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Did The Major World Banks Get The Scoop?

Did The Major World Banks Get The Scoop?

October 05, 2022

Welcome to another edition of The Scoop, the newsletter that is always there for you. Even when major banks and crypto projects are getting knocked down and out.

The Big Scoop

It seems the world might be collapsing all around us, and when we say the world, we mean The Bank of England, Credit Suisse, Deutsche Bank, Solana, and even Coinbase.

The Bank of England went back to money printing recently to avoid watching pension plans collapse due to lower government bond rates. That means the British pound is dropping in value once again. Credit Suisse and Deutsche Bank are also in a lot of trouble. Their stocks are down more than 80% over the past 52 weeks (an understandable trend with a crypto project, but very concerning for investment banks that are connected to much of the world economy).

Stack all of that with Solana suffering its 12th blockchain outage since the beginning of the year and Coinbase not having access to a U.S. bank for six hours over the weekend, and it’s been a fundamentally rough past seven days for all things traditional finance and crypto. (even though prices just might be primed to bounce up overall this week.)

With Bitcoin currently sitting at about the $20,000 mark, it seems the news hasn’t had a big effect on the space, so far.

The News

How a Credit Suisse and Deutsche Bank Collapse Could Deliver a Crushing Blow to Crypto and Web3

More trouble might be coming in the traditional financial markets, and if it does, it will undoubtedly affect Web3.

Major European banks, Credit Suisse and Deutsche Bank, are in danger of collapsing, which could cause a massive tidal wave in crypto, Web3, and broader markets.

With Credit Suisse and Deutsche Bank having a combined $2.8 trillion in AUM, many are starting to panic.

Credit Suisse is the most concerning as markets say, “it’s insolvent and probably bust.”

Ulrich Koerner, the Chief Executive at Credit Suisse, sent a memo to company employees to ease the tension around the rumours.

However, the memo was leaked to Reuters last week and was filled with many colourful phrases such as “this is a critical moment for the whole organization” and a “challenging period.” However, the memo had some positivity, stating that the bank is being reshaped towards a “long-term, sustainable future.”

Stabilizing Suisse will likely require additional investment, something it may struggle to acquire due to its current position.

At the start of the week, Credit Suisse shares (CSGN) dropped 11%–contributing to a 59% drop since the beginning of the year.

Also, Credit Suisse CDSs (credit default swaps) were close to surpassing levels last seen during the Great Financial Crisis of 2008–around the time Satoshi Nakamoto came to save the day... whatever happened to that guy?

As crypto and Web3 are heavily tied to the performance of the financial markets, this news could cause some issues in the space.

Such a major bank defaulting could lead to turbulence in high-risk markets, crypto included.

However, despite all this negative news, we have been seeing a gradual decoupling of Bitcoin against indexes like the S&P500, potentially acting in favour of blockchain-based assets in case of a major crash.

With Bitcoin currently sitting at about the $20,000 mark, it seems the news hasn’t had a big effect on the space, so far.

This could also be positive as it could cause people's diminishing trust in centralized banks to shrink even further, leading to a potentially massive rally for crypto.

Solana and Coinbase Fall Victim to Power Outages Over The Weekend

Solana and Coinbase suffered significant outages over the weekend.

Solana was out for about six hours on Friday leading into Saturday.

The exchange has a long history of outages, with the latest attributed to a misconfigured node which caused the network to stop processing transactions and go offline. This resulted in the price of SOL to drop 6%.

Due to Solana's poor track record regarding outages, there has been considerable damage to SOL and the network's image as an Ethereum Killer.

However, Coinbase outages are a relatively rare occurrence.

Still, the recent downtime on Coinbase caused investors a lot of trouble as they could not complete transactions for all of Sunday morning. The outages affected all transactions involving US bank accounts.

The outage was caused due to "ACH (Automated Clearing House Network) withdrawals, deposits, and buys failures," according to Coinbase. ACH is a network that transfers funds between bank accounts in the US, so an ACH issue effectively halts all transactions.

Coinbase classified the incident as a 'major outage.' Still, all coins on the network remained tradable, aside from SOL, due to its outage.

Fortunately, the issue was resolved in six hours.

These outages could have a significant effect on the perception of the space. During such volatile times, being unable to trade for six hours could lead to thousands of dollars being lost.

For example, in January 2021, Bitcoin's price dropped from over $41,000 to less than $32,000—about a 22% drop!

Luckily, the damages have been minor, but if this occurs frequently, it could cause a significant hit to confidence within the space.

Chart.

The Chart section of The Scoop is for everyone who prefers to listen to audiobooks or fill-in colouring books over text-based reading. Feast your eyes🍗👀

Fundraising In Web3.

Although it seems the broader economic world is getting closer and closer to a meltdown, new and exciting Web3 projects are still getting the decentralization cheddar🧀.

Here’s a rundown of funding announcements that came out over the past week. Altogether, around $200 million in venture capital money went into crypto companies and related funds over the last seven days💸💰💸:

A crypto banking platform called Juno closed an $18 million Series A round .
A Web3 security platform called BlowFish raised $11.8 million.
Hadean, a Web3 infrastructure platform, raised $30 million.
Space and Time raised $20 million in a fundraising round led by Microsoft.

Also, everyone’s favourite Web3 DEX, is looking to raise $100 million at a whopping $ 1 billion valuation .

Education.

Ready for a quick study break?!📙

Let The Scoop provide you with the always quiet and informative Study Space.

As you may know, we throw the term Web3 around like it’s going out of style (even though it’s actually the most futuristically stylish thing to ever happen to your data).😜

That’s why we wrote a brand-new Study Space post that breaks down the difference between Web2 and Web3 just in case you need some clarification

Web2 vs. Web3: What’s the Difference?

If you want to learn more about other basic and advanced Web3 topics, feel free to peruse the entire Study Space.

Scoop Meme

The Final Scoop

Keep in mind that through credit crises, outages, inflation, and price bloodbaths, Web3 projects are still raising millions of dollars for development and they are still building the future.

Now more than ever is the time to double down on digital ownership. Be your own banker. Be your own artist. Build your own communities. No matter what happens with banks, blockchains, and food prices that are out of your control, you owe it to yourself to focus on the things you can control. Your crypto, your data, your online identity. PERIOD.