Ecosystem Update October 23
We are thrilled to unveil our October 2023 Ecosystem Update. In this detailed update, we explore the pivotal industry trends, the successes within the Advanced Blockchain ecosystem, and the latest organizational developments, providing a full overview of our journey and the industry at large.
Macro Industry View
As 2023's final quarter unfolds, the cryptocurrency market is witnessing a kaleidoscope of changes that are shaping its future. Key developments include:
- Bitcoin's ETF Milestone: Bitcoin stands on the brink of a breakthrough with the anticipated ETF approval, promising to integrate it firmly within traditional financial systems.
- Ethereum's Market Optimism: Ethereum's derivatives market signals a bullish stance, reflecting heightened optimism and confidence among investors.
- Switzerland's Banking Innovation: Switzerland’s fifth largest cantonal bank, in partnership with SEBA Bank, has launched bitcoin and ether custody and trading services.
- Hong Kong's Regulatory Refinement: Hong Kong's SFC is set to revamp its cryptocurrency regulatory framework, aiming to bolster investor protection and market integrity.
- DZ Bank's Digital Leap: Germany's DZ Bank rolls out a blockchain-based platform for digital financial instruments, targeting institutional clients, marking a progressive step in crypto asset adoption
After largely de-risking Bitcoin since 2021 and recently being increasingly established legally and financially as a commodity which equally being an issuer-free asset, the case for Bitcoin as a robust, stand-alone asset seems increasingly strong.
The outlook is primarily buoyed by the imminent ETF approval and the forthcoming halving event. The convergence of these events sets a compelling stage for Bitcoin's ascent in the traditional financial realm.
ETF Approval Scenarios and the Unlikelihood of Rejection
The likelihood of Bitcoin ETFs being approved is high, with BlackRock's 99% success rate in ETF applications and Grayscale's victory over the SEC bolstering confidence. Several firms with substantial assets under management, including BlackRock ($9 trillion), Fidelity Investments ($4.2 trillion), WisdomTree ($70 billion), and Grayscale Investments ($20 billion), are poised to channel significant funds into Bitcoin ETFs. Even a 1% conversion from their AUM could lead to $100 billion flowing into Bitcoin.
Yet, Bitcoin is an asset that has high trading volume but is highly illiquid with only 25% of its free float being available and the rest being stored away. with only 25% of its free float readily available and 50% of Bitcoins not having moved in over 2 years, where about 2 years ago Bitcoin was trading at the all time high of $69,000 and has seen $45,000, $30,000, even $15,000 and is now back to $35,000. The asset's role as pristine collateral suggests that many Bitcoins may never be sold.
Institutional interest in Bitcoin is growing, and ETFs, which typically offer little differentiation, will rely on marketing to compete. This shift in strategy, along with substantial marketing investments, could have a profound impact on Bitcoin's adoption, especially among retail investors.
Comparing Bitcoin to Gold and Silver, ETFs have historically led to significant, long-term price increases, although volatility is expected. Microstrategy, despite concerns, is likely to benefit from the legitimization of the Bitcoin market, similar to how Spotify thrived despite competition from Apple Music.
The halving event is expected to continue to drive miner sell pressure in need for new hardware, however the halving of rewards will lead to again lower sell pressure. At current pricing this sell pressure would be reduced by $6 billion per year. Institutional demand is predicted to amplify this effect during the next halving.
In summary, ETF developments, the halving, and institutional investments suggest a transformative future for Bitcoin, with significant excitement anticipated as it evolves as an asset.
Ethereum's Market Sentiment: Derivatives Indicate a Bullish Outlook
Alongside Bitcoin, ETH experienced a rally in response to the buzz around a new Bitcoin spot ETF, with two derivatives metrics suggesting the highest investor optimism in over a year. This optimism coincides with Bitcoin's rise above $34,000 on Oct. 24 and may be partly due to anticipation of a U.S. spot Bitcoin ETF approval, which analysts believe could lift the entire crypto market.
SEC Chair Gery Gensler's past comments from the 2019 MIT Bitcoin Expo highlighted the SEC's previous inconsistency in denying spot Bitcoin ETFs while allowing futures-based ETFs since December 2017.
Ethereum's enthusiasm may also stem from the expected Dencun upgrade in early 2024, aimed at improving layer-2 rollups and setting the stage for sharding. Vitalik Buterin recently pointed out the need for more affordable rollup fees, especially for non-financial uses.
The Ether futures premium has notably hit a yearly high, indicating a strong demand for leveraged ETH long positions. This premium jumped from 1% to 7.4% within a week, aligning with a 15.7% increase in ETH's price over two weeks, signaling a bullish market sentiment.
Switzerland's Institutional Embrace: SGKB's Digital Asset Integration
Switzerland remains at the forefront of financial innovation, with St. Galler Kantonalbank (SGKB) introducing digital asset services through a partnership with SEBA Bank. SGKB is now providing select clients with bitcoin and ether custody and brokerage services, with plans to broaden these services in the future. This move is in line with the increased investor interest in digital assets and marks a pivotal step in incorporating cryptocurrencies into conventional banking.
SEBA Bank brings its digital asset proficiency to ensure a safe and regulated setting for SGKB’s customers, in harmony with Switzerland’s standards of financial security and innovation. This venture meets the needs of discerning investors and paves the way for wider cryptocurrency adoption as the market matures.
SGKB's foray into digital assets signals a transformative shift in institutional finance, with traditional banks acknowledging the value of cryptocurrencies within investment portfolios, further solidifying their status in the global financial marketplace.
Hong Kong's Regulatory Evolution: A Focus on Investor Protection
Hong Kong’s Securities and Futures Commission (SFC) is updating its cryptocurrency regulatory framework to enhance investor protection. The upcoming amendment will impose restrictions on selling certain complex products to professional investors only and will require intermediaries to assess whether investors have substantial knowledge about trading in virtual assets.
Although there is no specific legislative policy in Hong Kong that regulates virtual assets, financial regulators have released guidelines to oversee the industry. The SFC's regulation will apply to any virtual asset with security characteristics under Hong Kong’s Securities and Futures Ordinance.
DZ Bank's New Frontier: A Crypto Asset Safehouse
The DZ Bank has launched a new platform for the processing and custody of digital financial instruments, utilizing blockchain technology and targeting institutional clients. This development is part of a broader trend reported by Bloomberg, highlighting the bank's initiation of a custody platform for crypto assets. The bank has bolstered its operations by hiring over a dozen new staff in IT, operations, and compliance to manage the custody solution.
Having started building the platform last year, DZ Bank aims to initially include crypto securities in its custody services, including a crypto bond from Siemens, which DZ Bank and its subsidiary Union Investments had subscribed to six months prior and have now transferred to their own custody. With over 300 billion euros in assets, DZ Bank stands as the third-largest custodian in Germany, following BNP Paribas and State Street, and the largest among German custodians. In a move to facilitate investments in cryptocurrencies like Bitcoin for institutional clients, DZ Bank applied for a relevant license from the regulatory authority Bafin in June. Alongside the institutional solution, the bank is also developing a service to enable private customers to directly invest in cryptocurrencies.
Conclusion: A Transformative Phase for Cryptocurrencies
The convergence of ETF approvals, regulatory updates, network upgrades, institutional adoption, and burgeoning interest heralds a transformative phase for cryptocurrencies. These developments are indicative of a maturing market that is increasingly integrating with the global financial system.
Ecosystem Key Updates
- Composable Elevates Blockchain Veteran Henry Love to Executive Director, Fortifies with Swiss Foundation Status, and Debuts Ethereum IBC on Testnet at Cosmoverse.
- peaq's Ecosystem Soars as Global Leader in DePIN: October's tech surge welcomes penomo's tokenized energy rewards and Arkreen's green finance pathways
- Panoptic Kicks Off Beta Launch with $100K Giveaway to 32 testers to explore the platform, trade real options and provide feedback
- MYSO V2 Goes Live on Ethereum: Revolutionizing P2P Lending with Customizable, Capital-Smart Markets
- DELV Welcomes Shant as New COO: From Ground-Up Operations Leader at Tessera to Spearheading Delv’s Strategic Growth
Composable announced the appointment of Henry Love as its Executive Director. Backed by a strong expertise in blockchain technology, Henry Love has held various leadership roles, including serving as the Managing Partner at Fundamental Labs, a venture capital firm overseeing assets exceeding $1 billion in the blockchain sector, with an extensive portfolio that includes industry giants, such as Binance.US, Coinbase, Filecoin and Polkadot, among over 300 other projects. Prior to his tenure at Fundamental Labs, he co-founded Executive Council Network (ECN), a cryptocurrency corporate venture studio.
Henry's role will encompass a range of responsibilities, from guiding the treasury for effective resource allocation to managing daily operations and forging strategic partnerships, all aimed at contributing to the organization's growth and success. This transition also marks a remarkable change for Omar, who will now take on the role of Research Lead, and Founder within Composable Foundation. Omar's continued dedication to the organization's success and growth is commendable.
Aside from that, Composable is now officially established as a Swiss Foundation, strengthening its role in advancing the Composable and Picasso protocols. This new structure ensures a well-regulated environment, benefiting all Composable supporters.
Moreover, the team was present at the Cosmoverse conference in Turkey, where they announced the launch of Ethereum IBC on testnet.
Finally, a senior investment analyst at Van Eck has acknowledged the potential of Composable endeavors, highlighting the project's prospects due to its exceptional team.
peaq’s ecosystem is expanding rapidly and has become the largest and fastest-growing DePIN ecosystem globally. The recent integration of the penomo protocol, which tokenizes battery real-world assets (RWAs) and incentivizes the Web3 community with rewards for conserving energy, along with the Arkreen network that opens up new income opportunities for sustainable energy DePINS, further enhances peaq's network.
Throughout October, the team was engaged in a flurry of activities, focusing on technological advancements, broadening their ecosystem, and boosting their media visibility, among other areas. Below are the main updates that occurred in November.
The Panoptic team has declared the commencement of the first epoch of their beta launch, which began on October 13th. In this initial phase, Panoptic awarded $100,000 to 32 individuals, rewarding the most proficient traders, diligent bug finders, and others. This incentive was aimed to encourage users to engage with the platform, actively trade authentic options, and submit valuable feedback. Read more about the results of Epoch 1 here.
Additionally, the team has unveiled a revamped design for their website. You can view the new layout by visiting the link provided here.
MYSO V2 has officially launched on Ethereum, offering highly capital-efficient, scalable markets that connect borrowers and lenders directly (P2P). Lenders gain full autonomy to craft their own markets and tailor the terms of their loans. For a step-by-step guide, watch the tutorial video here.
DELV (formerly Element Finance)
Delv has appointed Shant as its new Chief Operating Officer. Prior to this role, Shant was the inaugural employee and previous COO at Tessera (previously known as fractional.art), where he was responsible for defining, establishing, and managing all aspects of the company's operations.
In early October, our CEO, Simon Telian, acquired additional 7,000 shares at an average price of EUR 3.10 each. Simon's direct holdings now surpass 12,000 shares. Additionally, he has options for up to 193,800 shares within the company at strike prices between EUR 3.10 and EUR 16.65. Collectively, this amounts to a potential ownership interest of about 5.4% in the company.
Moreover, our new Chairman Rüdiger A. Günther has subscribed to the company's 2023/2029 convertible bond with a total value of 200,000 euros.
As we enter the final stretch of 2023, we remain unwavering in our pursuit of closing more OTC transactions to achieve our revenue goal, while consistently delivering a strong Return on Investment. Our team is also diligently preparing for the upcoming Deutsches Eigenkapitalforum in Frankfurt, where we will share our latest developments, including those related to ABX.VC as well as engage with potential investors.
Lastly, the team is gearing up to attend the upcoming Global Blockchain Congress scheduled for December 11th and 12th in Dubai to engage with strategic investors around the topic of tokenization as well as to explore viable investment prospects in this burgeoning region.
We express our heartfelt appreciation for your ongoing support and trust in Advanced Blockchain's vision. Your partnership continues to be pivotal to our shared success, and we eagerly anticipate a promising future together.
Thank you for being a part of our journey.
Advanced Blockchain Team