Wall Street doubles down on crypto

Wall Street doubles down on crypto

Inspired by anime mech suits, Mekas are the latest NFT trend to fetch high prices. [Image courtesy of Matthieu Braccini and Mattey]

There’s never a dull moment on the blockchain. Here’s what you need to know this week:

Wall Street diversifies beyond Bitcoin. Markets rally as big firms explore Ethereum, DeFi, and more.

Mekas are the latest NFT craze. Bidders drove sales into the millions for the mech suit NFT collection — sight unseen.

The week in numbers. Breaking down crypto’s most significant digits of the week.

Whale Street

Bitcoin prices continue to rally as Wall Street doubles down on crypto

Around this time last year, crypto began the historic surge that culminated in spring’s all-time highs — a rally driven partly by Wall Street and corporate America’s increasing adoption of BTC. Since the start of October, Bitcoin has rallied nearly 20% as the S&P 500 has remained mostly flat. And with investments in the sector setting records — crypto firms raised $6.5 billion in the third quarter of 2021 — it’s clear that institutional crypto adoption wasn’t just a fad. Let’s dig into Wall Street’s latest crypto moves.

  • Banking giants are increasingly offering clients crypto products. U.S. Bank, the country’s fifth-largest bank, announced it will offer Bitcoin custody services for fund managers — joining players working on similar products including Bank of New York Mellon and Northern Trust. And in its first-ever research report dedicated to crypto, Bank of America noted, “We believe crypto-based digital assets could form an entirely new asset class.” 

  • Global firms and fund managers are also considering ETH, DeFi, and blockchain tech. A CoinShares report found that 42% of institutional respondents said they were most bullish about ETH; French investment bank Société Générale posted about potential DeFi offerings on an established crypto forum; and Visa outlined a “Universal Payments Channel” — a flexible network for digital currencies, including CBDCs.

  • George Soros’ fund revealed that it holds BTC. Speaking to Bloomberg, Soros Fund CEO Dawn Fitzpatrick said, “I think it's crossed the chasm to mainstream." Elsewhere, J.P. Morgan analysts suggested that Bitcoin may be a better hedge than gold, an idea echoed by billionaire Chamath Palihapitiya.

  • Meanwhile, Bloomberg analysts predict that four BTC futures ETFs could be approved by the end of October. ETFs — which provide investors exposure to an asset class without having to hold the asset themselves — are popular components of retirement-savings plans. 

Why it matters… Wall Street’s conventional wisdom around crypto has flipped in the last year — from high-risk bet to a mainstream component of a diversified portfolio. In a recent interview, legendary investor Bill Miller explained some of the appeal: "Bitcoin is a lot less risky at $43,000 than it was at $300. It's now established, huge amounts of venture-capital money have gone into it, and all the big banks are getting involved."

Meka Millions

Can Gundam-style NFTs push digital collectibles into the mainstream?

Meet the newest NFT project to captivate crypto Twitter: A collection of 8,888 unique “Mekas” inspired by Japanese anime classics like Mobile Suit Gundam. On October 7, almost a week before actual artwork for the 3D mech-suit avatars was revealed, the entire collection sold out. On OpeaSea, sales have since totaled more than 20,000 ETH (about $70 million). Let’s take a closer look.

  • European designers Mattey and Matt B, whose clients have included Apple, Nike, and MTV, thought of the idea for the MekaVerse during a five-month trip to Asia. Each Meka is a unique 3D illustration generated by an algorithm that integrates “hundreds” of designed visual elements. 

  • The project gathered buzz by requiring prospective collectors to register for a raffle using their Twitter or Discord accounts — winners would get to buy one or two Mekas for 0.2 ETH each (around $720) plus transaction (or “gas”) fees. The raffle was intended to help fans compete against the big-money collectors known as whales. Without such a mechanism in place, whales often walk away with the best of a drop because of their willingness to pay the highest Ethereum network fees.

  • More than 172,000 unique wallets signed up for the right to buy one of the 8,888 Mekas. As soon as the minting process began, values for winners’ Mekas began to rise — as of Tuesday the floor price for Mekas on OpenSea was 6.35 ETH (around $22,000). 

  • What made the Meka drop so hot? Likely a combination of factors, from the appealing robot-suit concept to the growing buzz around previous collectible NFT projects. CryptoPunks’ creator Larva Labs recently inked a deal with Hollywood mega-agency UTA and Bored Ape Yacht Club’s creators just signed with Madonna and U2 manager Guy Oseary.. 

  • The MekaVerse’s roadmap has teased physical Meka toys, “a more ambitious second Meka drop,” and a possible foray into short films and streetwear. The creative team broke down some possibilities: “We’re exploring more ideas and concepts every day… What if your Meka could grow into a Super-Meka? What if you could combine your Mekas? What if you could battle with your Mekas?” 

Why it matters… In the third quarter of 2021, NFT sales topped $10 billion, more than eight times the previous quarter’s volume. But despite the headlines, NFT collecting isn’t quite a mainstream hobby. The MekaVerse — with its relatively low original price-point, raffle system, and potential for physical merch — seemed to make waves with first-time collectors. Will developers’ promise for a “more ambitious” second drop result in an even bigger, more inclusive release?

Numbers to Know

$31 billion

The total value of BTC transferred on the Bitcoin network on October 6 — an all-time high and a 40x jump since the beginning of 2020. While daily settlement volume dropped back to $11.6 billion by October 10, it remained historically high. 

221 million

The number of people who have bought or sold crypto as of June 2021, according to Bank of America’s 140-page report, “Digital Assets Primer: Only the first inning” — up from 66 million in May 2020.

20,000 BTC

Estimated holdings (worth over $1 billion) of the largest publicly traded U.S. crypto mining companies. Why so much? Some firms, including Argo, Hut8, and Marathon, have used their BTC as collateral to secure loans to acquire new equipment and pay energy bills, believing that BTC’s future upside is worth more than the interest owed on the loans. 

42%

Approximate weekly gain for Stacks (STX) as of October 11. Stacks is a protocol that brings smart contracts to Bitcoin. STX has rallied amid the rise of use cases like Bitcoin NFTs and the CityCoins project, the developer behind Miami’s new municipal cryptocurrency MiamiCoin, which has generated more than $10 million for the city’s treasury. 

0?!

“I think bitcoin is worthless,” said JPMorgan Chase chairman and CEO Jamie Dimon at an event in France on Monday. Dimon, who clarified that he was expressing a (longstanding) personal opinion, added: “I don’t care. It makes no difference to me. Our clients are adults. They disagree. That’s what makes markets.”

Token Trivia

What is SHIB?

A

A Shiba Inu-themed crypto wallet

B

An Ethereum-compatible alternative to Dogecoin

C

A Dogecoin competitor with an intentionally scarce supply

D

A layer 2 scaling solution built on top of Dogecoin

Find the answer below.

Trivia Answer

B

An Ethereum-compatible alternative to Dogecoin