BlackRock Announced Partnership with CoinBase, DeFi TVL Dropped 66% from Peak, Tesla EV Wars
86% respondents wanted crypto, Tesla's Capex, DeFi Innovation remains steady despite drop in Crypto prices
By Terrence Hooi
Chief Investment Strategist
This Substack Post does not take into account nor does it provide any tax, legal or
investment advice or opinion regarding the specific investment objectives or
financial situation of any person.
1.) Coinbase And BlackRock Partnership
This week, BlackRock ( $BLK) CEO Larry Fink announced a partnership with Coinbase to offer its institutional clients access to cryptocurrencies.
BlackRock’s Aladdin, with nearly $22 Trillion under management and 55,000 investment professionals will be a strategic move for BlackRock to offer the fast growing asset class to its current client base. According to BlackRock’s existing client base, 86% are considering adding crypto assets to their holdings.
Singular’s Take: With the recent grueling drop in overall crypto prices, followed by the downfall of CeFi players like Voyager and Celsius, Singular believes more clarity in regulatory framework could unlock trillions of dollars into the the crypto asset class in the coming years.
2.) Tesla Continues to Dominate EV as GM, and Ford increases EV Production
General Motors $30 billion EV plan budget on its roadmap to build 30 all electric EVs by 2025 with its Ultium battery platform is showing competition is heating up in the EV industry. Furthermore Ford and Volkswagens partnership the year with about $50 billion budget is looking to double its production plans to produce 1.2 Million EVs over the next six years.
However, Tesla’s EV spending based on Capital Expenditure (Capex) still supersedes both auto giants and it is set to increase 14.95% year on year . According to Bloomberg, Tesla’s EV Capex is positioned to supersede GM and Ford’s.
Singular’s Take: Tesla CEO Elon Musk is aiming to build another 12 Gigafactories with a run rate of 2 million EVs by end of 2022 following its Germany’s 250 Acre Gigafactory now churning out EVs in Berlin. Expect Tesla to dominate the EV space as Tesla is still having the highest sequential Capex growth according to reports.
3.) Decentralized Finance Total Value Locked Dropped by 66% But Growth Remains Steady
Total value locked or TVL in the crypto market is one of the metrics used to gauge the amount of funds deposited into Decentralized Finance (DeFi). Although the amount of TVL dropped from $160 billion mid April to this month about $70 billion, the overall DeFi industry remains resilient.
With the current rapid innovation in the DeFi Space, Layer-2 scaling solutions and venture capital investments into the space remains strong. Think about layers 2s like Visa’s daily micro transaction system. Instead of taking transactions from thousands of vendors like your Starbucks coffee at once, Visa puts them into batches to be settled in the banking system at regular intervals to prevent data from clogging the network.
Layer 2s and zk-Rollups work in similar ways with the goal of making the transactions more seamless and practical for the average user.
Singular’s Take: The current Crypto winter is not the end of DeFi industry. Expect Layer-2 chains to process new transactions in DeFi to accelerate and taking much lower fees for decentralized applications.
Singular’s Action: We’re bullish on Layer-2s like Optimism and zk-Rollups solutions will soon improve users experience and could unlock financial tools for the next 1Bn unbankable globally.
TRADFI UPDATE
"Peak inflation" already priced in the market
Commodity prices down
Nasdaq up 17% (Tech rebound remains strong)
U.S. 10 year down from 3.5% to 2.7%
CEFI UPDATE
Coinbase reported larger than expected loss
Insitutional clients trading
Coinbase losses amounted to $1.1Bn
Coinbase placing big bets on upcoming Ethereum’s “The Merge”
DEFI UPDATE
Ethereums “The Merge” is less than 39 days
Social giant Reddit looking to use Layer 2 and FTX for community tokens
Ethereum transaction fees lowest in 2 years
TradFI👉Traditional Finance
CeFi👉Centralized Finance
DeFi 👉Decentralized Finance
See you again next week!