Bessie Liu

<div id="highlights-block_62be17ffd6617" class="highlights">
 <ul>
 <li>Crypto entities with strong balance sheets are stepping in to contain contagion, strategists say</li>
 <li>The bank points to continued strong VC investment as a sign the shakeout will be short lived</li>
 </ul>
 
</div>



Banking giant JPMorgan expects the current debt-related mayhem in the digital asset markets to come to an end soon. 



“Crypto entities with the stronger balance sheets are currently stepping in to help contain contagion,” a report by the firm’s strategists said. Funding from venture capitalists has also endured the turmoil and continued at a healthy pace in May and June, according to the report.



Entities that had higher leverage were ultimately the most vulnerable in the bear market, the strategists wrote. This included bitcoin miners who had “<a href="https://cms.blockworks.co/crashing-prices-expose-bitcoin-mining-industrys-addiction-to-leverage/" target="_blank" rel="noreferrer noopener">borrowed to expand operations</a> using their bitcoin as collateral,” hedge funds that used “futures to lever their positions,” and retail investors who borrowed “via margin accounts to invest into various cryptocurrencies.”



Among the deep-pocketed crypto firms stepping in to stem the damage is cryptocurrency exchange FTX, which is <a href="https://cms.blockworks.co/crypto-exchange-ftx-to-acquire-beleaguered-lender-blockfi/" target="_blank" rel="noreferrer noopener">pulling together a deal</a> to buy beleaguered digital assets lender BlockFi, according to reports in Blockworks and other publications.



Venture capital firms also seem to be pressing ahead with crypto investments. ​​Andreessen Horowitz broke records last month when it raised a <a href="https://cms.blockworks.co/andreessen-horowitz-launches-largest-crypto-fund-ever/" target="_blank" rel="noreferrer noopener">$4.5 billion fund</a> dedicated to crypto, and OP Crypto has reportedly just <a href="https://techcrunch.com/2022/06/30/op-crypto-raising-100m-for-fund-of-funds-to-back-fund-managers/" target="_blank" rel="noreferrer noopener">raised</a> $100 million for early-stage crypto investments. 



Although it is difficult to assess how much more deleveraging needs to still happen, strategists from JPMorgan said, “indicators like our Net Leverage metric based on CME futures suggest that this deleveraging is already well advanced.”



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Crypto Deleveraging Cycle ‘Won’t Last Much Longer’

Macauley Peterson

<div id="highlights-block_628e315869ea5" class="highlights">
 <ul>
 <li>a16z has earmarked $1.5B for seed investments in Web3 startups</li>
 <li>It’s time for the “golden era” of Web3, the firm said</li>
 </ul>
 
</div>



Venture capital behemoth Andreessen Horowitz (a16z) has raised the largest-ever crypto venture fund: $4.5 billion.



The vehicle, the firm’s fourth, brings a16z’s total crypto and Web3 holdings to $7.6 billion.&nbsp;



The launch makes good on <a href="https://cms.blockworks.co/andreessen-horowitz-looking-to-raise-4-5b-for-new-crypto-funds/" target="_blank" rel="noreferrer noopener">a plan unveiled in January</a>, when the company published a now-updated <a href="https://a16zcrypto.com/#vertical-landing-investment-thesis" target="_blank" rel="noreferrer noopener">investment thesis</a> predicated on the “power of software” as “the encoding of human thought, and as such has an almost unbounded design space.”



“We think we are now entering the golden era of Web3,” general partner Chris Dixon said in a <a href="https://cms.blockworks.co/a16zs-chris-dixon-crypto-growth-is-consistent-despite-downturn/" target="_blank" rel="noreferrer noopener">blog post</a> announcing the new fund. “Programmable blockchains are sufficiently advanced, and a diverse range of apps have reached tens of millions of users. More importantly, a massive wave of world-class talent has entered [Web3] over the last year.”



Talent flocks to the industry during a bull market, Dixon <a href="https://cms.blockworks.co/a16zs-chris-dixon-crypto-growth-is-consistent-despite-downturn/" target="_blank" rel="noreferrer noopener">told the audience</a> at last week’s Permissionless conference in Palm Beach, adding that a bear market is the prime time for builders to focus on what comes next.



The fund will invest in Web3 startups that run the gamut from DeFi, to gaming, infrastructure, DAOs, NFTs, privacy, decentralized social media “and many other areas.”



The firm also plans to expand its in-house staff to meet the vetting needs of additional startup investments.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">We will also keep expanding the a16z crypto operating teams that provide world-class support to our founders, spanning research and engineering, security, talent &amp; people, legal &amp; regulatory, go-to-market, and a lot more.&mdash; AriannaSimpson.eth (@AriannaSimpson) <a href="https://twitter.com/AriannaSimpson/status/1529419370534952960?ref_src=twsrc%5Etfw">May 25, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



The crypto portfolio of a16z consists of several dozen companies, including big names like Dapper Labs, dYdX, OpenSea, Near, Solana, Phantom and Uniswap. The <a href="https://a16z.com/2022/05/24/investing-in-flowcarbon/" target="_blank" rel="noreferrer noopener">most recent addition</a> is Flowcarbon, which is building an on-chain carbon credit tokenization platform.



“Our frequent conversations with builders have given us the confidence to go big, and we’re grateful to be your partner,” Dixon wrote of the latest fund.



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Andreessen Horowitz Launches Largest Crypto Fund Ever With $4.5B

Ben Strack

<div id="highlights-block_6285148568e31" class="highlights">
 <ul>
 <li>Grellet and Gustave will target investments in DeFi, CeFi, Web3 infrastructure, layer-1 and layer-2 scalability and the creator economy</li>
 <li>Grellet is set to continue relationship with CoinFund in an advisory role</li>
 </ul>
 
</div>



Former executives at CoinFund and Aave have joined a venture capitalist firm seeking to expand its investments in Web3.&nbsp;



Vanessa Grellet, who joined blockchain-focused investment firm <a href="https://www.coinfund.io/" target="_blank" rel="noreferrer noopener">CoinFund</a> in May 2021, is now a managing partner at <a href="https://aglaeventures.com/" target="_blank" rel="noreferrer noopener">Aglaé Ventures</a>. Grellet will continue her relationship with CoinFund as an adviser.



She joined Aglaé Ventures with Jordan Lazaro Gustave, who was a founding member of FlamingoDAO and previously served as chief operating officer of liquidity protocol Aave.



The venture capital firm, which has bases in Paris, New York and San Francisco, invests in asset-light activities and growing tech companies at all stages. These include marketplaces, software-as-a-service (SaaS) companies, content platforms, developer and application tools, and digital-native brands.



Aglaé has invested in Airbnb, Lyft, Netflix, Slack and Spotify. Its investments range from 100,000 euros to 100 million euros. The company is backed by Agache (formerly Groupe Arnault), the controlling shareholder of luxury goods giant ​​Moët Hennessy Louis Vuitton (<a href="https://www.lvmh.com/" target="_blank" rel="noreferrer noopener">LVMH</a>).



“It’s been a very successful VC in Web2, but they were seeing a lot of things coming in Web3 and wanted to hire someone who is a specialist to manage that portion of their investments,” Grellet told Blockworks.



Grellet and Gustave will target investments in four sectors: decentralized and centralized finance, web3 infrastructure, layer-1 and layer-2 scalability, and the creator economy.



“We’ll both have a lot of operational experience to help the founders and get them from zero to one,” Grellet said.&nbsp;



Grellet was hired last year “to cement CoinFund as one of the most hands-on partners to early-stage teams building blockchain technology products,” according to a company statement at the time.



CoinFund President Christopher Perkins told Blockworks that Grellet will continue to work with the company in an advisory role. No one person will replace Grellet in her former role as head of portfolio growth, as CoinFund is restructuring the team.



The investment firm is “in build mode,” Perkins added, noting that it is seeking to bolster its post-investment management strategy by hiring across marketing and communications, talent acquisition and technical support.



Before CoinFund, Grellet spent four years as an executive director at ConsenSys, where she focused on driving adoption for Ethereum, strategic initiatives, alliances and channels. While there, she worked with LVMH teams on their <a href="https://consensys.net/blog/press-release/lvmh-microsoft-consensys-announce-aura-to-power-luxury-industry/" target="_blank" rel="noreferrer noopener">AURA project</a>, which aimed to serve the luxury industry with product tracking and tracing services based on Ethereum blockchain technology.



Grellet has also worked at PwC and as a corporate strategy executive at the New York Stock Exchange.



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Former Execs at CoinFund, Aave Join Aglaé Ventures

Sebastian Sinclair

<div id="highlights-block_628278934da65" class="highlights">
 <ul>
 <li>Funding from the $70 million Series A will go toward expanding its suite of products as well as its global operations</li>
 <li>The list of investors included a mix of both traditional and crypto-native firms, marking another instance of a convergence between mainstream and digital assets</li>
 </ul>
 
</div>



Digital assets trading infrastructure firm Elwood Capital said Monday it had raised a hefty sum in fresh capital from some of the world&#8217;s largest financial institutions.



Dawn Capital, Europe&#8217;s &#8220;largest&#8221; B2B venture capital firm by total assets under management ($1.5bn) and global banking giant Goldman Sachs co-led the $70 million Series A funding round, according to a <a href="https://www.prnewswire.com/news-releases/elwood-technologies-closes-70m-series-a-co-led-by-goldman-sachs-and-dawn-capital-301542867.html" target="_blank" rel="noreferrer noopener">press release</a>.



Barclays, BlockFi Ventures, Chimera Ventures, CommerzVentures, Digital Currency Group, Flow Traders&nbsp;and Galaxy Digital Ventures also participated in the round.



Funding from the round will go toward expanding Elwood&#8217;s product offerings and its global operations. Elwood&#8217;s platform offers clients access to an order execution management system as part of its crypto infrastructure suite of products.



A portfolio management system and access to market data as well as analytics also form a major part of the company&#8217;s offerings to institutional clients.



The list of investors participating in the round represents an intersection of traditional and crypto-native firms despite the industry&#8217;s <a href="https://cms.blockworks.co/terra-halted-again-exchanges-delist-spot-trading/" target="_blank" rel="noreferrer noopener">recent market turmoil</a>.



&#8220;The rich mix of investors participating in this raise reaffirms the movement of financial institutions working closely with their native digital asset technology providers,&#8221; Elwood&#8217;s CEO James Stickland said. &#8220;Together, we aim to provide broader mass market involvement in digital assets and cryptocurrency.&#8221;



Indeed, <a href="https://cms.blockworks.co/framework-ventures-launches-400m-defi-fund/" target="_blank" rel="noreferrer noopener">investment</a> from outside capital <a href="https://cms.blockworks.co/pantera-capitals-blockchain-fund-has-1b-in-commitments/" target="_blank" rel="noreferrer noopener">continues to flow</a> into startups and businesses in a bid to capitalize on the growth of promising technological and financial innovations.



&#8220;Our investment in Elwood was a natural fit given the business&#8217;s cutting-edge technology, experienced team and significant market opportunity,&#8221; Dawn Capital general partner Josh Bell said in the release. &#8220;Now is an important moment in Elwood&#8217;s evolution as its technology moves to the mainstream.&#8221;



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Dawn Capital, Goldman Sachs Plow $70M Into Crypto Infrastructure Provider

Jacquelyn Melinek

<div id="highlights-block_6227c52cd3343" class="highlights">
 <ul>
 <li>Bain Capital has about $155 billion in assets under management</li>
 <li>“The fund was oversubscribed by a little bit, but in the classic spirit of Bain Capital, we started with a modest fund size and plan to expand significantly from there,” Alex Evans, a partner at Bain Capital told Blockworks</li>
 </ul>
 
</div>



Asset manager Bain Capital has launched its first $560 million crypto fund, the company confirmed to Blockworks Tuesday.



The firm, which has about $155 billion in assets under management, launched the early-stage crypto-native fund and its new venture arm Bain Capital Crypto to take promising stakes in Web3 founders and builders, partner Alex Evans told Blockworks.



The capital will be invested mainly in crypto-focused infrastructure and DeFi. The team will assemble a portfolio of 30 new companies or protocols to invest in across the fund, Stefan Cohen, managing partner at Bain Capital Crypto, told Blockworks.



Evans and Cohen will co-lead the fund. For the time being, the team will focus on deploying this capital into the crypto ecosystem but may look into launching future funds, Evans said.



“The fund was oversubscribed by a little bit, but in the classic spirit of Bain Capital, we started with a modest fund size and plan to expand significantly from there,” Evans said.



This fund was created in response to the firm’s ongoing investments in the crypto space over the past seven years, Cohen said in a <a href="https://baincapitalcrypto.com/announcing-bain-capital-crypto/" target="_blank" rel="noreferrer noopener">post</a>.



Bain has invested in 14 DeFi (decentralized finance) and crypto infrastructure businesses to date, including B2B infrastructure platform <a href="https://cms.blockworks.co/zero-hash-raises-105m-to-bring-crypto-products-to-all-financial-companies/" target="_blank" rel="noreferrer noopener">Zero Hash</a>, asset manager <a href="https://cms.blockworks.co/private-equity-firm-kkr-invests-in-defi-and-blockchain-focused-parafi-capital/" target="_blank" rel="noreferrer noopener">ParaFi Capital</a> and crypto lender <a href="https://cms.blockworks.co/blockfi-closes-350m-series-d-round/" target="_blank" rel="noreferrer noopener">BlockFi</a>. In general, its venture arm <a href="https://www.baincapitalventures.com/portfolio/" target="_blank" rel="noreferrer noopener">invests</a> anywhere from $1 million of seed capital to $100 million in growth equity.



It’s also a large investor in Compound Finance, an algorithmic, autonomous interest rate protocol for developers, and has the <a href="https://compound.finance/governance" target="_blank" rel="noreferrer noopener">third highest</a> voting weight for the protocol’s governance. 



“Those crypto investments will stick with their capital venturist funds, we’re not transferring positions or anything like that,” Cohen said. “This fund is entirely a net-new portfolio we’re building, and we’re very focused on early-stage investments but have flexibility to buy liquid tokens, as well.”



Over the next 10 years, the team anticipates crypto getting integrated and embedded into traditional consumer and business software stacks and plans to invest in companies that will bridge protocols into established software ecosystems, Cohen said.&nbsp;



“We also believe that this crypto-native economy and services around it are going to grow quite quickly,” Cohen said. “We’re starting to see some of that with DeFi [decentralized autonomous organizations] that formed and have treasuries, which use the capital in the crypto economy. So, we think that the snowball effect will continue to accelerate and create entirely new sectors of activity supporting the crypto ecosystem.”



While a number of firms have invested in crypto for years, the heat has been ramping up in the past 12 months as crypto adoption and growth builds globally.&nbsp;



Last month, the 50-year-old investment firm Sequoia Capital launched a new <a href="https://cms.blockworks.co/sequoia-capital-is-raising-up-to-600m-in-new-sub-fund-to-focus-on-tokens/" target="_blank" rel="noreferrer noopener">$500 million to $600 million</a> sub-fund focused on liquid tokens and digital assets. Separately, the traditional venture capital firm Andreessen Horowitz, a16z, has dove deep into the digital asset world and plans to raise another crypto fund around <a href="https://cms.blockworks.co/andreessen-horowitz-looking-to-raise-4-5b-for-new-crypto-funds/" target="_blank" rel="noreferrer noopener">$4.5 billion</a>, more than double the size of its last <a href="https://cms.blockworks.co/andreessen-horowitz-launches-2-2b-crypto-fund/" target="_blank" rel="noreferrer noopener">$2.2 billion</a> crypto fund.



“The reality is, we felt like we couldn’t service this market well from a generalist venture fund,” Cohen said. “There will be lots of generalist venture firms that will try to access this space and invest in it, and we’re excited that they’re going to be putting capital into it, but we think to properly support founders you need to take the approach we’ve taken here.”



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Bain Capital Ventures Launches $560M Crypto-focused Fund as Ecosystem Booms

Michael Bodley

<div id="highlights-block_62212f46e2aa9" class="highlights">
 <ul>
 <li>The launch bucks the trend of generalist crypto venture capital startups</li>
 <li>The fund’s portfolio manager previously spent time at firms ConsenSys Ventures and Google</li>
 </ul>
 
</div>



As cryptocurrency-focused portfolio managers look to narrow their niches in a sweep toward specialization, a ConsenSys Ventures alum is prepping a venture capital fund fund launch focused on just one protocol.



Rune Bentien told Blockworks he expects to hold a first capital close of between $10 million to $15 million for his United Kingdom-based MOVE in late March or early April. The plan is to raise about $40 million overall, pending a couple of additional closes later this year.&nbsp;



MOVE backs exclusively startups in the NEAR Protocol ecosystem, a decentralized finance blockchain that aims to harness a network of computers to create a cloud computing platform.



The NEAR token was trading at a little over $11 midday Thursday, a 165.6% increase from a year ago. Investors have been drawn to the proof-of-stake blockchain’s use of sharding, which splits the blockchain’s data into easily digestible pieces divided among the network’s nodes that validate transactions.



Bentien and other institutional investors deploying capital to NEAR projects say the blockchain is still in its early days and has a solid growth trajectory ahead.



“This is still so early,” Bentien said.”You have less than 30,000 full-time developers on Web3.”



The launch is one of a <a href="https://cms.blockworks.co/anon-cryptopunk-owner-launches-nft-fund-betting-on-ability-over-identity/" target="_blank" rel="noreferrer noopener">growing</a> <a href="https://cms.blockworks.co/miami-family-office-backing-nft-fund-launch-helmed-by-fine-art-collector/" target="_blank" rel="noreferrer noopener">number</a> of new vehicles keying in on a single corner of crypto  as limited partners increasingly look for specialization as a means to generate alpha.



A couple of years ago, industry participants say, crypto’s market cap was low enough that focusing on one niche wasn’t a viable way to deploy significant capital. That’s changing.



The NEAR team, Bentien said, has a “huge technical advantage” over other blockchains with its sharding technology and has been drawing the interest of institutional investors looking for the next big thing. Adding to the appeal: The cryptocurrency says it’s carbon neutral.



Bentien, who ran one of the first 50 nodes on NEAR, said the blockchain is primed for widespread adoption.



“Assuming they can stay focused in 2022, I think we have an exciting few years ahead of us,” Bentien said.



The startup plans to deploy capital “as early as possible,” Rune said, concentrating on pre-seed, seed and Series A investment rounds. He expects many of the investments to back startups developing decentralized applications on the NEAR blockchain.&nbsp;



The team is now warehousing five to 10 investments that will become part of its portfolio once the fund launches. To start, MOVE plans to put about two-thirds of its capital into equity plays, with the remaining third earmarked for token investments. That proportion is expected to flip over the next year or two.



MOVE plans to have five staffers, including some from crypto-native backgrounds, on board around its launch. They’re based in Africa, Europe and the US. Bentien declined to disclose their identities because some are still negotiating exits with current employers.



The startup also has one venture partner on board.



The team will take the helm of a fund with a five-year lockup period — a shorter duration than a good number of other venture capital funds — and plans to take limited partner contributions in the form of cryptocurrencies, including NEAR.



Fiat will not be accepted for limited partner contributions, a potential barrier to entry for traditional investors accustomed to conducting all their financial dealings in dollars — though support for commonly used stablecoins, such as USDC, could help.&nbsp;



Before working for ConsenSys, Bentien spent nearly nine years in business development roles at Google. He has also worked for a number of startups.



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New Crypto Venture Capital Fund Investing Only in NEAR in Nod to Specialization

Casey Wagner

<div id="highlights-block_621fd2d01a223" class="highlights">
 <ul>
 <li>The intensifying conflict between Russia and Ukraine has highlighted the use case around cybersecurity and Web3, industry experts say</li>
 <li>Venture capitalists are going to want in on the growing space, analysts say</li>
 </ul>
 
</div>



Increasing concern over the escalating conflict in Ukraine is likely to lead to a renewed push into decentralized finance and Web3 investments, experts say.



While crypto has always faced criticism for its bad actors, according to Jessica Rabe, co-founder of DataTrek Research, digital assets are still a necessary “decentralized way to store and transfer capital.”



“There are too many positive and lucrative opportunities with the blockchain and Web3 that venture capitalists will want to keep trying to capitalize on,” Rabe said.



Venture capital investments into blockchain startups have hit $3.8 billion so far in 2022, on pace to surpass 2021’s total of $17.9 billion, according to Crunchbase data. Crypto startups received $2.1 billion in 2020 and $2.9 billion in 2019.



“We expect VCs to keep putting money to work in the blockchain and Web3 amid the push to a decentralized internet and finance,” Rabe said. “Big Tech companies dominate today’s internet, so Web3 offers the opportunity to develop the next major online platforms and apps to drive engagement and therefore profits.”



The war in Ukraine <a href="https://cms.blockworks.co/crypto-exchanges-weigh-blocking-russian-accounts-as-sanctions-intensify/" target="_blank" rel="noreferrer noopener">underscores the need</a> for decentralized solutions, according to Hunter Horsley, CEO of crypto asset manager Bitwise.



“As it pertains to Web3, I think [the conflict] is absolutely galvanizing entrepreneurs to work on building the decentralized, permissionless systems of the future,” Horsley said. “I think you&#8217;ll see more projects and likely investments in identity and media and nonprofit fundraising and DAOs, and a renewed conviction in the importance of the existing platforms like Bitcoin, Ethereum and layer-1s and DeFi.”



Cybersecurity in particular is expected to see major growth, Rabe said, “especially with hacks and cyber threats stemming from the Russia and Ukraine conflict shining a light on its importance.”



The three largest cybersecurity-focused ETFs have all increased in assets under management by more than 9% over the past five days. The <a href="https://finance.yahoo.com/quote/BUG/" target="_blank" rel="noreferrer noopener">Global X Cybersecurity ETF</a> is up 11.4%.



“VCs putting more money to work in cybersecurity is positive for investors in public markets, who have taken notable interest in the space since Russia invaded Ukraine,” Rabe said.



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Ukraine Crisis Primes Crypto, Cybersecurity for Venture Funding Boost, Experts Say

Sam Martin

<div id="highlights-block_617725d07bf3f" class="highlights">
 <ul>
 <li>Polkdaot (DOT) and Terra (LUNA) are among the most commonly held assets in professional funds&#8217; portfolios.</li>
 <li>BTC price stays below $60,000 as inflation runs hot</li>
 </ul>
 
</div>



Many of the top crypto venture capital firms hold Polkadot (DOT), Terra (LUNA), Near (NEAR) and Oasis Network&#8217;s ROSE coins, according to a <a href="https://messari.io/article/messari-fund-analysis-q3-21-examining-liquid-portfolios-of-crypto-funds" target="_blank" rel="noreferrer noopener">Messari report</a>. 



Bitcoin (BTC) continues to tread water in the midst of inflation and decoupling from the NASDAQ. 



Short-term BTC holders could prove to be a headwind over the coming weeks if they look to close positions on any rallies.



The short-term holder realized price now sits near $53,000, according to Glassnode. A loss of this price level would signal further downside. 



Bored Ape Yacht Club has seen its floor price drop after last week&#8217;s strong rally.



<h3>Latest in Macro:</h3>



<ul><li>S&amp;P 500: 4,682, -0.32%</li><li>NASDAQ: 15,854, -1.26%</li><li>Gold: $1,805, -2.14%</li><li>WTI Crude Oil: $76.36, +0.55%</li><li>10-Year Treasury: 1.63%, +0.094%</li></ul>



<h3>Latest in Crypto:</h3>



<ul><li>BTC: $56,924, -5.54%</li><li>ETH: $4,071, -6.84%</li><li>ETH/BTC: 0.0724, -0.28%</li><li>BTC.D: 42.71%, -0.51%</li></ul>



<h3>DOT a favorite for crypto funds </h3>



Messari conducted its <a href="https://messari.io/article/messari-fund-analysis-q3-21-examining-liquid-portfolios-of-crypto-funds" target="_blank" rel="noreferrer noopener">Q3 analysis of top holdings among leading digital asset investment firms</a>. The analysis tracked 53 firms and their holdings, which included 228 different assets.



Due to the public nature of blockchains, the holdings of prominent investors are accessible to anyone. 



&#8220;Investing like a crypto fund – venture or hedge – has never been easier,&#8221; the <a href="https://messari.io/article/messari-fund-analysis-q3-21-examining-liquid-portfolios-of-crypto-funds" target="_blank" rel="noreferrer noopener">Messari report</a> states. &#8220;An average investor can quite literally copy-trade these portfolios and mirror any of their favorite funds.&#8221; 



It is important to note, however, that many funds are given the chance to invest in projects during their early stages in exchange for tokens at lower valuations with a <a href="https://www.investopedia.com/terms/v/vesting.asp" target="_blank" rel="noreferrer noopener">vesting period</a>. This means that the tokens are not liquid outright, but instead unlocked over a predetermined amount of time.



&#8220;Most of these funds typically receive private placements at far cheaper valuations, and the short-term focused funds are waiting to liquidate a portion of their tokens once vested to record profits for their investors,&#8221; the report adds.



Twenty-one of the 53 funds in the report, or 39%, are invested in DOT, making it the most commonly held digital asset among the portfolios tracked. This means that large investors will likely determine which projects win <a href="https://cms.blockworks.co/polkadot-reaches-major-milestone-with-launch-of-parachain-auctions/" target="_blank" rel="noreferrer noopener">Polkadot&#8217;s parachain auction slots</a>. 



BTC and ETH were excluded from the study.



ROSE, NEAR and LUNA tied for the second-most commonly held asset in the portfolios. 



<div class="wp-block-image"><figure class="aligncenter size-full"><img decoding="async" loading="lazy" width="987" height="553" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/commonly-held-assets.png" alt="" class="wp-image-11654" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/commonly-held-assets.png?w=987 987w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/commonly-held-assets.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/commonly-held-assets.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/commonly-held-assets.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/commonly-held-assets.png?w=466 466w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/commonly-held-assets.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/commonly-held-assets.png?w=80 80w" sizes="(max-width: 987px) 100vw, 987px" /><figcaption>Source: Messari</figcaption></figure></div>



The most popular digital asset category was smart contract platforms, Messari found, followed by decentralized exchanges (DEXs).



<figure class="wp-block-image size-full"><img decoding="async" loading="lazy" width="987" height="553" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/smart-contracts-.png" alt="" class="wp-image-11655" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/smart-contracts-.png?w=987 987w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/smart-contracts-.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/smart-contracts-.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/smart-contracts-.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/smart-contracts-.png?w=466 466w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/smart-contracts-.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/smart-contracts-.png?w=80 80w" sizes="(max-width: 987px) 100vw, 987px" /><figcaption>Source: Messari</figcaption></figure>



<h3>BTC struggles continue</h3>



<meta charset="utf-8">BTC surged to nearly $59,000 this morning on <a href="https://cms.blockworks.co/jerome-powell-secures-second-term-as-inflation-persists/" target="_blank" rel="noreferrer noopener">news</a> that President Biden would elect Jerome Powell for a second term as chairman of the Federal Reserve. BTC was unable to hold onto any gains, as price was hovering between $56,000 and $57,000 later in the afternoon. 



With <a href="https://cms.blockworks.co/bonds-sell-off-on-6-2-cpi-print-bitcoin-liquidations-spur-correction-markets-wrap/" target="_blank" rel="noreferrer noopener">inflation running hot</a>, BTC investors who were seeking a hedge against inflation are likely stifled by the recent BTC pullback.



&#8220;As long-term money enters the pool, it brings some very specific implications that anyone hedging with bitcoin should remain cognizant of,&#8221; <a href="https://www.linkedin.com/in/kay-khemani/" target="_blank" rel="noreferrer noopener">Kay Khemani</a>, managing director at <a href="http://spectre.ai/" target="_blank" rel="noreferrer noopener">Spectre.ai</a>, told Blockworks. &#8220;The violent gyrations that bitcoin has historically seen will become less frequent, while the asset will become more susceptible to classical schools of thought. This could ultimately result in bitcoin as a mainstream asset at the mercy of institutionalist buy-or-sell ideologies, which are dictated by the very elite 1% that BTC was intended to disrupt.”



The correlation between BTC and the NASDAQ has been strong since the markets crashed in early 2020. The correlation has abated in recent weeks, as the NASDAQ continues to notch record highs and BTC consolidates below $60,000. 



<div class="wp-block-image"><figure class="aligncenter size-large"><img decoding="async" loading="lazy" width="1024" height="576" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/nasdaq-1024x576.jpg" alt="" class="wp-image-11658" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/nasdaq-1024x576.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/nasdaq-1024x576.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/nasdaq-1024x576.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/nasdaq-1024x576.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/nasdaq-1024x576.jpg?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/nasdaq-1024x576.jpg?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/nasdaq-1024x576.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/nasdaq-1024x576.jpg?w=1200 1200w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Source: Bloomberg</figcaption></figure></div>



<h3>On-chain metrics</h3>



According to data from <a href="https://insights.glassnode.com/the-week-onchain-week-47-2021/" target="_blank" rel="noreferrer noopener">Glassnode</a>, 15% of the BTC supply is currently being held at a loss. Roughly 10% of the supply last changed hands at $60,000 or higher, which could prove to be a challenge in the coming weeks as new market entrants may look to cut their losses on any rallies.



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="576" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/pirce-clusters-1024x576.png" alt="" class="wp-image-11660" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/pirce-clusters-1024x576.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/pirce-clusters-1024x576.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/pirce-clusters-1024x576.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/pirce-clusters-1024x576.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/pirce-clusters-1024x576.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/pirce-clusters-1024x576.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/pirce-clusters-1024x576.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/pirce-clusters-1024x576.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/pirce-clusters-1024x576.png?w=1600 1600w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Source: Glassnode</figcaption></figure>



Short-term holders, normally consisting of traders and new market entrants, are sitting at an average cost basis of $53,000. If this level is lost, it would signal the potential for increased sell pressure prior to an eventual capitulation. 



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="576" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/STH-cost-basis-1024x576.png" alt="" class="wp-image-11666" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/STH-cost-basis-1024x576.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/STH-cost-basis-1024x576.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/STH-cost-basis-1024x576.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/STH-cost-basis-1024x576.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/STH-cost-basis-1024x576.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/STH-cost-basis-1024x576.png?w=464 464w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/STH-cost-basis-1024x576.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/STH-cost-basis-1024x576.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/STH-cost-basis-1024x576.png?w=1600 1600w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Source: Glassnode</figcaption></figure>



Short-term holders (STHs) hold roughly 3 million of the BTC supply. Glassnode data indicates that this figure is smaller than normal while bitcoin is hovering close to all-time highs. 



A potential reason for this anomaly is the parabolic rise in BTC&#8217;s price. Today, investors aren&#8217;t sitting on 10x to 100x gains like in previous market cycles, and the amount of capital inflows required to move more than 6 million BTC is drastically higher than in 2017 and 2018. 



<figure class="wp-block-image size-large"><img decoding="async" loading="lazy" width="1024" height="582" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/STH-supply-1024x582.png" alt="" class="wp-image-11686" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/STH-supply-1024x582.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/STH-supply-1024x582.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/STH-supply-1024x582.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/STH-supply-1024x582.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/STH-supply-1024x582.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/STH-supply-1024x582.png?w=459 459w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/STH-supply-1024x582.png?w=385 385w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/STH-supply-1024x582.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/STH-supply-1024x582.png?w=1600 1600w" sizes="(max-width: 1024px) 100vw, 1024px" /></figure>



<h3>Non-Fungible Tokens (NFTs)</h3>



Trading data from <a href="https://opensea.io/rankings" target="_blank" rel="noreferrer noopener">OpenSea</a> and <a href="https://solanalysis.com" target="_blank" rel="noreferrer noopener">Solanalysis</a> of some of the top Solana and Ethereum projects can be found below:



<div class="wp-block-image"><figure class="aligncenter size-large"><img decoding="async" loading="lazy" width="1024" height="339" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-22-at-4.33.00-PM-1024x339.png" alt="" class="wp-image-11688" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-22-at-4.33.00-PM-1024x339.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-22-at-4.33.00-PM-1024x339.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-22-at-4.33.00-PM-1024x339.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-22-at-4.33.00-PM-1024x339.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-22-at-4.33.00-PM-1024x339.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-22-at-4.33.00-PM-1024x339.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-22-at-4.33.00-PM-1024x339.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-22-at-4.33.00-PM-1024x339.png?w=1228 1228w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Top Ethereum Projects</figcaption></figure></div>



<div class="wp-block-image"><figure class="aligncenter size-large"><img decoding="async" loading="lazy" width="1024" height="284" src="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-22-at-4.33.09-PM-1024x284.png" alt="" class="wp-image-11689" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-22-at-4.33.09-PM-1024x284.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-22-at-4.33.09-PM-1024x284.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-22-at-4.33.09-PM-1024x284.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-22-at-4.33.09-PM-1024x284.png?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-22-at-4.33.09-PM-1024x284.png?w=470 470w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-22-at-4.33.09-PM-1024x284.png?w=389 389w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-22-at-4.33.09-PM-1024x284.png?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2021/11/Screen-Shot-2021-11-22-at-4.33.09-PM-1024x284.png?w=1199 1199w" sizes="(max-width: 1024px) 100vw, 1024px" /><figcaption>Top Solana Projects </figcaption></figure></div>



If you made it this far, thanks for reading! I am looking forward to catching up on Tuesday.



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