Welcome back chain reaction.
Last week, we looked at a crossover episode of the investing meme. This week we’re talking about the symbols of dumping musk while holding on to others.
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Weekly Submission from the TechCrunch Crypto Editor’s Desk Lucas Matney:
Elon Musk shared that Tesla sold some bitcoin this week. Well, to be fair, they sold a lot of bitcoin… tens of thousands of coins.
And while Tesla’s announcement last year about buying bitcoin sent prices to the moon, Wednesday’s revelation that they sold 75% of their bitcoin reserves in the second quarter did not significantly affect the cryptocurrency market, which has been in an alarming state this week with BTC Prices are pumping and Ethereum shoots even higher (although still well below prices two months ago).
At the end of the day, Tesla was one of the biggest owners of Bitcoin, and Elon Musk was, for a while at least, the coin’s biggest billionaire. Its stock in cryptocurrency circles appears to be declining; crypto Twitter was widely dismayed by the announcement, with some suggesting that crypto holders should join those shorting shares of the electric car maker.
Hidden within this revelation that the company had offloaded nearly $1 billion in Bitcoin was a small admission from Musk that Tesla had been holding Dogecoin and had not sold any of it. What was not clear from this statement is how much Dogecoin Tesla actually owns. Musk wrote on Twitter that he owns it, and Tesla has accepted Dogecoin payments for merchandise on its site for several months, but has not disclosed any cryptocurrency purchases.
I tried doing some arithmetic about how much Dogecoin the company might hold this week:
The company revealed that it currently owns $218 million in digital assets after selling $963 million in Bitcoin. The bulk of that $218 million is likely to be the remaining bitcoin.
Tesla reportedly had about 42,000 bitcoins in the second quarter, so after selling 75% of it, it should have had about 10,500 by the end of the quarter. Now, to determine exactly how much of this total amount of Bitcoin is, we have to know exactly when the shot was taken. Supposedly it was taken sometime on the last day of June when the fiscal second fiscal quarter ended, so 1 Bitcoin would have been trading for between $18,750 and $20,300 over the course of the day, which means that about $197 million to $213 million of the total “digital assets” will be in bitcoin.
Ultimately, Musk’s assertion that Tesla was holding onto its Dogecoin was more likely to be about preserving the good fortunes of this Twitter community than anything else, especially during a time when his Twitter dealings took some digging into his popularity among retail investors.
The Reaction streak summed up a lot of negative news in the last month as the token price took a hit and Web3 companies suffered as a result. The pain is not over yet, but crypto prices saw a fairly significant recovery last week, with ETH up 45% week-over-week. Lucas and Anita talked about what might have caused this rally, although they also had to talk about the more unfortunate news of layoffs at OpenSea.
Both co-hosts worked hard last week on two separate articles related to current crypto news, so they unpacked the ones on the show. Anita spoke about her article about the intensification of competition between crypto exchanges for the US market (which is likely to win), while Lucas shared his thoughts on Yuga Labs’ metaverse video game as one of its early players.
Subscribe to Chain Reaction on Apple, Spotify, or the alternative podcast platform of your choice to keep up with our news each week.
follow the money
Where startup money is moving in the crypto world:
- Crypto tool startup Sunscreen has raised $4.65 million in seed funding led by Polychain.
- Optic, an artificial intelligence-based NFT authenticator, has raised $11 million in an initial round led by Kleiner Perkins and Pantera.
- Zebedee raised $35 million in a Series B round led by Kingsway Capital to develop Bitcoin-based gaming payments.
- Blockchain cybersecurity startup Halborn has raised $90 million in Series A led by Summit Partners.
- UnCaged Studios has raised $24 million from investors including Griffin Gaming Partners and 6th Man Ventures to build crypto games.
- NFT brand loyalty platform Hang has secured $16 million in new Series A funding led by crypto venture firm Paradigm.
- Lines peer-to-peer portfolio app has raised an initial $4 million round from investors including Elad Gil and Scalar Capital.
- Corporate treasury Crypto firm Meow has closed a $22 million Series A led by Tiger Global.
- Empiric Network, the data infrastructure provider, has raised $7 million for its initial round of investors including Variant and Alameda Research.
- Web3 Secure3 security auditor has raised $5 million in an initial round led by Mirana Ventures.
week in web3
A weekly window on a web3 reporter’s ideas Anita Ramaswamy:
More than a few times recently, I’ve heard people in crypto say that a bear market will separate the good companies from the bad ones. Former Securities and Exchange Commission chief Jay Clayton put the matter straight at the Bloomberg Crypto Summit on Tuesday, saying that regulators should make responding to the “garbage” happening in Web 3 their number one priority.
Clayton invoked the ICO boom of 2017 when he described the aforementioned rubbish, a time when all sorts of cryptocurrency securities fraud and fraud were unfolding. I can’t help but wonder… Has cryptocurrency made any tangible progress since then in improving its reputation as a haven for miscreants?
For US lawmakers, the answer appears to be “yes,” perhaps because they hate stifling what has proven to be a fairly large industry worth millions of dollars (or billions in a strong market). So even though they’re slowing down, they’re finally coming. Specifically, US Senators Cynthia Loomis and Kirsten Gillibrand proposed a bipartisan encryption bill last month that was on everyone’s lips. The couple appeared at the Bloomberg Summit to share updates on the state of the law since its introduction. Gillibrand shared that while some of the provisions appear ready to move forward, the entire legislation will likely be pushed back to next year.
However, there are two provisions in the bill that Gillibrand predicted could gain consensus much sooner than the rest. The first is a set of rules for banks looking to issue stablecoins – understandably an area of special interest for lawmakers after the Terra failure. The second is part of a bill that would make the Commodity Futures Trading Commission (CFTC) the main regulatory authority for cryptocurrency, which it said is currently being finalized by the commission. She noted that Congress will be able to vote on this item by the end of the year.
While US legislators and regulators alike may always be slow to crack down on cryptocurrency because they don’t want to be seen as a stifling innovation, the new bill appears to be moving in full swing, faster than many expected. It’s not a totally abrupt shift from 0 to 100, but it is very likely that the US was on the brink of a faster and more severe regulatory response than most Web 3 could have imagined just a few months ago when markets were in a better shape.
TC + . analysis
Here are some cryptocurrency analyzes of this week available on our TC+ subscription service from top correspondents Jacqueline Milink:
Former Securities and Exchange Commission Chairman Clayton says regulators should tackle crypto ‘garbage’ first
As the cryptocurrency industry continues to grow, regulators around the world are looking for operational and legal frameworks to guide their actions to monitor the industry more effectively. While there are “a huge number of responsible players in the industry,” there are also irresponsible players, former US Securities and Exchange Commission Chairman Jay Clayton said during the Bloomberg Crypto Summit on Tuesday. Regulators must respond to the litter first. This is the job.”
Rarible co-founder says NFTs have the potential to become media companies
As NFTs maintain mainstream interest, one of the founders predicts that the digital asset sector will pivot in a new direction. “I think NFT Groups will develop as media companies [into something] Like Disney,” Alex Salnikov, co-founder and chief product officer of NFT Rarible Marketplace, told TechCrunch. In recent months, major NFT projects such as Bored Ape Yacht Club (BAYC) and Doodles have pushed their collections beyond just pictures and into Various sectors, which may be the beginning of what the expansion of NFT holds in the mainstream, Salnikov said.
Some venture capitalists are doubling down on cryptocurrency despite the unknown timeline for recovery
Cryptocurrency markets may be red all over, but that doesn’t stop many venture capitalists from investing in the space. Craig Borrell, a partner at crypto-focused firm Reciprocal Ventures, joked to TechCrunch that people who briefly entered the crypto market – aka tourists – are “already going home.” But a number of venture capital firms view the space as a huge opportunity, even though there may not be a measurable pull for a number of years.
MetaMask co-founder sees a developer-led future for his crypto portfolio
Six years ago, MetaMask was founded and today it is the largest cryptocurrency wallet. This was not always the plan, co-founder Dan Finley told TechCrunch. “We thought it would be a quick thing in and out. Aaron thought we’d be working on it for a few weeks. I thought it would be a few months. It became clear very quickly that it wasn’t.” Now, the team is testing the laissez-faire approach to be “less opinion” and get out of the way of users.
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