In June, Bitcoin's price dropped to a 6-month low and briefly slid below the $30K mark before recovering and continuing its sideways evolution. Overall, many altcoins and DeFii tokens closed the month in the red.
With a major news headline, El Salvador announced that Bitcoin would become legal tender starting from September 7th. International bodies met this historic legislation with skepticism. The IMF and the World Bank announced that they will not be assisting El Salvador in any way. Unsuspecting we would have been to the thought that, an emerging and quite frankly small Latin American country such as El Salvador, would be leading government-backed adoption of digital assets. Due to the ease of receiving remittances on which many developing nations rely for balance of payments, El Salvador is likely only the beginning. While we are very lucid to the truth that El Salvador’s economic reality is harsh, we are curious to see how such a monetary experiment unfolds.
In stark contrast to the underwhelming price developments, there was a substantial inflow of capital to be seen flowing into a wide range of blockchain projects:
- dYdX a decentralized derivatives exchange, has secured $65 million in a Series C following a $10 million Series B earlier this
- The crypto asset management firm Bitwise raised $70 million in a new funding round at a $500 million
- Amber Group, a crypto-financial services startup, raised $100 million at a $1 billion
- Chainalysis, a provider of investigation and compliance software, raised $100 million in a Series E, bringing its valuation to $4.2
- BitDAO, a new decentralized autonomous organization, is launching after a $230 million funding round led by venture capitalist Peter
- Crypto hardware wallet maker Ledger lands $380 million in a Series C.
It goes to signal the increasing appetite for investors to gain exposure to the potential of the technologies supporting the digital assets ecosystem. In addition to the above, Andreessen Horowitz (also called a16z) reaffirmed its commitment to startups building blockchain projects. The company led the financing round for Solana Labs, an Ethereum-challenger, and helped raise $314 million in a private token sale. In addition, Andreessen Horowitz, who was the first to launch a dedicated crypto unit and was an early investor in Coinbase, is now announcing the launch of a new $2.2 billion crypto fund. One of the many market elements that we are closely watching are projects positioning themselves as direct competitors to Ethereum. Projects capitalizing on scaling solutions for (Decentralized applications) DApps could provide a fertile ground for the next blockbuster DeFi protocol or products.
As is the case every month, the common institutional loudmouthing this month brought unceremoniously, more enthusiasm for all things blockchain. State Street is creating a cryptocurrency division, while Citigroup launched a digital asset unit within its wealth management division. Goldman Sachs has begun trading Bitcoin futures with cryptocurrency merchant bank Galaxy Digital. Morgan Stanley co-led a $48 million Series B for blockchain firm Securitize, the bank's first investment in the blockchain space. Investment firm VanEck filed a new draft prospectus for a Bitcoin futures mutual fund with the SEC. Steve Cohen's Point72 Asset Management is seeking to hire a head of cryptocurrencies. Finally, the family office of George Soros has started trading Bitcoin and Paul Tudor Jones announced his aim of holding 5% of his assets in Bitcoin. While we are often excited about hearing such news, the extent to which such plans convert to solid projects remains to be seen. For instance, high-profile digital assets newcomers are making headlines. Switzerland's Sygnum Bank ventured into DeFi, launching custody and trading across a range of DeFi tokens. On another end, Deutsche Boerse Group, the German exchange operator, has acquired a majority stake in the Swiss fintech firm Crypto Finance AG.
Britain's financial regulator has ruled that Binance cannot conduct any regulated activity in the UK with the Financial Conduct Authority (FCA) taking offense to Binance's deliberate lack of global headquarters. While Binance still holds a leading position towards the top of the charts in terms of digital assets trading volume, and notwithstanding the regulatory scrutiny by the UK’s FCA, a lot of criticism has been levied against Binance's alleged technical faults with the matching engine and leveraged tokens.
Our market-making strategies closed the month up 2.24%, resuming their streak of uncorrelated positive returns relative to the market from last month. This brings the net year-to-date returns to 12.15%. Yet again, the strategies have shown their best value proposition. In times of high downside volatility, the strategy has the potential to capitalize in such an environment given the low variance of market-making returns, which on average are uncorrelated with the wider market. Given a potentially looming bear market on the horizon, our strategies are well-positioned to weather such adversities and deliver positive, uncorrelated returns.
