“Stability” and “crypto” are not two words normally associated with each other, but hey, these are strange times.

October has seemingly brought some stability to what has been a tumultuous time forĚýcrypto, as large cryptocurrencies like Bitcoin and Ether seem to have found a level — at least for now.

Bitcoin has remained relatively stable this month, staying above $19,000, but not getting above $20,400. Ether has been above the $1,270 range, but staying below its recent highs seen in August. It, however, saw significant gains Tuesday to put it above $1,400.

While this won’t cause investors to celebrate — certainly not those who bought in high last November — it is an interesting moment in time where crypto seems to be separating from its normal trends.

While the markets have held reasonably strong for the past month, concerns about inflation, interest rates and the strength of the dollar continue to swirl. Those issues have usually rankled the crypto market as investors turn away from higher-risk assets.

However, now crypto seems to be working like an actual hedge against inflation. In fact, it’s resembling a store of value, — a correlation many have made over time but the markets have not borne out.

Crypto is perhaps working more like it was supposed to when DeFi originated. Or maybe it’s just a brief blip and high volatility will return.

It’s crypto, so we’ll bet on the latter.

In other news

This was a slow week in the Web3 world, so take a moment and read about the new Web3 unicorns minted last month in our monthly recap here.

Note: Our list includes a Switzerland-based crypto product startup, , which raised a smallish $25 million round at a whopping $2 billion value — which is so very Web3.

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Rounds were not that big this week, as only a handful were $100 million or more. Much like last week, investment was all over the board, as storage, grocery and energy startups led the way in what was a pretty down week.

1. , $125M, storage: The cloud services sector is dominated by the big tech names we all know. Boston-based Wasabi would like to change that, and just this week became a unicorn as it travels down that road. The “hot” cloud storage company raised $125 million in Series D equity led by at a valuation of $1.1 billion. The company also expanded its existing debt facility to $125 million. The startup claims it can offer its hot cloud storage—which refers to data that is readily available—at a fifth of the price of the big guys and now has 40,000 customers in over 100 countries. The cloud data market is big, but dominated by incumbents not likely to let new players in. We’ll see if Wasabi can heat things up. Founded in 2015, the company has raised more than $535 million, according to Crunchbase.

2. , $120M, grocery: It was this week that San Francisco-based GrubMarket raised $120 million from new investors including ’ venture arm. The company develops software and has an e-commerce platform that connects farmers and wholesalers with customers. It’s been quite busy in the last few years, making 60 acquisitions in the last four years and just last year raised $200 million at a $1.2 billion valuation. Per the story, GrubMarket now has an annual run rate of about $1.5 billion. Founded in 2014, the company has raised approximately $500 million, according to Crunchbase.

3. , $100M, energy: Sustainable and cleaner alternatives for power has been a big theme this year for investors. So far this year, the cleantech industry has seen 17 funding rounds worth $100 million or more, . This week included one of those rounds, as Richmond, California-based locked up a $100 million Series B led by . Moxion manufactures mobile batteries and energy storage to enable last-mile electrification in sectors that include construction, transportation, events and entertainment, film production and telecommunications. Although venture capital in general has slowed this year, cleantech is on pace to see a slight uptick from last year, according to Crunchbase. Last year, VC-backed cleantech startups saw $7 billion of investmentment, while already this year investors have poured more than $6.6 billion into the sector. Founded in 2020, the company has now raised just more than $113 million, according to Crunchbase.

4. , $80M, payments: While digital payments can be convenient, they can also be slow and cluttered with fees. Chicago-based Strike, built on Bitcoin’s Lightning Network, is looking to allow customers to avoid those hassles. The Lightning Network is known for fast transactions and could be a solution to Bitcoin’s scalability issues. Strike is looking to leverage that and make cheaper, faster, global payments a real thing for everyone. To that end, the company raised an $80 million funding round led by Ten31, its first funding round, according to Crunchbase. The company will look to use that new cash to attract large merchants, marketplaces and financial institutions to its payments platform.

5. , $70M, biotech: Waltham, Massachusetts-based Ventus Therapeutics announced an exclusive license agreement with and received an upfront payment of $70 million in cash as part of the deal. Under terms of the agreement, Novo will help develop and commercialize therapies from Ventus’ portfolio. Ventus has developed a platform to identify and develop small molecule therapeutics for a broad range of diseases. Ventus will be eligible to receive up to an additional $633 million in potential milestone payments as well under the agreement. Founded in 2019, the company has raised $370 million, according to Crunchbase.

6. , $66M, SaaS: Montclair, New Jersey-based Sitetracker, a developer of deployment operations software servicing critical infrastructure, closed a new round of equity and debt financing totaling $96 million.The round includes $66 million in equity and was led by . Sitetracker has raised nearly $200 million since 2013, per the company.

7. , $60M, human resources: San Francisco-based Workstream extended its Series B funding round with an additional $60 million, bringing the total Series B to $108 million. The extension was led by . The company had developed a mobile-first hiring and onboarding platform for the deskless workforce. Founded in 2017, Workstream has raised $118 million to date, according to Crunchbase data.

8. (tied) , $50M, cloud data services: Denver-based Flatfile, a AI-assisted data exchange platform, locked up a $50 million Series B funding led by . Founded in 2018, Flatfile has raised $100 million, per the company.

8. (tied) , $50M, big data: Palo Alto, California-based observability platform startup Unravel Data closed a $50 million Series D led by . Founded in 2013, the company has raised $107 million, according to the company.

10. , $48M, blockchain: Santa Barbara, California-based blockchain technology platform Candle Labs raised a $48 million funding round. Lead investors in that round were not disclosed. The startup develops software for decentralized services in sectors like finance.

Big global deals

Rounds were on the small side this week for U.S.-based startups. However, there was a large global deal.

• Saudi Arabia-based , a flight booking firm, raised a $1 billion venture round.

Methodology

We tracked the largest rounds in the Crunchbase database that were raised by U.S.-based companies for the seven-day period of Sept. 24 to 30. Although most announced rounds are represented in the database, there could be a small time lag as some rounds are reported late in the week.

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Canaan makes application-specific integrated circuits, hardware often used for bitcoin mining or artificial intelligence applications. The company claims to be the second largest designer and manufacturer of its chip varietal in the world, according to its F-1 statement. Canaan has shipped 26,000 AI chips and modules since they’ve been released, and has 21.9 percent of global market share for bitcoin mining machines in the first half of this year according to its filing.

Canaan, which is based in Beijing, was founded in 2013 and by Shandong Luyitong Intelligent Electric in 2016 for $466 million, .

The company now wants to go public in the United States by listing on the Nasdaq exchange. Credit Suisse and Citigroup are among its underwriters.

But enough about the figures Canaan touts. Let’s get to the good stuff: the money.

Financial “Results”

Canaan is an odd company, financially at least. Normally when an enterprise goes public it has a few characteristics. Revenue growth, for example, is nearly always present. Canaan doesn’t have that. Expanding gross profit is another regular measure that we see in S-1 and F-1 filings. Canaan doesn’t have that either.

Falling losses? Canaan actually has the opposite. Shrinking costs? That’s not common, but perhaps firms that are contracting while losing money at least can show diminishing operating costs? Not Canaan.

You get the picture. In numerical form, Canaan put up revenue of $41.9 million in the first half of 2019, down a little over 85 percent from its year-ago result. That’s the worst revenue growth we’ve ever seen here at Crunchbase News.

Even worse, Canaan’s gross profit fell around 97 percent to just $1.6 million in H1’2019. Again, that’s the least good result we’ve ever seen. Against that miserable gross margin, Canaan had operating expenses of $49.3 million in the first two quarters of the year. As you can largely calculate in your head, the company lost $48.2 million during the six-month period.

Canaan once posted growth (the firm grew tidily between 2017 and 2018), even managing to post a profit in 2018 of $17.8 million against $394.1 million in top line. How things have changed.

The price of bitcoin and demand for cryptocurrency mining hardware is both variable and volatile. As , this can lead to uneven demand for new hardware. It seems that Canaan has wound up on the wrong side of a trend.

Cash, Ownership, Second Chances

Canaan had about $39.4 million in cash on hand at the end of the first half of 2019.

The company has a dual class structure, and each class A share will have one vote, while each class B share will have 15 votes.

Of the directors and executives, co-founders Jiaxuan Li and Nangeng Zhang have the most votes, with each holding roughly 16 percent of the shares. Principal shareholders Ouroboros Limited and Flueqel Limited also hold roughly 16 percent each.

This isn’t the first time Canaan has tried to go public. Three years ago, the company tried to go public in China through a reverse merger by buying a Chinese electric equipment maker, according to . It also filed for a Hong Kong float just last year, but neither plans panned out.

Let’s see if the third time’s the charm when it comes to getting the company public. We doubt it.

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If you haven’t kept obsessively checking the price of bitcoin over the past year, don’t worry. You’re normal. For the rest of us, the price movement of the leading cryptocurrency has been somewhat staid.

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A year ago, bitcoin about $6,500. Today’s it’s worth about $8,100. That isn’t much movement. In between a year ago and today, however, bitcoin has set prices from as low as the $3,000 to and as high as $13,000. Bitcoin is still bitcoin, even if its former, regular value appreciation appears to have slowed.

But price is only one vital sign for bitcoin and its friends. There are others. Let’s examine two key indicators that we track to see where things are past the headline price.

Vital Signs

When I want to get a handle on the health of the crypto markets, I check (), , and, when I have time, the , the smaller, less-well-known cryptos that have yet to find a mainstream audience.

The logic behind the metric selections I hope is somewhat simple. Bitcoin transaction volume, while correlated to the price of the substance, helps paint a picture of how close bitcoin is to paying for itself. The more transactions that occur, the larger that miners can accrete. Since there is a time in the future when bitcoin miners won’t be paid in new bitcoin, it’s nice to know how much people are paying to use bitcoin. And, of course, companies like , so more volume can be viewed as bullish for startups in the sector.

Regarding decentralized apps, or “dapps,” I like to keep tabs on new dapp creation. Or, the pace at which new dapps are released. It’s a proxy of modest value to understand how many shots are being taken on the goal towards finding a great use case for Ethereum blockchain. Finally, market cap is something you can track here; it’s self-explanatory.

So, what do our first two indicators tell us?

• After a slump, bitcoin transaction volume has recovered from its 2018 lows and is high by historical norms. That’s bullish for bitcoin itself and the cryptocurrency market as a whole.
• And that new dapp releases are down sharply from their 2018 highs, but have matched the pace (roughly) set in late 2017. So, after a boom, about 60 new dapps are rolling out monthly. This is less bullish than our first indicator, while also showing that dapp activity is a multiple of where it was in 2016.

When I set out this morning to get a rough feel for the state of cryptocurrencies, I expected to find negative signals. Instead, bitcoin’s transaction volume recovery was stronger than I expected, and more dapps are being released than I anticipated.

The ICO boom is far behind us (), as are the heady days of 2017. But there’s still plenty going on over in crypto-land, even if bitcoin is still worth far less than it once was.

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Both are bullish for companies operating in the cryptocurrency space. There’s for cryptocurrency companies in the trading game performing well when crypto prices appreciate. As there’s a between the price of bitcoin et al and trading appetite; when the price of cryptocurrencies rise, trading revenues presumably grow as well.

In the late-2017 crypto bull run stacked huge revenues and profits, for example. Later, the company would , adding to both its bank balance and valuation. Other firms rode the same wave, including Bitmain, which later had to pull its public offering after swinging from profits to losses.

So, when the price of bitcoin from the $3,000s in January to the $5,000s by April to $13,000 in July to a more modest $10,560 today, I was waiting for the impact of the price run to show up elsewhere.

This morning we got a little taste. Recall that we noted above that a rising ±č°ůľ±ł¦±đĚýof cryptocurrency and related assets leads to a rise in trading volume of the same entities. Here’s a chart from citing his colleague who used data from their own publication, along with information from :

There are two things that we care about in the chart this morning. First, as expected trading volume has risen as the price of bitcoin and its subordinate crypto co-constituents have appreciated. And, second, that Coinbase has seen (according to this dataset) its trading volume rise sharply in recent months.

As Coinbase has a for what it calls “Buy/Sell Transactions” we can presume that the higher trading volume is leading to revenue growth for the American crypto-focused unicorn. The that we have for Coinbase is an $8.0 billion post-money valuation, meaning that the seven-year-old company has lots to live up to in revenue and profit terms.

Given the above chart, it seems like Coinbase, along with a host of smaller crypto-focused companies, is likely enjoying a welcome business boost after a turn in the wilderness after the most recent crypto bust.

Illustration: Li-Anne Dias.

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The media spotlight came together with huge monetary infusions along with interest from developers and the public alike. In 2018, however, the value of crypto-built assets has fallen dramatically. Over a half-trillion dollars in value has been deleted this year alone.ĚýBut what impact has the collapse in the value of all crypto products from around (as of the time of writing) had on interest in the market category?

As has , there is an enormous link between crypto price and crypto hype. As the price of bitcoin goes up, material interest in the sector itself grows.

That’s something underscored by a released by today. In a dataset constructed from dozens of billions of transactions, Mixpanel, a , created the following chart that compares what it described as “crypto user growth” and “percentage user growth.”

This chart is far more attractive and easy to understand than the charts we linked to first, but it makes a similar point: when bitcoin’s value rises, the crypto sector gets a usage bump. So we can now essentially tie interest and usage of crypto products to the price of bitcoin.

That should not surprise. Bitcoin is the most famous crypto product and the most valuable. It’s still worth over $100 billion as of this morning, a huge sum. That its price is a directionally-useful indicator for crypto activity is not mind-bending, but it’s nice to see the relationship in chart form.

Mixpanel also noted in an email that “crypto trading users grew 14 [times] in 2017,” going on to note that “based on the Bitcoin price-user correlation [the fact] could definitely be a bad sign in 2018.” If usage went up with the price, it has likely therefore fallen when prices dropped.

Other back up the point. December 2017 is a local and all-time maximum for bitcoin, and we’ll probably know when trading is going back up. The price will tell us.

The $400 million “pre-IPO” deal was in the English-speaking press by Deal Street Asia, which cited reports by local media, which in turn cited unnamed “insiders” at Bitmain. CCN this morning.ĚýAt time of publication, Crunchbase News hasn’t received confirmation from Sequoia Capital or its Chinese subsidiary concerning the round.

The Deal Street Asia report says Bitmain is planning to file for an IPO in Hong Kong in September, and “expects to go public with market capitalization between $30 billion and $40 billion by the end of this year.”

Bitmain graduating to public markets would be a significant milestone for the cryptocurrency industry, which has, so far, been backed mostly by venture capital and initial coin offerings (ICOs) of dubious legality. Obviously, it would be a landmark event for Bitmain too, which has signaled beyond cryptocurrency to another computationally-intensive field: machine learning and artificial intelligence.

This emerges following a challenging week for crypto markets. Bitcoin, the most valuable cryptocurrency by market capitalization, declined twelve percent over the last seven days, as the chart below shows. And the cumulative market capitalization of crypto assets dipped below $300 billion for the first time since mid-April.

Bitmain’s Public Market Dreams

a report released in February by Bernstein Research, which suggests that Bitmain controls roughly 75 percent of the market for application-specific integrated circuits (ASICs) designed to mine bitcoin. The bitcoin ASIC market’s second largest player, , controls roughly 15 percent, and all other producers account for the remaining 10 percent. In addition to bitcoin ASICs (hashing SHA256), Bitmain also manufactures custom hardware for litecoin (Scrypt hashing), dash (X11), ethereum (Ethash), monero (CryptoNight), and other hashing algorithms used by different blockchains.

In May, Canaan Creative filed in Hong Kong to potentially raise $1 billion in an IPO, sponsored jointly by Morgan Stanley, Deutsche Bank AG, Credit Suisse Group AG, and CMB International Capital, according to another Bloomberg from the time. The report said Canaan, which generated $205 million in 2017 revenue (and nearly $57 million in net income), intends to begin trading in July.

However, Bitmain’s revenues are an order of magnitude larger. Wu says Bitmain generated $2.5 billion in revenue in 2017. Using chip manufacturers Nvidia and MediaTek as public market comparables, Bloomberg estimated Bitmain would be valued at approximately $8.8 billion on public markets.

But that doesn’t jibe well with Wu’s statements, saying that the company was valued at $12 billion. Nor does that public-market comparison agree with new venture funding reports that bubbled up from China overnight.

A Big Fish In The Mining Pools, And Why It Matters

In addition to being the dominant player in manufacturing cryptocurrency mining equipment, Bitmain also runs two of the largest mining pools, BTC.com and AntPool. Collectively, these two pools account for close to 40 percent of the total bitcoin network hashrate, at time of writing.

AntPool was Bitmain’s original mining pool, and BTC.com (once a web-based bitcoin wallet) was turned into a mining pool following , which was announced in July 2016. In addition to these mining pools, which independent owner-operators of bitcoin mining hardware can connect to, Bitmain also operates Hashnest, a hosted mining service that lets people rent compute cycles on hardware owned by Bitmain.

This is all to say that Bitmain is in a uniquely powerful position in the cryptocurrency ecosystem. As both the largest manufacturer of metaphorical pickaxes, and operator of the biggest mines for the most valuable asset in the space, it stands to profit on both sides of the mining market. And as new bitcoins become ever more difficult to mine, and scarcer in the wake of events, demand for newer, more expensive generations of faster mining hardware will sustain itself so long as it’s still profitable to play this guessing game.

The crypto markets were on fire during the closing months of last year.ĚýThe aggregate value of all crypto assets spiked from under $200 billion as November started to over $800 billion in the first weekĚýof the new year.

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December was a heady period for crypto enthusiasts, seeming to bring to fruition patient optimism. Since those gains, however, the market for bitcoin and the asset class it pioneered has softened. The aggregate value of cryptos has fallen to about $360 billion, with another wide selloff hitting seemingly every major digital asset coming this week.

Bitcoin, far from $19,000+ highs, is worth less than $9,000 per coin today. Ethereum is worth under $700 as of the time of writing, off around half from its $1,300+ highs. The same sort of damage continuesĚýacross essentially every crypto you can nameĚýwhen compared to their previous highs.

But we shouldn’t read too much into any particular price fall, or gain; the short-term price fluctuations of single cryptos or the broader set of coins that make up the class are only so important.

But what those changes do function as is a read on market interest concerning the sector, and, perhaps, that day’s optimism regarding short-term prospects of the class. So, the exact price of bitcoin isn’t too important, but the direction of its movement is, as it implies that interest in the best-known crypto is either going up or down.

You can verify that yourself by checking recent bitcoin and —both are sharply down, corresponding to recent price declines.

So, falling interest, slipping trading volume, and declining prices are the current dynamics of the crypto game. That could change in an instant, as we’ve seen before. But as this week closes, it’s red ink

From TheĚý:

• , a service that delivers bulk items to consumers, has reportedly voted to reject a $400 million acquisition offer from supermarket chain Kroger. The New York-based startup will instead pursue further funding to remain private.

• , an asset manager focused on digital currencies, has raised funding from a number of prominent investors, including venture capitalist Marc Andreessen. The Austin-based firm currently has about $50 million and is looking to close on $250 million by the end of June.

Women-led VC firms look to change industry dynamics

• Crunchbase News profiles three women-founded venture funds that were created to fund and promote diverse startup teams. All are just a few years old.

• Online eyeglass retailerĚýĚýis raising up to $75 million in new funding, according to a securities filing. The financing would likely be at a higher valuation than Warby’s last round, which valued the company at $1.2 billion.
• Correction: On March 6th, the Crunchbase Daily featured a $20M round from Meniga. This was done in error – the company has not raised a recent round.

Morning Report:ĚýBitcoin’s slide continues as the crypto selloff erases hundreds of billions in value as rumors of fraud and manipulation carry the week’s headlines.

After a staggering 2017, the tokens of the crypto world are having a tough start to 2018. Keeping our timeframe short, over the last 24 hours 98 out of the top 100 cryptocurrencies are down, according to . The damage widens as you look at January as a whole.

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And the biggest coin of them all, bitcoin, is no exception to the trend. Bitcoin is off 9.35 percent over the last 24 hours to $9,110, a sum that would have thrilled hodlersĚýin mid-2017, but is off more than 50 percent from the coin’s prior heights.

Gone, at least for now, are the days in which the ascent of bitcoin and its various competitors and compatriots set new records weekly, if not daily. Indeed, hundreds of billions of dollars in value have been shorn from the crypto markets since its late-2017 peak of over $20,000.

So what gives, is a good question to ask. Just as there was no clear reason as to why bitcoin went up, there isn’t one single reason as to why it’s going down. But we can point, at least, to some things that could be impacting the price performance of Satoshi’s coin.

For example, this recent headline: “.” The piece covers legal action, potential fraud, historical fraud, and more. That article’s assertion that price manipulation could have been critical to bitcoin’s rise undercuts its store-of-value proposition; store-of-temporary-and-fraudulently-manipulated-value isn’t quite as good a sales pitch.

And, just sticking to what Techmeme has picked up at the moment, here’s another: “use .” That’s a pretty big market, potentially gone. Add in never ending China-based rumors, and rising regulatory action both domestically and abroad, and perhaps Robinhood’s impending charge into the crypto-exchange market looks a bit slack.

Regardless, this is crypto, so expect everything to change roughly by the time you’ve read this.

From TheĚý:

Unicorns gorge on record capital inflows

• Investors show little sign of easing back on giant unicorn funding rounds. Last year, they put a record $66 billion into private, venture-backed companies valued at over $1 billion, according to Crunchbase data. At the same time, the number of new unicorns declined some.

• , the recently retired CEO and chairman of GE, has joined venture firmĚýĚý(NEA) as a venture partner. The news follows another high-profile VC firm hire earlier in the week, withĚýĚýbringing on outgoing American Express CEOĚý.

• PayPal shares fell after former parent company eBay said it has signed up Dutch payments processorĚýĚýto manage global payments. Adyen, founded in 2006, has raised more than $260 million to date, with a private valuation exceeding $2.3 billion.

Mobile delivers big returns

• The number of mobile-focused startups raising seed and early stage capital has been trending down, but average round sizes are way up, a Crunchbase News analysis finds. It helps that the space has a history of producing some of the highest exit multiples of any sector.

As 2017 came to a close, the biggest story in the world of cryptocurrency and decentralized digital assets wasn’t bitcoin, whose price had fallen and failed to quickly bounce back. Instead, it was the rapid appreciation of XRP, the token , an “enterprise blockchain solution for global payments” .

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Ripple’s massive run value above the worth of Ethereum’s ether coin. It was heady stuff.

(There’s ample work out there already tucking into whether or not Ripple’s boom is reasonable; that’s not our goal here and I have no particularly strong perspective either way.)

But something that Ripple did while appreciating greatly was cut bitcoin’s share of the crypto pie. As the , bitcoin is nearly back to all-time-lows in regards to its share of the aggregate value of its asset class:

There’s a lot of nuance in the above chart which is missed on a quick glance. But who needs that on New Year’s Day? Instead of digging into details, I wanted to ask a question.

Bitcoin is slow to process transactions that cost quite a lot, a fact that has made itsĚýhopes of becoming a leading digital currency seem damp. But bitcoin has held its worth as market sentiment shifted towards viewing it as a store of value; it’s valuable because it’s valuable and thus it has value and may appreciate as people think of it as a valuable thing. Or something like that.

But what might happen if bitcoin falls to a low enough percentage of the crypto market that it’s no longer an obvious store of value in comparison to rival offerings? And then it doesn’t do really much of all that is useful.

Anyway, that’s what I was thinking about last night. Hope you are well and welcome to 2018.

From TheĚý:

• The Crunchbase Daily is back tomorrow!