Good morning. What is happening:
Prices: Bitcoin and other cryptocurrency prices have fallen along with other risk assets amid concerns that the US economy is not slowing down enough.
Informations: Is Taiwanese tech maker HTC betting too much on Metaverse’s success? It is reported that the company wants to introduce the virtual headset unit to the public in the United States
CoinDesk Market Index (CMI)
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The S&P 500 closes daily
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Treasury income 10 years
BTC/ETH quotes for CoinDesk Indices; gold is the COMEX spot price. Prices as of 4:00 p.m
Bitcoin has a sinking feeling
by James Rubin
Cryptocurrency markets didn’t like the sound of good economic news pushing prices lower on Monday.
While Bitcoin has breached its $17,000 support over the past six days, it has fallen 1.1% over the past 24 hours. The largest cryptocurrency by market capitalization, the cryptocurrency exchange, has recovered from the turmoil in mid-November following the FTX implosion, although it is subject to smaller headwinds that are dipped and raised by smaller increases in larger macroeconomic events.
On Monday, the Institute for Supply Management’s unexpectedly strong November services index rekindled fears that the U.S. economy will require the U.S. central bank to administer a longer-term dose of tough interest rate hikes to consumer prices than expected in mid-November. The index fell. The ISM services report came just three days after a hot jobs report raised concerns that the economy is not contracting enough and that inflation will remain problematic. In recent months, inflation concerns have often dictated the performance of asset markets.
“Bitcoin’s earlier gains evaporated after a warm ISM services report bolstered bets that the Fed could tighten more than markets are currently pricing in,” wrote Edward Moya, chief market analyst at currency market maker Oanda.
Ether recently traded hands above $1,260 at the same time, down more than 2% from Sunday. Other major cryptocurrencies spent most of the day sinking more than 3% with CRO, the Crypto.com exchange token, and DOT, blockchain interoperability protocol cryptocurrency Polkadot. AXS, the token of the Axie Infinity gaming platform, was trading at more than $8.40, up nearly 20%.
Crypto prices followed equity markets that sank amid interest rate concerns, largely stemming from the ISM report. The tech-heavy Nasdaq and S&P 500, which have a strong tech component, fell 1.9% and 1.8%, respectively. The Wall Street Journal reported that food and beverage giant PepsiCo will cut hundreds of jobs in North America amid concerns about the company’s shrinking volume.
Meanwhile, US consumer savings rates fell to their second lowest level in 60 years, suggesting cryptocurrency markets will remain calm for at least the foreseeable future, CoinDesk analyst Glenn Williams wrote on Monday. “Since retail investors make up a significant portion of cryptocurrency investors, the continued erosion of purchasing power is likely to affect bitcoin and ether prices.” Williams wrote. “We face higher interest rates, lower purchasing power and higher debt levels.”
Katie Talati, head of research at cryptocurrency investment firm Arca, noted on CoinDesk TV’s First Mover program that cryptocurrency prices are likely to fall with cautious optimism. “I don’t make price predictions, but I think we’ve probably bottomed in the last couple of weeks in terms of market prices and sentiment,” Talati said.
The biggest losers
By Sam Reynolds
Taipei-based tech maker HTC is reportedly looking to take its virtual headset business public in the US.
But in taking its VR business to IPO, the company may have made the same mistake it made years ago with its electric scooter arm Gogoro. There are many parallels between the two: What started as a niche product suddenly became more popular – and the market didn’t appreciate it. Fundamental questions about the future of the Metaverse have also arisen.
VR, HTC’s bright spot
Virtual reality has been a bright spot for HTC, a company that has seen its balance sheet effectively wiped out over the past decade. At the start of the Obama administration, HTC was a mobile phone giant, helped pioneer the Android ecosystem, reached 10% market share in 2011, and surpassed Nokia in market value. Microsoft.
But hitting 2% of the smartphone market share in 2015, it has been in freefall ever since, and is now too small to be tracked by research houses like IDC and Statcounter.
Looking to turn the company around, HTC launched the Vive VR headset in 2016. It was still a tool in development, with hardware and software technology lagging behind consumer expectations.
Facebook, which bought Vive rival Oculus for $2 billion in 2014, was in similar trouble. CNBC said in 2017 that the bet on VR was one of Zuckerberg’s “rare mistakes.” It was going nowhere because “nobody wants to be social in VR” and there was no compelling game for it.
Meanwhile, HTC’s balance sheet was still a sinking ship, and in 2017, Google came to the rescue by investing $1.1 billion in HTC’s mobile phone manufacturing division to have a manufacturing partner for Google’s Pixel phones.
VR continued to languish over the next few years. Reviewers still saw it as a niche product with obvious enterprise and commercial applications, but no “killer software” that would make the headset a must-have for gamers and retail users.
“The VR revolution is alive and well, it’s just not ready for you,” Gizmodo’s Sam Rutherford wrote in 2019. [going] it takes a little longer to become mainstream than people originally thought. Be patient, your VR dreams are still alive and well.”
Mobile headsets and the metaverse
VR saw its first surge in consumer interest with the release of the standalone Oculus Quest headset in 2019, as analysts pointed to a lower price point and its unrestricted nature that appealed to consumers.
As standalone devices powered by the same chips that go into smartphones, they couldn’t produce realistic graphics like PC-connected headsets, but they were cheap and fun with the games that eventually came, which is what consumers wanted.
Mid-2021 saw a mini-boom in standalone headsets like the Oculus Quest 2 and Vive Focus. HTC was still a money-losing enterprise, but its balance sheet was improving.
And then came Facebook’s first dive into the metaverse and VR.
Quality concerns about Facebook’s VR and metaverse platforms aside initially intrigued investors.
In Taiwan, HTC’s stock gained nearly 130% in the last quarter of 2021, becoming a proxy for the metaverse. VR headset shipments have grown at an unprecedented rate since 2016, but HTC has faced a competitive market from rivals.
Although the Metaverse bubble burst and Meta’s stock, along with the underlying metaverse tokens, began a year-long slide, HTC didn’t do too badly.
HTC (2,498) lost 28.6% year-to-date to Taiwan’s TAIEX, down 19%, but bettered the Meta, which fell 63%, and the Sandbox, which fell 53%.
Despite the wheels coming off everything in the metaverse, the market has determined that there is still a lot of value for the company.
Parallels with Gogoro
Scooters dominate the road in Taipei, and many pump out exhaust gas through their two-stroke engines.
In 2015, two former HTC executives proposed a solution: Gogoro. While electric scooters are not a new technology, a network of battery replacement stations is. The company raised a $150 million round led by HTC founder Cher Wang and incubated some of the initial technology at its facilities. But he missed the opportunity to turn it into a wholly-owned subsidiary.
Despite initial skeptics, Gogoro has managed to capture a 9% market share in recent years. In April 2022, the company made an IPO on the NASDAQ through a SPAC, but investors were unimpressed.
Year-to-date, the company posted losses of 62%, compared to HTC’s 30%. Despite Gogoro’s solid cash flow and license agreements for its battery replacement technology, it is not profitable, only showing net income due to a favorable charge on warranties on the books during the last quarter.
No doubt there would have been similar results if the Vive had gone IPO. We don’t know how much revenue the Vive is making at HTC because it’s being bundled with smartphones and other electronics. But probably not profitable.
Gogoro IPOed early because backers like HTC’s Cher Wang needed a quick buck (HTC is a money-losing entity). Wang probably regrets that as an investor he didn’t take a more significant stake in Gogoro and bring it closer to HTC, as that would certainly have been a success story for the company and a more proven product than VR.
Despite the progress of the past four years, VR still needs more time to incubate. The Vive’s performance in the stock market will be predictable and will likely only follow the ups and downs of the Meta. But HTC needs cash, and there’s clearly no private buyer.
The company hopes that the metaverse will find a solid footing.
11:30 a.m. HKT/SGT (3:30 a.m. UTC) Reserve Bank of Australia Interest rate decision
21:30 HKT/SGT (13:30 UTC) United States Goods and Services Trade Balance (October)
23:00 HKT/SGT (15:00 UTC) Canadian Ivey Purchasing Managers’ Index (November)
In case you missed it, here’s the latest episode of First Mover on CoinDesk TV:
Most Influential 2022; Genesis Lenders Group Loans Amount $1.8B and Count: Sources
$1.8 billion and possibly more. CoinDesk’s sources say Genesis owes loans to customers with funds locked up on its cryptocurrency trading and lending platform. Nikhilesh De had the latest version related to Genesis, which is owned by CoinDesk’s Digital Currency Group (DCG). Plus, Katie Talati, head of research at Arca, joined First Mover to discuss her view of the crypto markets. And it’s time to present CoinDesk’s Most Influential 2022, the definitive list of the biggest changemakers in cryptocurrency, blockchain and the Web3.
Introducing Consensus Journal, putting Web3 into perspective: Magazines are powerful when they spark dialogue about what’s happening now and what might happen in the future. It’s Consensus Everywhere, so we’re renaming Layer 2 after CoinDesk’s annual event.
Here are CoinDesk’s Most Influential 2022: Fifty stories of people who defined the year in crypto
Aave’s Social Media Protocol Lens Gets NFT Mobile Gaming Sonar: With the acquisition, Lens Protocol will be integrated into a gaming app that claims to have 20,000 monthly active users.
Contagion fever breaks, NFTs dominate Art Basel: The price of Ether has fallen by about 65% since last year’s Miami Art Week. But this year’s art fair saw an uptick in events, attendees, and conversations around Web3 technologies and the roadmap for their mass adoption.
Nexo Will Leave US After Regulatory Discussions Reach “Exit”: Nexo will immediately stop offering its Earn product in several US states.