This Week in the Metaverse: Crypto Lehman Brothers moment and Tesla dumps Bitcoin holdings
Things are moving fast in the metaverse, and in the wider world of web3 as a whole. Depending on who you ask, this futuristic, blockchain-based space is either the next big thing for marketing – and for almost everything else – or an overhyped fad. Here’s what you need to know from this past week:
Tesla Inc recently converted most of its Bitcoin holdings to cash / Adobe Stock
Celsius Network files for bankruptcy
Major crypto lending company Celsius Network filed for Chapter 11 bankruptcy last week. Some analysts are calling the incident crypto’s “Lehman Brothers moment,” drawing a comparison between the crypto lender’s collapse and the fall of the major bank leading into the 2008 financial crisis.
In its bankruptcy filing, Celsius Network blamed its financial downfall on the ongoing “crypto winter” and “negative media and social media comments about Celsius, a number of which were unsupported and misleading.” The company’s problems, according to the filing, were also compounded by the global economic strain caused by the Covid-19 pandemic and the war in Ukraine.
The company owes its users – currently numbering around 1.7 million – approximately $4.7bn, per the filing.
Tesla sells majority of its Bitcoin, citing Covid-19 lockdowns in China
Tesla Inc revealed in a Q2 earnings letter this week that it had converted around 75% of its Bitcoin holdings into fiat currency, which in turn added around $936m in cash to the company’s balance sheet. On an earnings call, Tesla chief executive Elon Musk said that the company decided to sell the majority of its Bitcoin in response to “the uncertainty of the Covid lockdowns in China.” As of this week, several cities have been locked down and millions of residents have been quarantined in China due to a surge in Omicron subvariants.
Tesla’s relationship with Bitcoin has oscillated between hot and cold: Tesla purchased around $1.5bn in Bitcoin back in early 2021, causing the cryptocurrency’s value to soar. For a time, the company allowed its customers to make purchases using Bitcoin, but that policy was quickly discontinued; in a Tweet from May 2021, Musk said that the company would no longer allow payments using Bitcoin due to “concerns about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal.” Musk also said on the recent earnings call that Tesla is “certainly open to increasing [its] Bitcoin holdings in the future.”
So should this be taken as a verdict on Bitcoin? After reaching a record-high valuation of close to $69,000 in November, Bitcoin has been plummeting since May in what many are calling a new “crypto winter.” Bitcoin is valued at the time of writing at around $22,500.
Christie’s launches web3 investment firm
Christie’s auction house announced on Monday that it is launching ‘Christie’s Ventures,’ an investment fund focused specifically on web3. The fund – designed to “provide financial resources and expert support to emerging technology and fintech companies creating solutions with art market relevancy,” according to a press release – has debuted with an investment in LayerZero Labs, a company that’s developing protocol for omnichain interoperability.
Christie’s, founded in 1766, has become known in the web3 space as an eminent NFT auction house; it made headlines last year with the historic sale of Beeple’s ‘Everydays: the First 5,000 Days’ token for more than $69m.
Second Life partners with DJ superstar Eli Brown for ‘all-new metaverse music video’
Electronic music artist Eli Brown has teamed up with Second Life – an online platform that enables users to interact with one another as virtual avatars – to produce ‘Club Arcane,’ an interactive experience that “literally puts listeners inside an all-new metaverse music video,” according to a blog post on the company’s website. The description of the new virtual experience makes it sound like a cyberpunk haunted house superimposed with house music: visitors can expect “sinister melodies,” “foreboding visuals,” “ominous alleys” and “a neon-lit nightclub bursting with hidden surprises at every turn.”
Nike and RTFKT drop an AR-compatible hoodie
Shorly after Nike acquired virtual clothing design studio RTFKT (pronounced ‘artifact’) back in December of 2021, the two companies dropped CryptoKicks – a “breedable” fusion of a sneaker and a NFT. Now Nike and RTFKT – a power couple in the up-and-coming virtual fashion scene – have released a physical hoodie that comes with augmented reality (AR) capabilities.
The RTFKT x Nike AR Genesis Hoodie, as it’s being called, will come with a built-in near-field communication (NFC) chip, enabling its wearer to link it with an AR program – accessible via a QR code emblazoned on the front of the hoodie. The program allows the wearer to add a number of blinged-out virtual accessories to the hoodie (wings, for example).
It will only be available to owners of CryptoKicks and holders of the CloneX avatar collection.
The metaverse makes the cover of Time magazine
For decades, Time magazine has been something of a bellwether for American culture; its cover art typically portrays some of the most influential ideas and people of the day. It’s significant, therefore, that the magazine has dedicated its August 2022 issue to the metaverse.
The cover art, designed by digital artist and former Major League Baseball shortstop Micah Johnson, features a rendering of a young man wearing an astronaut helmet and stepping through a kind of portal, separating his bedroom from a sci-fi realm replete with flying cars and a futuristic cityscape. The headline? “Into the Metaverse: The Next Digital Era Will Change Everything.”
Usain Bolt steps into web3
Step App – a fitness finance (fitfi) platform that enables users to earn cryptocurrency through physical activity – announced a new partnership on Thursday with eight-time Olympic gold medalist Usain Bolt. “With Step App, the blockchain economy is expanding beyond finance by incorporating lifestyle, fitness and play elements into the space,” the company announced in a press release. “The platform transforms everyday exercise activities like walking the dog or a daily jog around the park into social activities or competitions with friends and strangers that encourage consumers to earn as they exercise toward economic freedom.”
In addition to attracting new users, the new partnership with Bolt – who has been named as Step App’s “core ambassador” – is aimed in part at catching the eye of potential brand partners (including governmental organizations) “who share Step App’s vision for a healthier world through web3.” The company launched its private beta testing for its gamified, move-to-earn web3 platform today.
For more, sign up for The Drum’s Inside the Metaverse weekly newsletter here.