Author: MIIX Capital

Introduction:

Last week, as the price of BTC fell below the $40,000 mark (which was a psychological support point for most investors), the trading volume of BTC spot ETFs once again exceeded $2 billion. Meanwhile, GBTC saw over $640 million in outflows on the same trading day. Beneath this calm surface, the deeper market liquidity and structure seem to be undergoing significant changes.

From the data, Grayscale's selling pressure appears to be easing day by day, which is interpreted by the industry as a positive signal for alleviating the market's downward trend. JPMorgan even stated in its latest report that the wave of profit-taking from GBTC has essentially come to an end, injecting a bit of warmth into the market during this winter season.

1. Investment and Financing Observation

Last week (01.22~01.28), there were 35 investment and financing events in the global blockchain sector, with a total funding scale exceeding $260 million:

• There were 6 investment and financing events in the decentralized finance (DeFi) sector, including the on-chain financial platform VETA Finance, which completed a $2.85 million strategic financing round led by Matrixport Ventures;
• There were 3 investment and financing events in the NFT and metaverse sector, including the NFT cross-chain lending protocol Singular, which completed a $3 million seed round financing led by IOBC Capital;
• There were 5 investment and financing events in the GameFi sector, including the Web3 game monetization platform 3thix, which completed an $8.5 million financing round;
• There were 12 investment and financing events in infrastructure and tools, including Layer 2 development company Polymer Labs, which completed a $23 million Series A financing round led by Blockchain Capital, Maven 11, and Distributed Global, with participation from Coinbase Ventures, Placeholder, Digital Money Group, North Island Ventures, and Figment Capital.
• There were 5 investment and financing events in other Web3 and crypto projects, including the Farcaster ecosystem project Wield, which announced over $1 million in Pre-Seed financing on platform X, led by Lemniscap;
• There were 4 investment and financing events in the centralized finance sector, including the cryptocurrency bank Sygnum, which completed over $40 million in financing at a valuation of $900 million;

Compared to last week, the number of investment and financing events in the cryptocurrency market has significantly increased this week, with a focus on infrastructure. There were six financing rounds in the tens of millions of dollars, including the ETH historical data protocol Axiom, the AI-driven brand protection platform Doppel, the Web3 digital identity service platform Root Protocol, the cryptocurrency bank Sygnum, the cryptocurrency mining machine manufacturer Canaan Creative, and CryptoSafe, which focuses on improving capital efficiency in the cryptocurrency market.

About Singular

Through the Singular Protocol, users can stake their NFTs to participate in NFT liquidity provision. This allows users not only to earn staking rewards but also to benefit from the appreciation of NFTs in the market, providing additional investment opportunities and profit potential.

Currently, Singular's cross-chain staking NFT feature has officially launched, and Singular's first full-chain PFP project with token attributes, Golden Chipmunk, is about to be launched. It will enable real-time cross-chain conversion on BTC, ETH, and Layer 2. Holding Golden Chipmunk will also yield additional airdrop incentives from Singular in the future.

2. Industry Data

FTX Asset Liquidation, Grayscale Selling Pressure Eases

BitMEX Research data: As of January 27, in the 11th trading day since the launch of the U.S. BTC spot ETF, Grayscale's GBTC outflow amounted to $255.1 million, with 6,000 BTC transferred from GBTC. Over the past 11 trading days, the total outflow from GBTC has exceeded $5 billion.

According to private data reviewed by CoinDesk and two informed sources, a significant portion of this is related to the liquidation of FTX's bankrupt assets, which sold off stocks worth nearly $1 billion (22 million shares), bringing FTX's GBTC holdings down to zero. Theoretically, since FTX has completed a large amount of selling, the selling pressure may ease, as bankruptcy liquidation is a relatively unique event.

Like many large cryptocurrency trading entities, FTX exploited the price difference between Grayscale trust shares and the net asset value of the underlying BTC in the fund. According to a document dated November 3, 2023, as of October 25, 2023, FTX held 22.3 million GBTC, valued at $597 million.

Additionally, Bloomberg analyst James Seyffart tweeted that the outflow rate of GBTC is expected to be above 20% but not exceed 35%, while GBTC has already seen a 13% outflow. Bloomberg analyst Eric Balchunas previously stated that 35% of the outflow from GBTC may flow into nine other Bitcoin spot ETFs, particularly retirement accounts, as tax considerations are not an issue for them.

ETH Options Trading Volume Hits New High

The Block data: As of January 26, the Ethereum options trading volume on major cryptocurrency derivatives exchanges reached a historical high of $17.9 billion. Combining with GreeksLive options data, approximately 932,000 ETH options expired at 3:00 AM EST on January 26, with a call ratio of 0.31 for ETH options open interest, while the put option ratio for Ethereum options on Deribit had dropped to 0.3 before the options expiration, indicating a generally bullish market sentiment.

Put-to-call ratios below 0.7 are typically seen as indicating bullish market sentiment, while ratios above 1 are viewed as indicating bearish sentiment; when the put-to-call ratio is below 1, it indicates that there are more call options (buy options) relative to put options (sell options), suggesting a prevailing bullish sentiment in the market.

Smart Money Movement: $ezETH

This week, Smart Money continues to flow significantly into the Restaking sector, with $ezETH receiving more attention in the inflow data of tokens held by Smart Money.

ezETH is the staking token of the Renzo Protocol;

Renzo Protocol secured seed round financing led by Maven11 on January 15, 2024, with a valuation of $25 million;

Renzo is a liquid derivatives platform built on EigenLayer. It acts as an interface for the EigenLayer ecosystem by protecting Active Validation Services (AVS) and providing higher yields than ETH staking. For every LST or ETH deposited into Renzo, an equivalent amount of ezETH is minted;

Multiplier Effect Brings High Expectations for SSV

Currently, SSV has a market cap of $213 million and a fully diluted valuation of $339 million. Based on SSV's economic model, current market cap, and future expectations, the multiplier for SSV is expected to exceed 5 times in this bull market.

SSV itself represents a chain and serves as a substitute for stakers to stake ETH, so there is potential for various application solutions to emerge. Moreover, SSV is essentially EigenLayer, and if SSV introduces multi-application staking pilots, it will greatly enhance the value of the SSV network.

In discussions about the Pectra upgrade, Lido's centralization issue has been raised once again. Currently, Lido's market share has reached 32%, and if it exceeds 33%, it will have a strong impact on how ETH transactions are added. Its solution has been thoroughly discussed in 2023, using DVT (Distributed Validator Technology) services such as Obol network, SSV, and DIVA, with the basic principle being to decentralize the infrastructure by splitting keys.

67.4% of RSIC Activated

According to official news, as of January 24, 14,150 Bitcoin Rune game tokens RSIC are activated, accounting for 67.4% of the total. Some practitioners believe that the runes may become a focal point in the market after inscriptions.

RSIC (Rune Specific Inscription Circuits) is a peer-to-peer rune distribution system based on Bitcoin. The core of RSIC is a digital game where players manage and operate RSIC tokens to obtain runes, which will be "inscribed" on the Bitcoin network at a future point in time.

In the supply chain of RSIC, there is a "factory" that produces RSIC, a "distribution center" that distributes RSIC, and a "forge" for inscribing runes. A total of 21,000 RSIC have been manufactured and distributed for free to the Ordinals community through the distribution center for "mining" runes.

The main goal of players is to activate and utilize RSIC to obtain runes, which will be distributed to addresses holding activated RSIC in each Bitcoin block. There are four modes of rune distribution: flat, random, enhanced, and halved. Players can choose to mine runes, sell RSIC in the market, or opt not to participate.

3. VC Holdings Data

Note: The above data is sourced from https://platform.arkhamintelligence.com/, statistical time: January 29, 2024, 12:00 AM (UTC+8).

4. This Week's Focus

January 31

• POLY migrates from Ethereum to Polymesh Network (POLYX)
• Ethereum L2 network Frame launches mainnet and token

February 1

• Ethereum Sepolia will undergo Dencun upgrade at 6:51 AM
• Federal Reserve interest rate decision

February 2

• U.S. January unemployment rate
• U.S. non-farm payroll data release

5. Conclusion

In the past week, investment and financing activities in the global blockchain sector have shown significant vitality, with an increase in both the number of financing events and the scale of funds. The capital market and institutions have begun to lay out in advance in segmented areas, and with the conclusion of FTX asset liquidation, Grayscale's selling pressure has eased.

As upcoming policy decisions and macroeconomic data releases, such as the Federal Reserve's interest rate decision and U.S. non-farm payroll data, we should remain vigilant and pay attention to the potential impacts of these events on the cryptocurrency market.

Currently, the market is still influenced by various interwoven factors. Although the turbulent adjustment seems to be nearing its end and is beginning to show signs of warming, we must remain keenly aware of industry dynamics and be prepared to respond to unexpected market fluctuations.