Act to restrict, among other things, the inflow of capital to protesters. Under the act, the government can freeze bank accounts without going through the court system, as well as take a number of other measures to force an end to the protests.

Freezing bank accounts without going through the court system… Could there be a better example of the control institutions have over your personal savings? A better advertisement for bitcoin? While the government has attempted to incorporate cryptocurrencies into its financial censorship efforts, it goes without saying that they are much more complex to curb, as they do not rely on centralized networks controlled by traditional payment providers. Bitcoin is entirely technological and has no intrinsic political flavor. Isn’t that the kind of freedom we want with our money?  Neeraj Agrawal of crypto lobbying organization Coin Center tweeted sarcastically: “Oh no please don’t expose how easily the state can lean on financial intermediaries [to] cut off political protest fundraising.” Another reminder that your money is yours to use as you see fit…as long as it doesn’t conflict with the political will of your government.

Were you watching the Superbowl last Sunday? If you were, you’ll have seen the bold Coinbase exchange ad, which featured a QR code that ran on a black background for 60 seconds. Scanning the code took one to the Coinbase site, where new users could get $15 in free bitcoins, while existing users could enter a $3 million lottery.

In a blog post, Kate Rouch, Coinbase’s director of marketing, writes that more than 20 million people tried to access Coinbase within a minute because of the ad. That’s more than six times as much as any previous load Coinbase has faced, completely overwhelming the site. “Our engineering teams tested our site’s ability to handle millions of concurrent visits. The volume we saw was staggering compared to our expectations,” said Rouch, who added that the traffic was “historic and unprecedented.” The ad, by the way, won the annual Clio Awards’ Best Superbowl ad.

It’s been 13 years – only 13 years should we say in this context – since a mysterious user with the nickname Satoshi Nakamoto introduced the world (or rather, once upon a time, the few people interested in listening to him) to his concept of bitcoin. 13 years later, bitcoin’s value is greater than the capitalization of the majority of national currencies, it’s held by some of the world’s largest companies, it’s a national currency in one country, and it’s the highest-returning liquid asset of that same time period. A reminder of the words shared on February 11, 2009 is in order:

 

 

 

This week we saw a new major sponsorship from a company in the industry. Bybit has just signed a multi-year, $150 million agreement with the Red Bull Racing Formula 1 team. The deal is valued at a minimum of $50M per year. According to the announcement, the fee will be paid in a combination of fiat and BitDAO (BIT) tokens. The company announced that the partnership aims to expand the F1 team’s fan engagement through its capabilities as a cryptocurrency exchange. As part of the agreement, Bybit will act as a token issuer for fans and as a technology incubator for Red Bull Racing. This means the exchange will help the team distribute its digital asset collections.

Cryptocurrency payments for your rides via the Uber platform… it’s coming. Uber’s boss, Dara Khosrowshahi, revealed that the global brand is looking into digital currency transactions. In the immediate future? Not quite. Here’s his reasoning, by the way, very apropos: “I think right now, what we’re seeing with bitcoin and other cryptocurrencies is that they have great value as a store of value, but the exchange mechanism is expensive and not very environmentally friendly. As they become cheaper [to operate] and more environmentally friendly, I think we’ll look to cryptocurrencies a little more. If you’re asking if Uber is going to accept cryptocurrencies in the future, absolutely. At some point. It’s not the right time, but we will.”

New data reveals that the Ethereum network has added 18.36 million addresses with a balance greater than zero in 2021. That’s an amazing growth rate of 1.53 million new addresses per month. There are currently 70.4M wallets holding Ether. According to Glassnode data, the number of addresses holding at least 0.1 Ethereum (ETH) has also reached a record high. Average holdings are still low, but this is a clear measure of adoption. Will the price catch up to the growth curve of addresses however? Here’s the chart shared by analytics firm IntoTheBlock :

 

 

We’ll have to get past the $45,500 mark to expect another bullish push following the rebound that began in late January. However, the indicators pointing in this direction are becoming more and more numerous. As analyst Matthew Hyland points out, major oscillators showed a classic buy signal on Monday.

 

 

The trading volume profile also shows a similar V-shaped drop and recovery and is just as significant as when the price went from $30,000 to $60,000 last June, as shown by this twitter user.

 

 

The current supply dynamics can be described as a powder keg concludes a recent report from research firm FSInsight. “The question is who is lighting the match.” The report notes that the market to realized value (MVRV) of BTC is at the lowest level since April 2020, when its price was still below $10,000. From that point, the price of BTC climbed steadily over the next year to a peak of about $57,000 in May 2021. Finally, the report predicts that the price of BTC will reach a range of $138,000 to $222,000 by the end of 2022. It goes so far as to predict a price of $12,000 for the same period for ETH. Let’s hope their optimism is justified!

Rivemont Investments, manager of the Rivemont Crypto Fund.

The presented information is as of February 16th, 2022, unless otherwise indicated and is provided for information purposes only. The information comes from sources that we believe are reliable, but not guaranteed. This statement does not provide financial, legal or tax advice. Rivemont Investments are not responsible for any errors or omissions in the information or for any loss or damage suffered. 

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