Dispatch #71: The Metaverse Is on the Menu!

In this patch of your weekly Dispatch:

• Microsoft joins the metaverse
• Russia’s central bank wants to ban crypto
• Are markets oversold?

The Big Idea

The Battle Between the Open and the Corporate Metaverse

“Metaverse” is off to a rollicking start as the biggest business buzzword of 2022. This week, Microsoft made news with the biggest acquisition in the company’s 46-year history. They’re paying $68.7B in cash to acquire Activision Blizzard, maker of top game titles like Diablo, Call of Duty, World of Warcraft, and Candy Crush.

Lest we have any questions about what was motivating the purchase, Microsoft CEO Satya Nadella said “Gaming is the most dynamic and exciting category in entertainment across all platforms today and will play a key role in the development of metaverse platforms.”

Commentators widely saw the move as Microsoft peering over at Facebook-turned-Meta’s recent moves and feeling the pressure. However, crypto companies are determined that other FAANG companies should not be the only metaverse pressure on the tech giants.

Animoca Brands, a game publisher and investor in the NFT and metaverse space, just announced a $359M raise at a $5.5B valuation – doubling their valuation in just three months. Chairman Yat Siu drew the line clearly in his Twitter announcement:

“The threat to building a #metaverse that is owned by a majority interest comes from those that want to build a closed metaverse who already have control of all our data and are monetizing off the data that we gave up for free.” He then focused specifically on the Activision Blizzard deal, saying that Microsoft too understands “that #gaming will lead the way into the #metaverse but we have to make sure it is an #openmetaverse.”

It’s worth remembering that the term “metaverse” was first used in Neal Stephenson’s “Snowcrash” and referred to a dystopian, corporate-owned virtual world. The battle that seems to be shaping up is whether it will be the corporate metaverse or the open metaverse that shapes the next generation of consumer experiences.

The Latest In…

The US Energy Debate

On Thursday, Congress held a hearing called “Cleaning Up Cryptocurrency: The Energy Impacts of Blockchains.” The hearing featured witnesses including BitFury CEO and former Binance US CEO Brian Brooks. It was – and we mean this as a compliment – sort of boring. Although it started pretty basic with explanations of Bitcoin, there were some fairly substantive back and forth around considerations like its impact on smoothing out energy flows in the context of inherently intermittent renewable energy sources. All in all, it was another example of a shift in the US political discourse, where elected officials seem more interested in actually learning than just scoring political points.

The Latest In…

Global Governments and Crypto

It’s not just the United States that’s digging into its crypto position. Countries around the world are clearly focused on this little (but growing) industry of ours.

• The Prime Minister of India referred to crypto as a “challenge” and called on the world to have a coordinated response.
• In Pakistan, a security agency is asking to have crypto sites blocked.
• In Russia, the central bank released a report advocating for a ban on crypto investing, trading, and mining.
• In Ontario, Bitfinex is packing up and heading out due to regulatory pressure.
• Finally, in the UAE, new rules have gone into place that come with up to five years in prison time and $270,000 in fines for promoting crypto.

The Latest In…

The Nexoverse

• A final Nexonomics 3.0 release – the Nexo Booster – arrived on our mobile app this week. The product allows you to get between 1.25 and 3x leverage on your portfolio and to amplify the purchasing power of your current holdings without allocating additional capital. Needless to say, as a leverage product, the Nexo Booster can work in both ways – it amplifies your gains when the chosen asset appreciates, yet magnifies the losses when prices are falling – so you should always make an educated decision about your transactions.

The Week’s Most Interesting Data Story

Why On-Chain Data Suggests the Market Is Too Bearish

Ah, crypto, where the pendulum swings wildly between greed and fear. Recently, we’ve been firmly in the fear section of things, with many wondering if we were on the verge of entering a more prolonged bear market. According to Glassnode, the data points in the other direction. First, the number of short-term holders is at historically low levels, meaning there aren’t many more people to wash out.

Second, the percentage of coin balances in profit has reached 71.8%, in a range that tends to be indicative of the end of bearish periods. Does this mean that there’s no more pain in store? Of course not! But they are relevant data points when trying to get an understanding of where in the cycle we find ourselves.

Hot Topics

What the Community Is Discussing

With so much of the bearish sentiment coming from the macro environment, some are saying we’re already pricing much of what’s to come in.

Nic Carter, community-appointed fighter of energy FUD.

That would be a heckuva new market participant.

What to Watch for Next Week:

• Will Bitcoin break away from this range?
• Will Instagram push its NFT avatars live?
• Can NFTs keep up their momentum?