February 4, 2022
“My parents used to pay 50 cents an hour for 14.4kbps internet, it took minutes to connect, and we couldn't use the phone when online. Photos took minutes to load. People who don't remember this have basically no context for where we are in crypto.”
- Anthony Donofrio (“Texture”), Ethereum Founding Member
Happy February and TGIF! After a rollercoaster start to the year, we’re back with a recap of some top headlines and happenings over the past month.
Here’s what went down in January: The Federal Reserve released their CBDC discussion paper and Vladimir Putin claimed that Russia has a competitive advantage when it comes to mining cryptocurrencies such as Bitcoin. Our team takes a look back at this past month’s market volatility in our February Breakdown.
Let's dive in…
*Note that the contents of this newsletter are subject to a legal disclaimer located below*
Top Gainers and Losers in January
- On Jan. 20, The Federal Reserve Board released a discussion paper that examines the pros and cons of a potential U.S. central bank digital currency, or CBDC. To fully evaluate a potential CBDC, the Fed asks for public comment on more than 20 questions. Comments can be submitted until May 20 through the official CBDC form. (Read more)
- Russian president Vladimir Putin said that Russia has "certain competitive advantages" when it comes to mining cryptocurrencies such as Bitcoin, according to a transcript posted to an official government website. (Read more)
- The Northwest Arkansas Council is offering $10,000 worth of Bitcoin in an attempt to attract remote tech workers to move to the region. The region includes the cities of Fayetteville, Rogers, Bentonville, and Springdale. (Read more)
February Breakdown: 2022 Kicks Off With High Market Volatility
It was a month full of steep highs and lows as the crypto market saw its most volatile month since May of last year. There was a 56.7% decline in market cap over the course of 41 days while traditional equity markets grappled with their worst month since the March 2020 COVID market meltdown. On Jan. 24, the S&P 500 recovered from an intraday loss of more than -3.98% to close up .28%. This has only happened three times on record since daily high, low, and close data collection began in 1977, with the other two occurring on Oct 16, 2008 (down -4.63% and closed up 4.25%) and Oct. 23, 2008 (down -4.28% and closed up 1.26%). Interestingly, it marked the first time on record that we’ve ever seen a reversal bar like this for the S&P when the close is within 10% of an all time high daily close.
What does history tell us?
For crypto markets, it's very clear that anything can happen (e.g. Tesla’s BTC announcement in March 2021). But in traditional markets, we have a bit of performance history to look back on. While the sample size of this type of trading activity is small, the only other time in history where trading activity has mimicked these large reversal patterns, as seen on Jan. 24, 2022, occurred in October 2008 during one of the most devastating financial crises of our lifetime, which marked the beginning of the Great Recession. The S&P 500 would continue to decline another 28%, extending losses into March of 2009. Keep in mind, this sample size is incredibly small and that past performance serves as no indication of future events.
Back to the crypto markets
Kaiko, a leading Digital Assets Data Provider, published a report on Jan. 11 detailing bitcoin’s surging correlation with equity markets in price movements, volume dynamics, order book liquidity, derivatives, and macro trends, suggesting that volatility in traditional markets could be mimicked closely in bitcoin and overall crypto market movements. Additionally, Jerome Powell (Federal Reserve Chairman) hinted that the Fed could start raising interest rates as soon as March and that asset purchases also are likely to halt in March as well.
- How many decimals do ERC20 tokens (tokens live on Ethereum) support?
- Which one of these projects are not Ethereum scaling solutions?
- Boba Network
Answers at the bottom!
Venture & Fundraising
- Near Protocol raises $150M to promote Web3 adoption
- Lukka Exceeds Billion-Dollar Milestone in Latest Fundraise
- DeFi API startup Conduit raises $17 million from Portage Ventures
- BasicBlock Raises $78M in Equity Funding
- Pixel Vault raises $100M for NFT development platform
- Dune Analytics Raises Crypto’s Latest Meme Round: $69,420,000
- Decentralized Data Sharing Network ‘Project Galaxy’ Raises $10M
- NFT marketplace LooksRare goes live with vampire attack on OpenSea (The Block)
- Ethereum’s burn rate saw a dramatic resurgence during from January 9-14 due to highly volatile market conditions and renewed NFT volume, averaging 8.58 ETH burned every minute (Defiant)
- NYC Mayor Adams will convert his city paycheck to bitcoin and ethereum (Verge)
- LinkedIn reported job postings related to "bitcoin," "blockchain," "Ethereum," and other terms surged 395% between 2020 and 2021 (The Block)
From the Binance.US Blog
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- 18 decimals
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