Dispatch #158: The Warmth of Venture Capital

Sep 22, 2023 3 min read

Dispatch

In this patch of your weekly Dispatch:

Interest rates paused ⏸️
South Korean whales 🐳
More institutional adoption 🏦

The Big Idea

Blockchain Capital for Start-ups and Grown-ups

Nothing clears the clouds during crypto winter better than a good ol’ blast of venture capital. Blast could indeed be the right word to describe the $580M in investment coming from prominent digital asset manager Blockchain Capital. You see, getting to enjoy the freedom that cryptocurrencies provide is fantastic. But, as often is the case, it’s the visionary approach and funding that allow the development of the crypto products that the community has come to utilize. Much like how Nexo Ventures was established to strategically support early stage businesses.

Blockchain Capital has supported over 100 projects in various stages and sub-sectors in the digital asset industry, so the track-record for major developments is there. Over half a billion dollars are spread across two funds:

$380M is allocated for an early-stage fund, focusing on companies and protocols in pre-seed and Series A rounds.
$200M is designated for an opportunities fund, which will target late-stage investments from Series B onwards.

The firm's investors range from traditional institutions like university endowments and financial institutions to strategic investors like Visa and PayPal, who bring their expertise to bolster supported projects. Previous triumphs include a $115M Series C investment in Tools for Humanity and a $40M Series A in RISC Zero.

We often discuss what needs to align for crypto so new all-time highs are seen again and a healthy dose of large, institutional investor capital is certainly part of that alignment, but could it turn to the only alignment needed for a new power cycle in crypto? These are the hints.

The Latest In…

Syncing Rates to Sink Inflation?

Interest rate decisions in the USA and U.K. stole the economic headlines this week, with inflation in the EU also coming in better than expected. Here are the main numbers:

The U.S. Fed kept its benchmark interest rate unchanged at 5.50% in a widely expected decision, projecting higher rates in 2024 and stronger GDP this year.
The Bank of England surprised markets by keeping its policy rate unchanged at 5.25%, contrary to expectations of a 25 basis point increase to 5.5%.
Inflation in the EU has been adjusted to 5.2%, for a 1% decrease from July, as part of a broader trend that has seen CPI cut in half since it peaked at 10.6% in October 2022.

The Latest In…

You Have How Much in Crypto, South Korea?!

It was probably with a sense of aversion that South Korean crypto investors had to disclose their overseas digital asset holdings for taxation purposes under recently introduced legislation. Apparently, South Korean taxpayers declared overseas cryptocurrency assets worth a staggering $98.5B in 2023, reports local Yonhap. Over 1,432 individuals and companies disclosed these assets, accounting for 70.2% of their reported foreign holdings. South Korea has bolstered crypto regulations with 19 new bills to safeguard investors and increase industry transparency. See – tax data can be certain, surprising and intriguing.

The Latest In…

Institutional Interest Par Excellence

The interest financial institutions display towards blockchain and cryptocurrencies is a driving force for the entire ecosystem. Here are this week’s prominent developments:

Grayscale's Ethereum ETF Application: Grayscale Investments has submitted a new application for an Ethereum futures ETF under the Securities Act of 1933.
Nomura's Bitcoin Adoption Fund: Nomura's digital assets subsidiary, Laser Digital, has launched the Bitcoin Adoption Fund, offering institutional investors long-only exposure to Bitcoin.
Citigroup's Digital Asset Expansion: Citigroup is expanding its digital asset services to allow institutional clients access to fractionalized bond trading and atomic settlement.

The Week’s Most Interesting Data Story

The Summer to HODL

Now that’s the kind of attitude worthy of applause, Bitcoin HODLers! According to Glassnode's latest Bitcoin supply data, the amount of inactive BTC that hasn't budged from its addresses for one-, two-, three-, and even five-year periods has been steadily reaching all-time highs since July 2023!