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Issue 32 September 25 – October 7, 2021 Market Insights $55,545 45% $585 million the highest price of LUNA token price gains raised from VCs by crypto Bitcoin since May 11, after Columbus-5 update companies between recorded on October 6 on Terra Network Sept.30-Oct.7
COINTELEGR APH CONSULTING MARKET INSIGHTS ISSUE 32
Savouring the triumph: Major events between September 25 and October 7
Key Takeaways VC Activities
ā After a turbulent September, the crypto market entered so-called “Uptober”, VC funding in the crypto market holds strong with no signs of slowing down. The ongoing rush to invest
and the first week of October has proven this accurate.. Total crypto market resulted in two more $100+ million deals. CoinSwitch Kuber, an Indian crypto exchange, raised $260
capitalization is back above $2 trillion as Bitcoin surged 32% in one week, million, while Sky Mavis, the studio behind the popular Axie Infinity NFT game, raised $152 million.
breaking through key resistance levels full tilt.
ā CoinSwitch Kuber is joining the unicorn club, having raised $260 million in a Series C funding round at
ā Rumors of an upcoming Bitcoin ETF approval are sweeping through the a valuation of $1.91 billion. Using the new funds, CoinSwitch Kuber plans to onboard 50 million Indians
crypto market. The expectations for a positive decision from the US SEC kept on the platform and introduce new services like lending and staking; the exchange also expects to
bullish bets afloat this week, but could the excitement last longer? launch an institutional-grade product.
ā The world of crypto moves so quickly that market commentators already Visit Page
treat China’s crackdown as ancient history. However, the decision of the
Chinese authorities to enforce a ban on crypto has implications across ā Ripple Labs launched a $250 million fund for creators, marketplaces and brands to explore new use
all corners of the industry. Major Chinese exchanges prepare to remove cases for NFTs on its ledger. The platform aims to address concerns with the minting of the tokenized
existing China-based accounts later this year. Crypto market data sites are artwork, including “clunky” user experiences, high transaction fees and the possible ECG impacts.
blocked across the country and two of the four largest Ethereum pools
Visit Page
are suspending operations. Some Chinese traders are circumnavigating
this crackdown by moving to decentralized exchanges, causing a recent
ā NFT gaming studio Sky Mavis, developer of Axie Infinity game, closed a $152-million Series B funding
surge in volume. After over a decade of interference and bans, the Chinese
round. The funding news comes on the heels of the project’s token AXS reaching a new all-time high
government seems to have reached a final stance on cryptocurrency.
above $155 on October 4. With fresh capital at hand, Sky Mavis plans significant upgrades to its gaming
ā While Terra’s Columbus-5 upgrade is causing a stir in the market, we take a platform and the release of a native DEX.
look at the other fundamentals that could influence the price of their LUNA
Visit Page
tokens in the long term.
2
Terra’s bullish case after the Columbus-5 upgrade
Market Analysis Terra’s bullish case after the Columbus-5 upgrade
Terra’s (LUNA) three-month rally saw its token rise by 674%, catapulting LUNA to LUNA and UST
the ranks of potential “Ethereum killers.” LUNA has been on a tear lately because
An important detail about the Terra blockchain is it utilizes a dual token system,
its most recent upgrade has effectively overhauled its tokenomics and brought
which involves Terra (LUNA) and TerraUSD (UST). LUNA serves as the protocol’s utility
significant improvements to its technology. It now sits in fourth place in total
token, while UST is the native stablecoin.
value locked (TVL) among other blockchains, indicating its growing popularity for
decentralized finance (DeFi) applications and also underpins its long-term viability. LUNA’s tokenomics ensure the stability of UST and other stablecoins. UST, on the
other hand, is an algorithmic stablecoin introduced in September 2020. This means
Terra LUNA that UST doesn’t require any centralized or collateralized backing, which helps it
Terra is a Layer-one blockchain developed by South Korean startup firm Terraform avoid dependence on central entities and other centralization issues.
Labs and was released in January 2018. It has a payments-focused ecosystem This is contrary to other stablecoins pegged to stable assets like the United States dollar,
powered by algorithmic stablecoins and aims to be the infrastructure for all the as UST’s value against the greenback is maintained by a constant burning of equivalent
apps being built by Terraform Labs and the Terra community. LUNA tokens. In other words, UST is produced when an equal amount of LUNA is burned.
Investors have been bullish on Terra, as it already serves real-life utility, particularly For instance, if the price of UST goes above $1, the algorithm would burn more LUNA
among merchants. Arrington Capital, Lightspeed Venture Partners and Pantera to mint UST and bring the value back to $1. Conversely, if the price becomes less
Capital have committed to about $150 million to fund projects based on Terra. than $1, UST would be swapped to LUNA to prop up the price.
Terra’s moving parts Terra ecosystem
Terra is built using Cosmos, which uses the Tendermint delegated proof-of- Terra has built a pretty strong foothold in the DeFi scene, with its whole ecosystem
stake consensus mechanism. This makes it possible to scale up to thousands of circled on TerraUSD. Three major decentralized applications (DApp) are already
transactions per second along with near-instant finality at much cheaper fees utilizing the stablecoin, including Mirror, Chai and Anchor. Mirror is a synthetic asset
compared to Etheruem. Cosmos is seeing use by other major projects such as protocol that replicates world stocks markets and allows users to invest even if they
Binance Chain, Crypto.com and Cosmos Hub. don’t have regular access to these markets.
Currently, Terra has 139 “bonded” validators, which are validators that are among On the other hand, Chai is like an e-wallet for fast and cheap mobile payments in
the top ones that hold the most LUNA tokens. These bonded validators have about Korea, but it also plans to expand in other Asian countries, such as Singapore, Thailand
341 million staked LUNA, according to Terra Analytics. and Taiwan. And lastly, Anchor is a savings protocol, providing UST-based fixed-income
investments for users. Anchor was introduced in March but has quickly become a
popular yield farming avenue, ranking third behind Aave and Compound in TVL.
4
Market Analysis Terra’s bullish case after the Columbus-5 upgrade
“LUNA-r” landing?
The long-term value behind Terra is based on the utility of
LUNA and the blockchain infrastructure. The DApps in the
LUNA price and market capitalization Terra ecosystem are designed to increase UST demand,
reducing the LUNA supply and making it more valuable in
the long run. In August 2021, the listing of Wrapped LUNA
and TerraUSD on Coinbase Pro was believed to be one of the
catalysts for its rally since, in the past, LUNA was tradable only
to a number of non-major exchanges.
Another catalyst is the anticipation of the Columbus-5 upgrade.
The price of LUNA soared from under $10 in July to about $41
on Oct. 6, and its market capitalization is already above the
$18-billion mark, earning it the 11th spot in top crypto assets,
according to Cointelegraph Markets Pro.
The Sept. 30 Columbus-5 upgrade is deemed to draw a
plethora of new projects to Terra, which will put more
deflationary pressure on LUNA coins and make the case for a
more bullish valuation.
Prior to the upgrade, the burned LUNA tokens go to a
Source: Yahoo Finance, CoinMarketCap
community pool so they can be reinvested to build more
applications. This burned LUNA is referred to as “seigniorage,”
which essentially refers to the face value of the newly issued
currency minus their production costs. Post-upgrade, those
burned LUNA tokens are now burned permanently, making
LUNA more scarce.
5
Market Analysis Terra’s bullish case after the Columbus-5 upgrade
During the past three months, LUNA experienced a fairly steady
supply flow, albeit reduced significantly since February 2021.
Up to this point, the total circulating supply of LUNA is under
LUNA 3-month token supply changes 400 million tokens ($17.6 billion currently), and the total supply
reduced is 81 million ($3.6 billion). The effects of the permanent
LUNA token burning will gradually be felt in the months to come.
The latest upgrade also enhances Terra’s usability as it opens
up to interchain assets in other Cosmos-integrated blockchains
such as Solana and Polkadot. This was made possible through
Terra integrating with Cosmos’ Stargate protocol. Aside from
opening up to more DApps in the Cosmos ecosystem, the
Wormhole bridge, which is also part of the Columbus-5 upgrade,
is designed to reduce the friction of UST moving to Solana,
facilitating tokenized assets to move quickly across chains.
Lastly, another major overhaul is the increased yield for staking
LUNA, one of the causes for its increased TVL. With all these in
play, it leaves a predominantly bullish investment narrative for
LUNA. This is due to how the value of the LUNA token is related
to the growth of the Terra blockchain. As the DApps in the
Terra blockchain generate more UST demand, this also reduces
Source: Terra Analytics
LUNA’s supply and renders it more valuable for holders.
However, there are two sides to the coin, and it is even more
worth mentioning, especially amid the intense race of Layer-one
blockchains. That other side is the scenario where a sustainable
demand for Terra and its stablecoins fails to exist, which would
spell trouble for long-term holders of LUNA.
6
Market Analysis BTC Daily Exchange Trading Volume and Price
ý BTC trading volume has reached almost $43 billion on
Sep. 24, when BTC plunged from $44,800 to $42,800, but
decreased on the following day. On Oct. 1 BTC trading
BTC Daily Exchange Trading Volume and Price volume peaked at $48 billion as the BTC soared from
$43,800 to $48,100.
ý Both the jump and the fall of the BTC’s price have been
fuelled by the actions of regulatory bodies. On Sep. 24 China
announced a blanket ban on all crypto transactions and
mining, then on Oct. 1, the U.S. Federal Reserve Chairman
Jerome Powell said the Fed had no intention of banning
cryptocurrencies.
7
Market Analysis BTC 30-day Annualized Volatility and Price
ý The behavior of the BTC’s 30-day annualized volatility
resembled that of the daily trading volume with spikes on
Sep. 24 and Oct. 1.
BTC 30-day Annualized Volatility and Price
ý Similar to price action in August, Bitcoin is struggling to
maintain above $50,000 after dipping below this key area.
8
Market Analysis BTC – DXY
ý The last ten days of August were marked by a plunge in the
BTC – DXY 30-day moving average correlation as the USD
failed to keep up with the rising price of Bitcoin
30 days moving average correlation BTC – DXY
ý Although DXY has not performed as well as BTC in this
same period, DXY hit 94,3 on Sep. 29, in tandem with rising
Treasury yields.
9
Market Analysis BTC – Gold
ý Gold is proving its safe haven status by slightly appreciating
on Oct. 4, when the S&P 500 index dipped by 1.2%, but its
performance was nowhere near that of BTC which rose by
30 days moving average correlation BTC – Gold 1.7%.
ý Overall, Gold’s price has been fluctuating in between $1,720
and $1,780 between Sep. 21 and Oct. 4, whereas BTC
has skyrocketed from $40,700 to $49,000 over the same
period of time, further cementing the idea of its safe haven
potential.
10Market Analysis BTC – S&P500
ý The last week of September has been a rough ride for the
S&P 500 index, which tumbled 2% on Sep. 28. Investors
faced the expected impacts of a halt of the bond purchase
30 days moving average correlation BTC – S&P500 by the Federal Reserve and growing fears of Evergrande’s
crisis, causing the S&P 500 to fall by 1.2% on Oct. 4. This
was further exacerbated following the outages suffered by
Facebook along with its subsidiaries.
ý Notably, BTC got dragged down by the S&P 500 on Sep. 28,
but Bitcoin and other cryptos managed to withstand the
market trend on Oct. 4, possibly meaning that decorrelation
between traditional financial markets and cryptocurrencies
will grow bigger.
11Market Analysis BTC – ETH
ý BTC – ETH 30-day moving average correlation has diverged
from its historical level of 0.8 maintained since July 2021
and increased to over 0.92 as these cryptocurrencies moved
30 days moving average correlation BTC – ETH in the same direction every day over the last ten days of
September.
ý Overall, ETH has been more profitable from Sep. 21 as it
delivered a 22% profit compared to 20% gain in the BTC’s
price. Ethereum’s growth might be attributed to the rising
trading volumes in the nonfungible token industry.
12Institutional, Venture Capital & M&A, Enterprise Blockchain and Regulatory Activities
Institutional Activities
Cryptocurrency Investments Crypto Trading Instruments and Payment Options
Morgan Stanley doubles exposure to Bitcoin Institutional investors bought the dip as Verifone to enable crypto payments at major
through Grayscale shares China FUD broke retailers through BitPay
U.S. investment bank Morgan Institutional investors were Verifone — one of the largest
Stanley owned 58,116 shares of buying the dip on the back of point-of-sale providers in the
the Grayscale Bitcoin Trust as China’s latest FUD, with $95 world — announced that the
of July 31, meaning that it has million worth of inflows between extension of BitPay’s blockchain
increased its shares of GBTC by Sept. 20 and Sept. 24 marking a payment technology will enable
more than 105% since April. weekly increase of 126%. Bitcoin cryptocurrency transactions by
and Ether investment products led the pack with $50.2 the end of this year.
SEP 27, 2021 Visit Page
million and $28.9 million worth of inflows, respectively.
SEP 28, 2021 Visit Page
SEP 28, 2021 Visit Page
Grayscale adds SOL and UNI to Digital Large
Cap Fund portfolio
Crypto asset manager Grayscale
Investments now includes
Solana’s SOL and Uniswap’s UNI
tokens in its Digital Large Cap
Fund. Based on the adjustment,
SOL and UNI make up 3.24% and
1.06% of the fund’s components respectively, while Grayscale
continues to cut down on Litecoin and Bitcoin Cash holdings.
OCT 02, 2021 Visit Page
14Venture Capital and M&A Activities
Silvergate Bank issues $100M credit line to African crypto exchange Yellow Card closes Social token provider Roll raises $10M to
mining firm Marathon Digital $15M Series A tokenize online interaction
Creditor: Silvergate Bank Investors: Valar Ventures, Third Prime, Castle Island Ventures, Investors: IOSG Ventures, Animoca Brands, Alchemy, Huobi
Business scope: Cryptocurrency financial services Square, Inc., Blockchain.com Ventures, Coinbase Ventures etc. Ventures, Weekend Fund, Mischief Fund, Audacity etc.
Headquarters: The U.S.
Funded company: Yellow Card Funded company: Roll
Funded company: Marathon Digital Business scope: Cryptocurrency exchange Business scope: Social token infrastructure
Business scope: Cryptocurrency mining Headquarters: The U.S. Headquarters: The U.S.
Headquarters: The U.S.
Announcement date: September 27, 2021 Announcement date: September 28, 2021
Announcement date: October 4, 2021 Deal Size: $15 million Deal Size: $10 million
Credit Size: $100 million
OCT 04, 2021 Visit Page SEP 27, 2021 Visit Page SEP 28, 2021 Visit Page
15Venture Capital and M&A Activities
Facebook announces $50M investment fund tasked with
developing its virtual metaverse
Facebook has announced it will allocate $50 million to a two-
year fund tasked with building its metaverse. The funding
is slated to back “global research and program partners”
looking to build out the platform, in addition to internal
research. Funding will be disbursed through Facebook’s XR
Programs and Research Fund.
Polkadot Web3 wallet Talisman closes $2.35M SEP 28, 2021 Visit Page
seed funding round
Investors: Hypersphere Ventures, Koji Capital, Advanced
Blockchain AG etc.
Funded company: Talisman
Business scope: Cryptocurrency wallet
Announcement date: September 29, 2021
Deal Size: $2.35 million
SEP 29, 2021 Visit Page
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16Enterprise Blockchain Adoptions
Bacon Protocol launches decentralized
mortgage platform
Decentralized mortgage lender Bacon Protocol officially launched, allowing
cryptocurrency investors to participate in the housing market through
a new stablecoin that’s backed by USD Coin and home loans.
SEP 28, 2021 Visit Page
Switzerland national postal service to debut
crypto stamp on Polygon
The national postal service of Switzerland announced the upcoming
launch of the “Swiss crypto stamp,” a digital collectible linked to a
physical stamp issued by the postal service worth 8.9 Swiss francs. The
Swiss crypto stamp will launch in late November, with 175,000 such stamps
coming to selected Swiss Post branches on Nov. 25.
SEP 30, 2021 Visit Page
17Enterprise Blockchain Adoptions
Central Bank Digital Currency (CBDC)
Bitcoin as a legal tender in El Salvador
IMF recommends CBDC and global crypto Hong Kong exploring CBDC as part of fintech CBDCs can cut cross border remittance costs
standards for financial stability strategy by half: BIS report
The International Monetary Fund The Bank of England announced The Bank for International
(IMF) released a set of policies for the membership of its CBDC Settlements has published a
emerging markets and developing Engagement and Technology report titled “Inthanon-LionRock
economies to ensure financial Forums set up to “understand the to mBridge: Building a multi
stability amid global crypto adoption. practical challenges of designing, CBDC platform for international
The IMF recommends a CDBC implementing and operating a payments”, in which it concluded
issuance and a “proportionate regulation to the risk and CBDC.” Participants are invited from companies such as Google, that CBDCs can reduce the transaction throughput of
in line with those of global stablecoins.” Mastercard, Consensys, PayPal and Spotify. cross-border payments from three to five business days
to only a few seconds.
OCT 03, 2021 Visit Page OCT 04, 2021 Visit Page
SEP 28, 2021 Visit Page
New Zealand central bank releases issue Federal High Court of Nigeria approves eNaira Global CBDC bridge needs public and private
paper on digital currency CBDC rollout cooperation, says BIS
The Hong Kong Monetary Authority The Nigerian Federal High Court The Bank for International
(HKMA) released an official white has approved the rollout of a Settlements published a new joint
paper exploring the potential central bank digital currency as report with seven central banks
of a retail-focused central bank a legal tender. The digital currency stating that the central bank group
digital currency, the digital Hong named eNaira will be issued by will continue to explore CBDC
Kong dollar. HKMA will seek to the central bank and supported issues and plans to increase global
understand the “potential architectures and design options” by a homegrown eNaira wallet. and domestic outreach to maintain an open and informed
from a technical and regulatory policy perspective. dialogue on CBDC.
OCT 03, 2021 Visit Page
SEP 30, 2021 Visit Page OCT 01, 2021 Visit Page
18Regulatory Activities
North America
CFTC hits Kraken with $1.25M in fines over CFTC charges 12 New York crypto options Fed’s Powell has no intent to ban Bitcoin or
alleged illegal offering businesses with failing to register crypto
The United States Commodity Futures The Commodity Futures Trading United States Federal Reserve
Trading Commission has said that Commission has charged 12 New Chairman Jerome Powell clarified
crypto exchange Kraken has failed York-based crypto options businesses that he is not considering a China-
to register as a futures commission with allegedly failing to register with style ban on digital assets. Talking
merchant and is thus providing the regulatory body. The listed crypto about stablecoins, Powell underlined
margined transactions illegally. The options providers include relatively that they “are like money market funds
order requires the exchange to pay a penalty of $1.25 million unknown names such as Bitfxprofit, Star FX Pro, Smarter Signals [and] like bank deposits, but they’re, to some extent, outside the
and “cease and desist from further violations of the Commodity and BinanceFx Trade (unaffiliated with the major exchange Binance). regulatory perimeter, and it’s appropriate they be regulated.”
Exchange Act”.
SEP 30, 2021 Visit Page SEP 30, 2021 Visit Page
SEP 28, 2021 Visit Page
SEC extends four Bitcoin ETF deadlines by 45 Biden admin weighing bank-like regulation for
days stablecoin issuers
The United States Securities and The Biden administration is
Exchange Commission has extended reportedly considering a new legal
the deadline of four Bitcoin exchange- framework for stablecoin issuers.
traded funds (ETFs) — Global X Bitcoin The administration is looking to
Trust, Valkyrie XBTO Bitcoin Futures convince Congress to create a new
Fund, WisdomTree Bitcoin Trust and “special-purpose charter” for stablecoin
Kryptoin Bitcoin ETF — to Nov. 21, Dec. 8, Dec. 11 and Dec. 24, issuers and other companies that fall within the same category.
respectively.
OCT 01, 2021 Visit Page
OCT 01, 2021 Visit Page
19Regulatory Activities
Europe, the Middle East, and Africa Rest of the World
SEBA Bank granted the first Swiss digital Billion-dollar Bitcoin mining industry resumes Brazil aims to tighten penalties for crypto-
asset custody license in Iran after three-month ban related financial crimes
SEBA Bank AG, a Swiss-based The Iranian government will Brazil’s Special Committee of
institution that focuses on offering allow licensed cryptocurrency the Chamber of Deputies has
digital cryptocurrency assets, miners to resume operations approved a bill that increases the
announced the approval of a on Oct. 1 following a three-month size of the fines from one-third of
Collective Investment Schemes ban imposed by former President the amount of laundered money
Act (CISA) license from the Swiss Hassan Rouhani on May 26, 2021. to two-thirds for financial crimes
Financial Market Authority to facilitate an institutional-grade that employ cryptocurrencies. The bill also proposes to raise
OCT 01, 2021 Visit Page
custodian service for national collective investment schemes. minimum and maximum prison terms.
SEP 29, 2021 Visit Page OCT 04, 2021 Visit Page
First cryptocurrency fund approved in
Switzerland
The Swiss Financial Market
Supervisory Authority has
approved the Crypto Market
Index Fund as the “first crypto fund
according to Swiss law.” The Crypto
Market Index Fund will be available
solely for qualified investors and may only invest in leading
cryptocurrencies with a “sufficiently large trading volume.”
SEP 29, 2021 Visit Page
20Regulatory Activities
Asia Pacific
Binance blocks fiat deposits and spot crypto CoinEx crypto exchange to remove all mainland South Korean crypto tax delay thwarted
trading for Singapore users China users in October
Following warnings from the CoinEx cryptocurrency exchange Lawmakers in South Korea are said to
Monetary Authority of Singapore is going to completely retire user have come to a final agreement that
that the platform had violated local accounts verified as mainland China the crypto tax will take into effect
payment laws, Binance blocked access citizens as well as those linked to a starting from 2022. A 20% tax will be
to fiat deposits, crypto spot trading, mobile phone number from mainland levied on income generated by crypto
liquid swap and crypto purchases China to comply with local anti- transactions in excess of about $2,100.
via fiat channels on the website for customers in the country. crypto regulations. The only service available after Oct. 31 will
OCT 01, 2021 Visit Page
Binance also blocked users in Singapore from downloading its be withdrawal.
mobile platform.
SEP 30, 2021 Visit Page
SEP 27, 2021 Visit Page
Singapore finance authority grants licenses to Korean crypto exchange Upbit to halt
Independent Reserve and DBS withdrawals for unverified users
Singapore’s principal financial South Korean cryptocurrency exchange
regulator, the Monetary Authority Upbit will be restricting unverified
of Singapore, issued licenses customers from transacting more
to Australian crypto exchange than $850 at a time in compliance with
Independent Reserve and DBS the country’s Anti-Money Laundering
Bank’s brokerage arm, DBS Vickers, requirements. Effective Oct. 13, Upbit
allowing them to provide digital payment token services. will stop trading services, deposits and withdrawals for existing
customers who have not completed customer verification.
OCT 01, 2021 Visit Page
OCT 04, 2021 Visit Page
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