Crypto Market Rebounds Amid China Ban and NFT Surge

Market Outlook

The crypto market has shrugged off the losses incurred last week following China’s most scathing ban on the crypto industry yet. Large caps such as both Bitcoin and Ethereum have made a stirring market recovery by regaining almost 20% of their lost value and flirting with their key resistance levels at $50K and $3,400 respectively — established halfway through September.

As emphasized last week, China has in fact become DeFi’s largest user base evidenced by the abrupt flow of capital into platforms such as DyDx and Uniswap. Uniswap experienced the largest address activity spike over the past 5 months owing to the news, while the DyDx governance token saw an 80% appreciation in price value accompanied by the surge of trading volume exceeding that of Binance and Coinbase.

The notable market bounce was not only limited to large caps, as competing Layer 1s conveyed further momentum with networks such Solana and Terra capturing around 27% and 70% in price appreciation respectively. Terra enjoyed its biggest network boost to-date with the deployment of the Colombus-5 upgrade that will initiate Cosmos’ Inter-blockchain-communication standard after a community vote. IBC allows for interoperability and transfer of assets between blockchains, thus facilitating additional utility for the LUNA token as it can be used across far ranging environments of DeFi ecosystems, and ultimately accruing more value towards token holders. Another aspect of the upgrade pertains to the tokenomics of LUNA, as the token will now be directly burnt as a result of minting UST, instead of sending it to the community pool.

On the flip side, Solana has been making headlines on the back of the chain’s NFT sector exponentially growing to reach a billion dollar market cap, with some collections belonging to the “Solana Monkey Business'' project selling for as high as 13,027 SOL, or almost $2 million as of writing. The network’s imminent success was signalled recently as Sam Bankman-Fried insinuated that a NFT marketplace of interoperable collections, functioning across both ETH and SOL, would be built into the FTX derivatives exchange. Finally The Wormhole bridge linking both Solana to Ethereum has been live and reportedly helped the transfer of more than 100 NFTs to the SOL ecosystem, and secured around $200M in AUM. While competing bridges such as Allbridge demonstrated that almost half a billion were moved over to Solana from different blockchains, with the highest allocation interestingly being sourced out of Polygon. At last, Grayscale added SOL to its large-cap crypto fund affirming the swelling institutional interest in the project.

The week’s real spotlight was shone around the breathtaking growth of NFT-gaming project, Axie Infinity. Not only has the AXS token experienced a growth of 110% over the past week, putting the company at a higher market cap valuation than conventional gaming companies such as Ubisoft and T2, but it’s also enjoying the highest volume within the growing sector by reaching $2.25B in token sales since its inception. What prompted last week’s rally had been the news surrounding the plans to airdrop AXS worth $60M to early adopters, as well as launching a staking service which already saw around 21% of the circulating supply locked into the staking smart contract. Additionally, the firm disclosed its intent for releasing Axie’s decentralized exchange, which would reduce the present friction in the exchange of the game’s non-fungible character tokens. To capitalize on the protocol’s unprecedented success, a series B funding raised $152 million at a valuation of $3 billion led by Anderseen Horowitz.

Weekly Returns

The returns of the top five crypto assets over the last week were as follows — BTC (19.5%), ETH (20.45%), BNB (28.69%), XRP (16.6%), and ADA (7.4%).

Net Inflows per 21Shares ETP

The net inflows of our ETPs combining $23.01 million in the past week, were as follows: AADA (+$452,549.32), ABBA (+$3,071,905.89), ABNB(-$ 789,838.09), ABTC (+$ 10,468,978.26), ADOT (-$ 1,739,256.83), AETH (-$ 3,790,946.57), ASOL (+$ 3,874,604.38), AXTZ (-$ 875,388.27), HODL (+$ 1,914,554.97).

Media Coverage

Our very own Solana ETP has just reached $100 million in AUM, up 366.94% since launch in June. The British Morning Star picked up the story, ranking the ETP fifth following oil and gas commodities. “In fifth place there is the 21Shares Solana ETP (AS0L), launched on June 28, one of the few cryptocurrencies in positive territory last month. The digital token’s project, whose innovative technology has generated significant visibility, claims that it has created the world’s fastest blockchain. Solana is up more than 13,200% for year-to-date,” the Morning star reported.

Mark your calendars on October 7th to catch 21Shares’ co-founder Ophelia Snyder at 6 PM CET, where she’ll be participating in a webinar (in Italian) that goes by the title Refink: Business Stories with Law. The discussion will be moderated by Andrea Conso and Vittorio Carlini of Il Sole 24 Ore, the national daily business newspaper.

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News - As Promised, El Salvador Started Using Its Volcanoes to Mine Bitcoin

What happened?

After making bitcoin a legal tender last month, El Salvador has officially started mining using geothermal energy generated by one of its 23 active volcanoes. Earlier in June, President of El Salvador Nayib Bukele had assigned state-owned geothermal electric company, LaGeo SA de CV to put up a plan to offer facilities for Bitcoin mining with, in his words, very cheap, 100% clean, 100% renewable, zero emissions energy from El Salvador’s volcanoes. As of writing, the country has mined around $300 worth of Bitcoin, which is nearly 0.006 BTC. Dubbed as “the land of volcanoes,” El Salvador heavily relies on geothermal energy and is one of the top producers of it in the world in spite of its small size.

Why does it matter?

Mining on volcanic geothermal energy is not new, Iceland has been a bitcoin mining attraction since 2009 thanks to its volcanic resources. Iceland’s 130 volcanoes powering up 32 volcanic systems provide Bitcoin miners with a cheap abundance of renewable energy; allowing miners to earn higher profits for their labor. What’s different in El Salvador is that there is now more incentive to utilize the country’s geothermal facilities to mine bitcoin since it became a legal tender as of September 7th. Although there are some concerns about sulfur dioxide and silica emissions, when compared to fossil fuels, geothermal energy wins at having the most minimal carbon footprint.

Last year gave us a bit of a hint on what we’re witnessing now with regards to the rise of Bitcoin-mining institutionalization coupled with the increasing interest in turning the cryptocurrency green, like Square's $10 million initiative to foster clean-energy-enabled Bitcoin mining. At 21Shares, we’ve been big believers in climate change and how carbon emission control on the institutional level could take leaps towards saving our planet. That’s why at the beginning of this month, 21Shares partnered with myClimate, a Switzerland-based climate protection foundation, to put together a three-phase plan to become fully carbon neutral by 2022.

We are optimistic that nature will literally take its course to support the crypto industry at scale in spite of regulatory clampdowns. Given 8% of existing Bitcoins are mined by Iceland’s volcanic facilities, and now with El Salvador catching up more than a decade later, we can definitely see volcano-rich countries like the USA (173 🌋), Russia (166 🌋), and Indonesia (139 🌋) get inspired in the near future.