When Facebook (now Meta) announced its Libra (now Diem) project in 2019, crypto was in the depth of winter. Sure, there were lots of diehards still quietly building, but it was quiet. The announcement that Zuckerberg was turning his gaze to the space in the form of a global stablecoin project was a game-changing moment.
Unfortunately for Facebook, it was a stillborn effort. The US government acted with incredulity at the idea that Facebook would be allowed to create global money – especially one that was domiciled in Switzerland and didn’t even use the US dollar as its sole reference rate. For China, it was a reason to dramatically accelerate their digital yuan efforts.
Indeed, in many ways, the main impact of Libra/Diem might be the response that it provoked. First, it was a starting gun for the central bank digital currency era as governments raced to create their own stablecoins. Second, the resistance it faced might well have pushed Facebook to focus its crypto-ish energies not on the real world, but the metaverse instead.
After numerous key leaders left the project, it seemed like Diem’s time was nigh, but that was well and truly confirmed this week when it came out that Silvergate Bank will be purchasing Diem’s intellectual property assets for $200M.
There aren’t many projects that change the world without ever launching, but Diem is certainly one of them.
The Latest In…
NFTs & Other Fundraising
This week hasn’t been great for markets (no sh*t, Sherlock). Anticipated rate hikes in a few months plus the flip from quantitative easing to quantitative tightening has markets risk-off. Except for NFTs and funding rounds, which clearly didn’t get the memo.
OpenSea had its best month by volume ever
Big NFT projects like PleasrDAO were out raising money ($69M)
Crypto tax platform Cointracker announced a $100M Series A
Diem’s shuttering may have been precipitated by previous US government antipathy, but that wasn’t the big story in US crypto regulations this week. That belongs to the America COMPETES Act, a bill nominally about supply chains and US competitiveness with China that included a sneaky little provision that would make it trivial for the Treasury Department to block crypto exchanges and transactions.
The crypto lobby is already up in arms and seems optimistic, but it isn’t the first time that an elected official has tried to shoehorn an anti-crypto provision into a totally disconnected bill, remember Infrastructure Bill? The US crypto community is also awaiting more information about a potential Biden executive order… Truly, there is never a dull moment in this industry.
Come Thursday, Nexo users found yet another new asset in their wallets… Fantom’s $FTM, a sizzling hot DeFi token, is now available to buy, exchange, earn 18% on, and borrow against.
Finally, go and check your $MATIC stashes ‘cause you can now transfer them all to Nexo (and earn 16%) – we’ve enabled Polygon deposits!
The Week’s Most Interesting Data Story
Institutions Are (Ever so Slightly) Buying the Dip
There is a tendency in crypto to overstate the positive and understate the negative. Let us say in no uncertain terms that the price action of the last week has not been pleasant. Still, not all indicators are bad. One of the leading indicators that the crypto markets were in for an adjustment? Five consecutive weeks of institutional fund outflows from the industry extending back into December. Hundreds of millions of dollars had flowed out of the market during that period, but the past week saw a shift back to inflows. Those inflows were only $14.4M, but they came in the latter half of the week during a period of extreme price weakness, suggesting dip-buying behavior. This means that at least some smart money is betting that current prices represent a good buying opportunity.
What the Community Is Discussing
Have NFTs been the real store of value all along? Ask here.
There was a lot of Fed watching this week, only for the crypto folk to remember how absurd it is for the words of one person to carry so much weight.
One of the biggest topics of the week is the IMF vs El Salvador on Bitcoin.
What to Watch for Next Week:
Will markets have another leg down?
Can NFTs keep their anti-gravity properties?
How will the latest chapter in the Quadriga scandal play out?