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June 14, 2022

Market downturn, JP Morgan, Mastercard NFTs

Welcome to Swarm Markets’ media memo. This weekly update provides comments from Swarm Markets’ co-founders, Philipp Pieper and Timo Lehes, on key industry news that has caught our eye, plus our own developments. 

Comments available on the following news items:

  • Extreme market fear takes hold. What now?
  • JPMorgan shares ambitious DeFi assets plan
  • TradFi/business tech gets stuck into NFTs

Markets are living extreme fear – Timo Lehes

Extreme fear is now driving market losses. This is neither especially rational nor easy to watch – but it is understandable. Crypto has gone through stratospheric changes in the last 18 months, but there are two sides to the coin on this.

On the one hand, cryptoasset values have soared, and now, are coming back in for a hard landing. But memory loss on this is rife – bitcoin is reaching 18 months lows, but it was much lower still relatively around two years ago. 

On the other hand the industry is still plugging away developing new ideas, technologies and solutions to problems. The fall of assets is not that far removed from listed businesses that have to operate in a negative market environment. Funding is more difficult to place and business leaders have to work harder to justify price levels. 

Until cryptoassets have utilities in place such as collateral for lending, we’ll see large liquidation events continue – where investors are running to other asset classes. Subsequent adverse price movements are just the proof of this. 

We’re seeing a big shake out underway. What will be left is the really viable businesses and projects. Beyond this, the issue now is how crypto keeps moving forward despite the outsize losses. The sector can learn from lessons of the past, particularly from the 2008 Great Financial Crisis. As they say, history doesn’t repeat itself, but it often rhymes. 

JPMorgan shares ambitious DeFi tokenised asset plans – Philipp Pieper

Investment bank JPMorgan has said it is looking at ways in which traditional assets can be leveraged onto decentralised blockchains. While the firm’s entrance into this area of the market will certainly help profile, the work from the sector to digitalise assets is already well underway.

Its stated ambition is to bring ‘trillions’ of dollars in assets to DeFi. This might seem fanciful but in truth we are only a few steps away from a realistic scenario whereby technologies such as blockchain, NFTs and other areas of crypto essentially transcend the divide.

The future of finance is the adoption of these technologies. Decentralisation has benefits for security, proof of ownership, ease of management, and many other benefits. These benefits are being realised in areas of the market already. Swarm itself is already working to bring securities on-chain, so the work of digitalising traditional assets is well underway. 

Mastercard and Salesforce join the NFT sector – Timo Lehes

Mastercard and Salesforce have both announced forays into NFTs, a very promising signal at a difficult moment for the sector. 

Caught in the wider market malaise, NFT values have been hit hard as investors seek to de-risk their portfolios. But the entrance of both Mastercard and Salesforce into the sector is a sign that underlying potential innovations and possibilities are still there to be had. 

Salesforce’s entry point is to create business tools to build NFT propositions. This is a savvy and unsurprising move from a firm that specialises in providing tools to solve problems – call it a picks and shovels play for crypto. As for Mastercard, the potential here is much greater, as the company is an enormous player in the infrastructure of global transactions.

Either way, what really matters is that major businesses continue to take an active part in the development of the sector, despite the short-term fears over market valuations.