Welcome to our monthly newsletter. Every month we create an overview of the performance of our Hodl funds, the developments within Hodl, and the latest cryptocurrency news.
November was a dynamic month for cryptocurrency. Bitcoin had its first protocol update since 2017, Metaverse projects experienced tremendous growth, and financial markets fell as a new variant of the coronavirus was discovered.
On November 14th, the Bitcoin protocol had its first update in 4 years. ‘Taproot’ is known for the improvements made to ensure its users’ privacy. One of the core aspects of the Bitcoin protocol. Another key element added to the protocol is the ability for developers to build Smart Contracts on top of the network. This allows for a broader use-case, which previously was reserved for other networks.
November was a big month for metaverse projects. By announcing its rebranding to Meta, Facebook led the market segment to exponential growth. A metaverse is a digital universe where people can meet. It is an ideology of what the future of the internet will look like, combining augmented and virtual reality.
In a recently published report, cryptocurrency investment giant Grayscale predicts a market cap of 1 Trillion dollars for the Metaverse market. Projects as Sandbox, Decentraland, and Gala benefitted from this news and experienced rapid growth. Our funds benefitted from the growth as well. The Consensus fund and Genesis fund both participated in the seed round of Revolve Games: a cryptocurrency that focuses on providing games in the Metaverse.
Similar to earlier this year with the discovery of the Delta variant, financial markets corrected as the new Omnicron variant was discovered. As a response, the cryptocurrency market corrected as well. Bitcoin fell over 20% in a risk-off movement. On-chain data provided by Glassnode however implicated that the large holders of Bitcoin were increasing their positions during the dip, showing a positive sentiment in the market.
From a macroeconomic standpoint, more and more investors see a rise in inflation. Previously the Fed called the inflation transitory. However, in a recent statement, Jerome Powell, head of the Federal Reserve, stated that it is time to ‘retire’ the word transitory.
The rise in inflation is also seen in Europe. In October, The Netherlands experienced the highest rate of inflation in 10 years. Belgium, Germany, and Spain saw their inflation rise to over 5%. The escape to hard assets, such as Bitcoin, continues. Below you can see the decreasing value of a dollar expressed in Bitcoin.
In November, the Hodl funds outperformed the declining market. Despite the strong market correction, the Hodl.nl Consensus Fund and Hodl.nl Genesis Fund both closed above the all-time highs of the previous month. The Hodl.nl Oracle Fund experienced a slight decline.
The results of November 2021:
Hodl has officially become a member of the Blockchain Netherlands Foundation (BCNL). BCNL is a community driven by individuals, companies, and crypto projects which represents the interest of the ecosystem in the Netherlands. By partnering up with BCNL, we want to support the adoption, education, and regulation of the sector. BCNL is also the organizer of the Dutch Blockchain Week. We’re proud to announce that Hodl has been nominated for the BCNL Community Award.
Every month we highlight a cryptocurrency and this month we focus on Immutable X (IMX).
Over the last few years, the Ethereum Network has seen tremendous growth. The network has welcomed millions of users due to its capability of hosting Decentralized Finance (DeFi) and Non-Fungible Tokens (NFTs). This has led to an exponential growth in transactions, causing the network to get congested. Users of the Ethereum Network increase their fees to get their transactions processed first, occasionally leading to fees higher than the traded NFT’s themselves. Immutable aims to end this.
Immutable X is a Layer 2 scaling solution built on top of Ethereum that aims to have fast, gas-free peer-to-peer transactions to improve the user experience of NFT trading. Their unique technology allows for the processing of transactions outside of the Ethereum Network while maintaining its decentralization and security.
On November 14th, Bitcoin’s Taproot update went live. Taproot is Bitcoin’s first update in 4 years. Two key cornerstones of the update are found in the privacy and Smart Contracts. Individual bitcoin addresses are better hidden in on-chain data, but won’t compromise anonymity once the address is known. Privacy is one of Bitcoin’s core aspects and therefore the update is warmly welcomed by its users.
Taproot also allows programmers to build smart contracts on top of Bitcoin’s blockchain, which is now mostly done on popular chains like Ethereum and Binance Smart Chain. The update makes Smart Contracts on Bitcoin’s network severely smaller and therefore cheaper in its use. Smart Contracts are designed to cut out the middle-man via agreements that are encoded in the smart contract. The contracts are structured in an ‘If this, then that’ manner, which allows for automatic execution when a certain requirement is met.
Earlier this month Paradigm has announced its 2.5 Billion US Dollar Venture Fund to support upcoming cryptocurrency projects and protocols. Paradigm Investment Fund is known for supporting the disruptive Crypto and Web3 companies of tomorrow. The 2.5 Billion Dollar Venture Fund is the largest cryptocurrency fund ever raised. Paradigm’s new fund will invest alongside their main fund, which has been investing in cryptocurrencies since 2018.
The president of El Salvador, Nayib Bukele, has recently announced plans to build the world’s first ‘Bitcoins City”. The construction of the city will be funded through the 1 Billion Dollar “Bitcoin Bond”, which the government is planning to issue in 2022. Half of the funds raised through the bonds will be used for acquiring Bitcoin and the other half for the construction of the city.
Bitcoin city will be located along the Gulf of Fonseca, near a volcano. The El Salvador government aims to utilize geothermal energy for the mining of Bitcoin, as well as provide the city with its required energy resources, making Bitcoin City ‘fully ecological’.
Grayscale, the world’s biggest cryptocurrency fund, announced in its last report that it expects the Metaverse to grow to a trillion-dollar market capitalization. Over the last year, this market has seen exponential growth. The number of active wallets in this segment grew from 15K to 43K, leading its market cap to an estimated value of 27 billion US dollars. Organizations with a Metaverse potential have an estimated value of 15 trillion US dollars, showing the market’s growth potential. The metaverse is a digital universe where people can meet. NFTs, DeFi, and gaming play a big role in this new world.
Receive our newsletter to stay on top of the crypto market.