🧘‍♂️$1 Billion Valuation

Market Meditations | July 27, 2021

Don’t worry, we explain it all

Dear Meditators

It’s been a busy week in the crypto markets. Today, we cover: 

  • ? NFT marketplace OpenSea becoming the latest crypto unicorn 

  • ? Vitalik Buterin’s new adventure 

  • ? Crypto exchange FTX’s stance on leverage

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Here’s 5 things you should know about the crypto markets today:

Our Market Meditations are longer format educational segments. Each letter features a Market Meditation which will deep dive and analyse a relevant crypto event, theme or tool. 

? Seas of Unicorns

? NFT marketplace OpenSea has become the latest crypto unicorn. It recently announced a $100 million Series B funding round led by venture capital firm Andreessen Horowitz at a valuation of $1.5 billion. Let’s unpack this statement: 

  • Non-fungible tokens or NFTs are a special type of token that represent a unique asset like digital art, in-game items and other collectibles. For more on this, check out our NFT Guide.

  • Unicorn status is attributed to firms that are valued at over $1 billion. Other crypto unicorns include Coinbase and Chainalysis.

  • Valuation is the analytical process of determining the current (or projected) worth of an asset or a company. There are many considerations when it comes to valuation: business’s management, the composition of its capital structure, the prospect of future earnings, and the market value of its assets, among other metrics.

  • Series B funding will require some more explanation. Seed Funding typically represents the first official money that a business venture or enterprise raises. Once a business has developed a track record that company may opt for Series A funding in order to further optimize its user base and product offerings. Series B rounds are all about taking businesses to the next level, past the development stage. Businesses that make it to Series C funding sessions are already quite successful. These companies look for additional funding in order to help them develop new products, expand into new markets, or even to acquire other companies. 

? How do we interpret all this? On the surface, there has been a general cool down of hype towards NFTs over the past few months. Likely driven in part by more bearish market conditions. Digging below the surface, this latest funding round shows significant interest in the growth of one of the top NFT marketplaces in the industry.

✅ TIP: DappRadar can be used to track, analyse and discover decentralised applications (dapps). Using the data provided on NFTs, we can see that OpenSea is 2nd in marketplaces by volume. Surpassed only by Axie Infinity.

? What is Axie Infinity? Why is it the 1st NFT marketplace by volume and traders? Find out why on Thursday. We’ll be sharing a guide on playing and earning money on Axie Infinity.

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? Stoner Cats 

Vitalik Buterin has just been cast in an NFT Cartoon called “Stoner Cats”. But who will Vitalik not be starring in the show with?

  1. Mila Kunis

  2. Ashton Kutcher

  3. Chris Rock

  4. Seth Rogan

  5. Jane Fonda

? Time’s Up for 100X?

FTX CEO Sam Bankman-Fried (SBF) announced on Sunday that his exchange would limit leverage to maximum 20x. Less than 24 hours later, Binance’s CEO also tweeted a similar message. This follows Huobi Global’s move in June to chop their maximum leverage from 125x to 5x. Points to note:

  • Business Case: according to SBF, leverage above 20x makes up “way less than 1%” of its volumes and positions. By taking a short-term hit on the tail-end of its revenue, an exchange may increase overall revenue in the long-term as more users stay in the game longer.

  • Price Action: when exchanges remove high-leverage, users are theoretically less likely to be liquidated due to sudden price movements. This may help to reduce price volatility to some extent, especially if it delays the onset of cascading liquidation.

  • Regulation & Reputation: a move like this signals good intent in terms of consumer protection in a space with an uncertain path forward in regulation. With FTX planning to publicly list one day, investors in the recent series B fundraising may also have been looking at the parallels with Coinbase, who have limited (pro) traders to 3x leverage.

Overall, we believe this is a positive development for the crypto space that will help traders and investors build (and keep!) wealth while protecting their mental health – two things we strive for! 

? If you’d like to understand more about what leverage and margin trading is, check out section 3 of our Profit Protection Guide here and our All in One Guide to Using Leverage

4. Seth Rogan

Unfortunately Seth Rogan is not part of the cast, however the maker of Family Guy Seth McFarlane is. This show is another step forward for NFTs. Created, produced and acted in by Mila Kunis. In order to watch the show you must purchase one of their NFT’s to unlock the episodes. Each NFT is selling for 0.35 ETH (approximately $750) Vitalik’s character has been named Lord Catsington, a taxidermied cat that acts as a spirit guide to the others. 

The question is: will you be watching this new show?

At Market Meditations, we firmly believe that generational wealth should be accessible to everyone. To that end, we’re delighted to be partnered with Nexo: one of the most user-friendly crypto lending and earning platforms in the industry. 

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??‍♂️✍️ Stories in this newsletter were written by Isambard FA, Nick T., Max P,. Kimia K., Ellen B. and Koroush AK. Graphics were produced by Gerasimos P.

Not financial or tax advice. The content in this newsletter is fo informational purposes only. Nothing in this email is intended to serve as financial advice. We are not financial advisors. Every investment and trading move involves risk. Do your own research when making a decision. See our important security disclaimers here

Disclosure. Some of the links we’ve included are affiliate, they give you rewards and discounts and earn us a commission. Additionally, the Market Meditator writers hold crypto assets. See our investment disclosures here.