Market Direction: The crypto market in June is struggling to show signs of improvement. On a macro level, the Federal Reserve continues to send strong signals, and there are no new hot topics driving speculation. Mainstream currencies are following the news and experiencing significant volatility. The altcoin sector is also struggling, with a clear downward trend in the sector and controversies arising between VC tokens and exchanges.
Looking at the hot events of June, it can be considered the month of airdrops, with ZKsync, LayerZero, and Blast all releasing airdrops that sparked discussions in the market about the industry. On the other hand, the hype around Ethereum spot ETFs is coming to an end, with predictions for new developments in early July. Solana ETF is following closely, but due to SOL’s security classification and limited fund inflows, market expectations are generally pessimistic.
Turning to domestic news, the new regulations for licenses in Hong Kong have reached their one-year anniversary, with 11 trading platforms approved by the Securities and Futures Commission to become license applicants as the transition period comes to an end.
Policy Direction: Up to the end of June 2024, there have been 60 blockchain-related policies introduced in China. This month, following the policy release path led by Shanghai, the city has once again announced three policies. Despite Shanghai’s late issuance of specific measures in the blockchain sector, its clear development path, strong executability, and government support have propelled it to the forefront of China’s blockchain industry. With 61 units in the city confirming a total of 83 blockchain construction needs based on the Pujiang Blockchain Infrastructure, Shanghai has achieved rare incremental growth in the current context of declining blockchain construction demand.
Investment Direction: There were 97 blockchain events globally this month, a decrease of 38.21% compared to the previous month. The disclosed investment amount was 69.86 billion yuan, an increase from the previous month’s 6.38 billion yuan, with an average financing increase of 80% to 0.72 billion yuan. Overall, there has been a significant decrease in the number of events while the amount has increased, largely driven by large financing, indicating a shift in focus towards more competitive projects. Digital currencies led the way this month, with 15 events totaling 29.69 billion yuan, an increase of 180% compared to the previous month. Cefi projects also showed an upward trend, with financing of around 1.54 billion yuan. Another growing sector is blockchain games, with 14 events receiving investment totaling 4.24 billion yuan, a 13.98% increase from the previous month.
Application Direction: Discussions have arisen in the market surrounding the advantages and disadvantages of closed-loop business models in the blockchain ecosystem. For core enterprises with economies of scale, a closed-loop ecosystem is beneficial for control and can create a strong narrative for the chain owner. However, for node enterprises, there may be inherent suppression, such as in common supply chain scenarios where the chain owner company may have better control over information and fund flows, potentially leading to extended payment terms for suppliers. Presently, the blockchain industry is progressing slowly, with few mature use cases beyond common applications like certification, supply chain finance, and traceability. The main obstacles lie not only in technological bottlenecks but also in the business models.
CBDC Direction: While China is making rapid progress with its digital yuan, global development of central bank digital currencies (CBDC) faces numerous obstacles. Despite 134 countries and regions, accounting for 98% of global GDP, implementing CBDCs, progress has been slow due to concerns over privacy and security. In Europe, even with promises of anonymity, hash functions, and encryption to prevent tracking of individual transactions, and restrictions on the use of consumer financial data without consent, public opposition persists. In the United States, CBDCs have become a contentious issue, with discussions even reaching the presidential level. Despite differing values, the development of global CBDCs can be seen as a strategic product due to the long-standing dominance of the US dollar and seigniorage tax. Developed economies are still exploring while controversy-prone Middle Eastern countries and developing nations with weak financial infrastructure and a strong desire to protect monetary sovereignty are making relatively faster progress, leading to a divergence in CBDC development paths.
Excerpt from the Monthly Report:
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