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Covid Variant Weights on All Markets
The World Health Organization on Thursday gave a briefing on the new variant originating from six African countries. This resulted in several countries suspending flights from the region to contain the spread. The markets retreated into safety leading to all risk-on assets falling sharply. This knee jerk reaction wasn’t a surprise given the market sell-off we experienced back in March 2020.
However, provided that most cases in the epicenter of this variant have been mild it puts into question why the media is pushing this narrative aggressively. With 40% of the total money supply being printed this year I doubt new lock downs will bring the market to its knees. The inflation genie is out of the bottle and all assets will continue to appreciate until counter measures are taken. In my judgement there’s very little stopping the massive asset inflation bubble. Out of all the assets, digital assets stand to make the biggest gains for investors. Conversely, once counter measures are taken against inflation they will also experience the largest draw down.
Metaverse: 1 Trillion Dollar Opportunity According to Grayscale Report
Grayscale’s Head of Research published a report titled “The Metaverse, Web 3.0 Virtual Cloud Economies” exploring the rapidly growing sector popularly known as the metaverse. The report focuses on how DeFi, NFTs, and decentralized storage have created the infrastructure needed to support this new online experience.
By analyzing global all-time active metaverse wallets the user base has ballooned 10x, sitting at 50,000 as of June 2021. The report further stated,
“compared to other Web 3.0 and Web 2.0 segments, Metaverse virtual world users are still in the early innings, but if current growth rates remain on their current trajectory, this emerging segment has the potential become mainstream in the coming years.”
Furthermore, the report highlights that there’s ample demand from venture capitalists. Total fund raising in Q3 totaled $1B for blockchain gaming. This represented 12% of the total fundraising for the entire crypto sector in the quarter, ranking as the top sub-sector within Web 3.0 and NFT category.
This enthusiasm hasn’t subsided. In October, publicly-listed cryptocurrency and blockchain investment firm Tokens.com announced an agreement to purchase a 50% stake in the metaverse real estate firm Metaverse Group in a deal worth over $1.6M. The CEO of Tokens.com shared his insights in the following statement,
“The Metaverse is a game-changer for how advertisers and brands market their products. As more people congregate in these virtual cities, the land becomes more sought after for its ability to reach a new global demographic. Metaverse Group has the potential to be a major landlord and developer by using the same strategies used by physical real estate managers.”
The hype is real and it’ll fuel the next boom and bust cycle. Too much money is coming into the space too fast. This will inevitably lead to misallocation which will reconciled in the next bear market. However, it provides a great opportunity to lock in big gains and wait for killer opportunities after the market corrects.
Celsius Expands Funding Round from $400M to $750M
Celsius had to expand their Series B funding round from $400M to $700M due to strong demand. The company is now valued at $3.5B and the CEO expects it to be valued at $10.5B next year. Celsius plans to use these funds towards expanding into new markets and product offerings, along with their native CeFi to DeFi bridge.
Most these centralized finance (CeFi) platforms are likely to see ongoing growth in both the expansionary and contractionary phases of the market. The demand for yield will remain high regardless of market conditions. The complexity of DeFi will force many users to find comfort in the simplicity of CeFi. As DeFi protocols become more battle tested we’ll eventually see a merging of the two. Platforms like Celsius will inevitably integrate DeFi protocols into their backends to optimize their yields and expand their product line. This is how we bring the masses to DeFi.
OTC & markets insights + Portfolio update below
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