Market Trend｜Meta Lost $13.7B On Metaverse In 2022; Ripple’s On-Demand Liquidity Soars To Record Highs
Across the past week, the cryptocurrency market has been privy to an uptick in valuation and volume, with the total market capitalization totaling $1.8 billion. Having broken free from the confines of the bear market for the most part, the wider cryptocurrency market is still reaping the benefits of the previous weeks’ bullish wave, with upticks of 2%-20% seen predominantly across the top 20. However, in spite of this bullish sentiment, it was revealed in a data release this week that the social media giant, Meta, lost $13.7B on metaverse initiatives across 2022, signaling that the previous bullishness surrounding this experimental facet of blockchain technology has significantly waned since its emergence in 2021. In addition, it was revealed in another data release that in 2018, four primary individuals controlled 86% of the stablecoin issuer, Tether. However, moving away from this more speculative and bearish news, it was reported that this week Ripple’s on-demand liquidity neared record highs amidst the XRP army’s anticipation of the SEC lawsuit verdict.
The Latest News
Meta Lost $13.7B On Metaverse In 2022
Social media giant, Meta, recently released their earnings data for the previous year, thus revealing that the company lost a whopping $13.7B across the entirety of 2022. It appears that Mark Zuckerberg’s metaverse bid was a costly venture for the company, with Meta reporting an operating loss of $4.28B in Q4 of 2022 alone, plunging its total losses for the year. This has been widely speculated to be a direct repercussion of the turbulence seen throughout the wider cryptocurrency market across 2022.
It was reported that Meta’s metaverse branch, Reality Labs, generated only $2.16B in 2022, a decline from $2.27B seen in 2021. However, addressing the losses, the CEO stated: ‘Our priorities haven’t changed since last year. The two major technological waves driving our roadmap are AI today and over the longer term the metaverse.’; insinuating that the company is set to continue developing its metaverse vision in light of the Quest Pro release, which is touted as being the first mainstream mixed reality device.
Meta Logo (Image Courtesy of Dezeen)
Ripple’s On-Demand Liquidity Soars To Record Highs
With the SEC vs Ripple case appearing to be nearing a close as the verdict looms closer, the XRP army has begun to rally together as a testament to their support, leading Ripple’s total liquidity to soar to record highs. It was reported in 2022 that an estimated $18B worth of transactions was processed through Ripple’s on-demand liquidity, accounting for 60% of the $30B in volume transacted on the network since RippleNet was launched.
On-demand liquidity is a flagship crypto-powered payment solution developed for Ripple and introduced as a means of allowing customers to transfer funds internationally without the need to establish correspondent banking partnerships or pre-fund foreign accounts. The surge in on-demand liquidity is attributed to the ongoing focus on the utility of cryptocurrencies and the demand for streamlined international payment solutions. As of today, Ripple’s on-demand liquidity is accessible in 40 payout markets, a sharp uptick from 3 markets in 2020.
Charles Hoskinson (Image Courtesy of UToday)
86% Of Tether Controlled By 4 People As Of 2018
Historically, Tether has been known for being the most secretive stablecoin issuer, with its ownership structure largely unknown, despite its standing as the largest issuer on the planet. However, investigatory documents viewed by the Wall Street Journal revealed that four men owned 86% of Tether as of 2018. It has been revealed that Tether was born from an array of separate companies led by ex-plastic surgeon, Gincarlo Devasini and the former child actor Brock Pierce.
Devasini who helped develop the crypto exchange Bitfinex and now acts as its CFO, was reported to own around 43% of Tether in 2018. It was also found that two other utives working for Bitfinex, Jean-Louis van Der Velde and Stuart Horgner, each owned roughly 15% of Tether. The fourth major owner was reported to be Christopher Harborne (however, he is also known as Chakrit Sakunrit in Thailand), who owned 13%. Tether has declined to comment on the Wall Street Journal’s findings, instead addressing the publication in a tweet, where CFO of Bitfinex called the piece a ‘clown article’.
Tether Illustrative Art (Image Courtesy of Binance Academy)
Current Project Trends
Based on data provided by CoinMarketCap, a majority of the top-gaining projects across the past week have been focused on the development of the metaverse. With tokens such as Metaverse Dualchain Network Architecture (DNA) increasing by almost 1100% in seven days, it is evident that attention has once again been placed on evolving a multichain, decentralized metaverse architecture, for other projects to build upon.
The Current BTC Trend
Having rallied over 3.83% across the past seven days, Bitcoin currently appears poised for a bullish breakout, with this already seemingly being articulated through the realization of a bullish golden cross formation. According to previous analysis courtesy of Thescalpingpro, he hypothesized that if Bitcoin breaks through the $23,500 resistance, it could potentially break into the key zone of $23,500 and $24,500, which could eventually propel it to bullish highs stretching beyond $28,000.
However, with Bitcoin having finally emerged clearly above the $23,500 zone, it appears as if this bullish sentiment has the potential to reveal itself in the coming weeks, provided the current bullish momentum is maintained. Bitcoin is currently trading hands at an average of $23,559, however, February 2nd saw Bitcoin push beyond the $24,000 region and dramatically accelerate, before falling back to the aforementioned region, which appears to act as its current support.
In light of this bullish sentiment, Bitcoin’s MVRV (market value to realized value) has significantly increased over the past week, remaining consistently above the 1 threshold. Entering the week at 1.157, BTC’s MVRV was one of the highest values it has been in several weeks, with this then soaring to a high of 1.177 on the 2nd. This signals that BTC is continuing to move away from the ‘market bottom’ indication and towards a more stable territory as its value becomes more fully realized.
Weekly BTC MVRV Data (Data Courtesy of Blockchain.com)
The State Of ETH Gas Fees
As of the 2nd of February, there has been a moderate decrease in the total volume of gas used across the past week in comparison to the former, with the lowest figure attained on the 2nd, totaling 108,031,130,324. The highest figure attained this week was on the 28th, totaling 108,897,299,392, demonstrating a similar total usage to that seen throughout the opening of 2023. Despite this moderate change in the volume of gas used, the current volume of gas used appears to be in line with current monthly trends.
As a result, Ethereum gas fee boundaries this week have had a moderate increase from the week prior. The low gas boundaries were between 10-200 gwei, the average boundaries were between 10-605 gwei, and the high boundaries were between 11-732 gwei – demonstrating a substantial disparity in gas fees across the past week.
Across the past 24 hours, the top ‘Gas Guzzlers’ according to Etherscan were Uniswap: Universal Router (with fees totaling $653,729.58 or 396.70 ETH), Seaport 1.1 (with fees totaling $345,838.01 or 209.86 ETH), and Uniswap V2: Router 2 (with fees totaling $323,090.09 or 196.06 ETH) – thus demonstrating a significant increase from the previous week.
The estimated cost of transactions across the likes of OpenSea: Sale, Uniswap V3: Swap, and USDT: Transfer, has been suggested to be between $2.68 and $9.73, according to Etherscan.
The Current Macro Situation
Bank Of England Hikes Interest Rates By 50BPs And Forecasts A ‘Shallower’ Recession Than Previously Feared
On Thursday the Bank of England hiked interest rates by 50 basis points and began to dial back on some of the previous bleak concerns regarding the potential for a recession. Having voted 7-2 in favor of a second consecutive half-point rate hike, the Monetary Policy Committee collectively took the main Bank rate to 4% but consolidated in their decision statement that by taking smaller hikes that there may be an eventual end to the hiking cycle in the coming meetings.
The Bank stated: ‘Annual CPI inflation is expected to fall around 4% towards the end of this year, alongside a much shallower projected decline in output than in the November Report forecast. In the latest modal forecast, conditioned on a market-implied path for Bank Rate that rises to around 4 ½% in mid-2023 and falls back to just over 3 1/4% in three years’ time, an increasing degree of economic slack, alongside falling external pressures, leads CPI inflation to decline below the 2% target in the medium term.’. This more positive slant comes in light of recent forecasts that a shorter and shallower recession is likely, as opposed to the bleak outlook set out in the November projections.
Having previously forecasted that the UK economy was entering its longest recession on record, the UK’s GDP unexpectedly grew by 0.1% in November, following an outperformance of expectations in October. In addition, the economy is expected to contract slightly throughout 2023 and the first quarter of 2024 due to high energy prices and rising market interest rates restructuring spending. However, it appears as if the looming threat of a hard-hitting and long recession has eased.
What Could Be Coming In The Week Ahead?
Considering the marketwide bullishness as of now, it is likely that the cryptocurrency market will continue to capitalize on this, and valuations and volume across the market will increase further. However, with significant losses being reported across the metaverse sector, it is plausible that this and associated facets of blockchain will take a hard hit in the coming week, as the potential for bearishness to accrue among investors remains possible.
