Dispatch #66: The Financialization of NFTs

Dec 17, 2021 4 min read

Dispatch

In this patch of your weekly Dispatch:

A massive upgrade for your NFTs
A new stage in the fight against inflation
More monster crypto fundraises

The Big Idea

A New Day for NFTs?

One of the things that makes the crypto space so different from what came before it is the incredible dynamism of digital assets themselves. That was on full display in the realm of NFTs this week.

First, one of the premier digital asset managers Bitwise launched a new index fund for accredited investors that tracks non-fungible tokens. Yes, you heard that right, an index fund for NFTs.

The Bitwise Blue-Chip NFT Index Fund will purchase and hold NFTs from the top 10 NFT collections based on market cap derived by floor prices. The first edition of the fund will purchase NFTs from collections including CryptoPunks, Bored Ape Yacht Club, Mutant Ape Yacht Club, Autoglyphs, Fidenza, VeeFriends, CyberKongz Genesis, Cool Cats, Meebits, and Chromie Squiggle. The fund will rebalance quarterly. It goes without saying that this sort of index fund could be a game-changer for bringing more passive investors into the NFT markets. That could provide additional liquidity to the sector.

Speaking of liquidity, that wasn’t the only upgrade to the NFT experience that came this week. We’re excited to share that Nexo has launched the first NFT Lending Desk. Owners of blue-chip NFTs (starting with CryptoPunks and Bored Apes) can borrow up to 20% of the value of their NFT without having to sell them. Initially, this will only be available for NFTs exceeding $500,000 in value but we hope to expand in the future.

The thing that makes this industry great is holders with long-term horizons. We’re thrilled to make it even more economically rational to make a bet on the long-lasting value of your NFTs.

The Latest In…

The Hot Inflation Battle

The US has seen two significant bumps in Consumer Price Inflation. The issue is becoming a major political battleground for the Biden Administration. And so perhaps it wasn’t surprising to see the Federal Reserve finally turn and take a more hawkish stance after this week’s Federal Open Markets Committee (FOMC) meeting. The Fed is doubling the speed of its asset purchase taper and now expects three interest rate hikes in 2022.

The Bank of England surprised everyone on Thursday with the first raise from a G7 central bank since the pandemic began. The question is will it help? Markets in the US actually raised 5-year inflation expectations after Powell began giving his interview. It seems likely this issue is staying with us for the foreseeable future.

The Latest In…

Fundraising

This week started off with a lot of folks in a bleak mood and calling the end of this bull run. Some of that may have just been spillover from institutional Bitcoin investors who were awaiting news of the Fed’s plans. Whatever the case, as we’ve pointed out for months when a bear turn does happen, there are certainly going to be some very well-capitalized companies positioned to ride it out. This week, more massive crypto fundraises:

Crypto data company Nansen raised $75M at a $750M valuation
Sources say another analytics company, Dune Analytics, is raising at a $1B valuation
NYDIG nabbed $1B at a $7B valuation in the biggest round in crypto history

The Latest In…

Nexonomics

When big exchange listing? Now big exchange listing. NEXO live on FTX. FTX's users are now able to invest in our native asset through the NEXO/ USD pair, which in fact encompasses a basket of five USD-pegged stablecoins. As a result of this latest Nexonomics development, the market for NEXO Tokens has become even more liquid and our token is now trading on 15+ platforms and exchanges, including the Nexo Exchange, Huobi Global, Bitfinex, Uniswap, HitBTC, Quickswap, Balancer, and many others.

The Week’s Most Interesting Data Story

Whales Down, Retail Up

One of the things that makes Bitcoin so fascinating is the rich trove of on-chainn data it gives us access to. This week we’re looking at the buying behavior between whales and smaller holders. FYI, whales control 1,000-10,000 BTC while small holders control less than 1 BTC. Right now, we’re in a period of divergence where whales are distributing and small holders are buying. There is often a presumption that whales are more sophisticated investors, but there are a lot more retail holders, so perhaps this divergence is reflective of just how sideways and choppy Bitcoin has recently been.