CoinLoan Weekly: Market serenity, VC inflows, bullish investors
After losing its grip on $16,800, BTC reached a 7-day low of $16,408.93 on Tuesday, December 20. Recovery was quick — the coin shot up to a high of $16,940.61 later that same day. It then traded tightly above $16,800 on Wednesday, December 21, and most of the next day until touching $16,611.77. Following another quick rebound, BTC resumed teetering between $16,800 and $16,900.
BTC's performance was lackluster, as it mainly moved sideways. A Christmas rally did not happen, and its volatility, according to William Clemente, "is at an all-time low." On Sunday, December 25, Reflexivity founder also tweeted that the total crypto market cap had retraced 75% of its gains from its 2021 highs. Unsurprisingly, The Crypto Fear & Greed Index was flat, stuck between 26 and 29 fear points. Bitcoin also barely reacted to the December 23 release of the US Personal Consumption Expenditures (PCE) Price Index, despite its significance for the Fed.
As of this writing, BTC is changing hands at $16,848.17, with a 24-hour climb of +0.5% and a 7-day gain of +0.6%.
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Like BTC, ETH fell on Monday, December 19, as traders were mulling over the Fed's warning of further monetary tightening. The next day, it bottomed out at $1,161.88. ETH yo-yoed close to $1,200 until the end of the week, dipping to $1,188.58 on Thursday evening (December 22) and hitting a 7-day high of $1,225.11 on Friday, December 23. Trading on Monday, December 26, was neutral.
Technical analysts highlighted a lack of power for a surge, explaining that it required fixed support at around $1,230. The market showed little movement overall, and ETH's growth was also partly hindered by its tight correlation to BTC, which followed the stock market. Finally, the news of Paxful delisting ETH created negative pressure — the exchange claimed to prioritize "integrity over revenue," questioning the degree of network decentralization following the Merge.
As of now, ETH is worth $1,218.21, with a 24-hour uptick of +1.0% and a 7-day change of +2.6%.
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XRP moved in accord with BTC for two consecutive days but bounced off sooner. Its 7-day low of $0.334714 on Monday, December 19, was followed by a peak of $0.353383 on Wednesday, December 21. Subsequently, XRP dipped to $0.340105 and began a choppy ascent. From roughly $0.353, it slid to $0.345 by Monday, December 26, and shot up past $0.36 in the late hours.
Analysts noticed a strong demand for XRP, slightly above $0.30. Whale accumulation continued, bringing the share of XRP held to 18.3% and the number of shark and whale addresses to a historic high. Meanwhile, Matt Hamilton, former director of developer relations at Ripple, tweeted that smart contracts could soon be launched on XRP Ledger while "most functionality needed" was already in place. Still, a court victory for Ripple Labs over the SEC should be crucial for the XRP price — as of now, both sides have submitted their closing arguments.
At press time, XRP is trading at $0.368009, with a 24-hour rise of +6.3% and 7-day growth of +4.9%.
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Amid the bear market, VCs continue investing in crypto
Despite the multibillion-dollar FTX fiasco, venture capitalists still have an appetite for crypto projects. According to Pitchbook's estimates, capital continues pouring in even in the frigid cold of the crypto winter. Moreover, the sheer amount of this year's investment outshines both fintech and biotech. Over the past 12 months, the crypto industry (mainly Web3 and DeFi) has attracted $6.5 billion, including $879 million in the last quarter alone.
Yet in 2021, VCs brought $25.2 billion amid a bullish market and the NFT boom. Combined with the bearish sentiment, a string of high-profile bankruptcies, including hedge fund Three Arrows Capital, lender Celsius Network and exchange giant FTX, have tempered investors' enthusiasm.
Commenting on the chilling effect on VCs, Decrypt correspondent Ben Munster noted that they seem to be "far more cautious than before." For example, Kevin de Patoul, the CEO of the market maker Keyrock, sees a renewed emphasis on "due diligence."
Another consequence, according to Coinfund President Chris Perkins, is a fresh focus on "decentralized" investments, away from excessive centralization. CoinFund's managing partner and venture investing head David Pakman elaborated on these effects in an interview with CoinDesk.
Pakman noted, "Crypto has seen a lot of self-harm in 2022, and it feeds the narrative that we're already fighting against: 'Oh, scammy people doing scammy things.' And here's yet another example," he said, referring to the human factor that had brought FTX down. "Hopefully, we're weeding them out of the system."
Despite the drab macro environment and losing a modest amount of equity with the collapse of FTX, CoinFund is still raising money for crypto projects. Its plans include a $300 million Web3-focused fund launched in August and a further $250 million for a seed investments fund.
Among other projects funded in recent weeks are Earn Alliance ($4.75 million), Ramp Network ($70 million), and Roboto Games ($15 million). Meanwhile, Animoca Brands, a metaverse fund, aims at $2 billion. Well-established firms like Andreessen Horowitz, Ripple, Coinbase Ventures, Paradigm, Polychain Capital, and Pantera are still associated with impressive crypto-related valuations.
Miller and Cuban remain bullish on BTC
Despite the crypto turmoil, Bill Miller, a legendary value investor and fund manager, is not giving up on Bitcoin. In an interview with Barron's, he acknowledged that things are "very controversial," but BTC is still among his top personal holdings. Meanwhile, Miller Value Partners keeps BTC in private accounts, along with shares of Coinbase Global and Silvergate Capital.
Miller differentiated between BTC and other cryptos, which he described collectively as "venture speculation." He went so far as to say that most of them "will fail," while the BTC price could recover if the Fed eases its hawkish approach.
To Miller, trading around $17,000 is "pretty remarkable" for BTC, given the FTX fallout. He views the coin as "a potential store of value like digital gold" and sees no convincing arguments against investing at least 1% of net worth into it. While 1% is an amount "anyone can afford to lose," BTC is also now well above the market low of $5,800 in 2020. "If anyone has a time horizon of longer than a year, you should do quite well in Bitcoin. I wouldn't call that an investment. I would call it a speculation, but I would call it a sound speculation."
Mark Cuban calls BTC 'a store of value'
Billionaire Mark Cuban has reiterated that Bitcoin is a store of value on par with gold. In a Club Random podcast released on Monday, December 26, the owner of the Dallas Mavericks admitted he wanted BTC to fall "a lot further" so he could "buy some more." In his conversation with host Bill Maher, He also questioned the idea that investing in gold was a "hedge against anything."
In November, Cuban told TMZ Sports that he still believed in crypto despite the FTX fallout. He advised investors to "separate the signal from the noise," noting that mistakes made by specific people did not undermine "the underlying value and applications of it."