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Crypto unicorns on the rise as unicorn startups exceed 1K in 2022

When a privately-owned company receives a valuation of $1 billion, it’s introduced into the magical world of unicorns.
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When a privately-owned company receives a valuation of $1 billion, it’s introduced into the magical world of unicorns. And while it might seem like an exclusive club, there are actually 1,146 unicorns in the world with a cumulative valuation of over $3.8 trillion, according to CB Insights data.

This hasn’t always been the case, though. The overall number of unicorns has doubled in the past year alone, as 519 new unicorns emerged on the market in 2021.

The ever-growing land of the unicorns

According to a TradingPedia report, this increase was a result of fundamental changes in societal models, workflows, and industries the market has seen since the beginning of the pandemic in 2020. The disruption from the pandemic revealed a huge demand for conceptually new solutions, not just in tech, but in a multitude of industries.

As soon as new solutions emerged in any given industry, they attracted considerable investments in 2020 and 2021, leading to a massive increase in the number of valuable companies.

In fact, there are so many of them, that we began seeing multiple different breeds of unicorns mentioned that paint a much clearer picture as to just how many tiers there are. Aside from the aforementioned unicorn, which is a company with a valuation of $1 billion, there’s the decacorn — a company that reached $10 billion in valuation. And while there are 54 decacorns, there aren’t as many hectocorns, or super unicorns, which are companies valued at over $100 billion.

CB Insights data indicates that there are just three hectocorns currently on the market — Bytedance, Tik Tok’s parent company, SpaceX, Elon Musk’s space exploration endeavor, and SHEIN, a Chinese B2C e-commerce platform. Valued at $140 billion, Bytedance ranks first and is followed by SpaceX’s $125 billion and SHEIN’s $100 billion valuations.

The fourth most valuable unicorn, Stripe, falls just below the hectocorn threshold with a valuation of $95 billion. That’s almost exactly double the valuation of Klarna, a Swedish payment solution company, whose latest raise puts its value at $45.6 billion.

Table showing the top 10 unicorns by valuation (Source: TradingPedia)

Counting crypto unicorns by the dozen

A significant amount of the new unicorns that were added throughout last year came from the crypto market. The first crypto company on the list, and the 12th most valuable privately-owned company in the world, is FTX. The cryptocurrency exchange is valued at $32 billion, having raised $1.5 billion in private funding in 2021 alone. The raise pushed its valuation from $1.2 to $25 billion, while a $500 million raise in January 2022 took it to its current $32 billion value.

The second most-valuable crypto unicorn is Ripple with a $15 billion valuation, followed by Blockchain.com and its $14 billion.

Ranking fourth is OpenSea, one of the biggest beneficiaries of last year’s bull run. The NFT craze that swept the world by storm pushed OpenSea’s valuation to $13.3 billion.

Bitmain Technologies, the world’s largest mining hardware manufacturer, is the 33rd most valuable unicorn in the world with a valuation of $12 billion.

Trailing closely behind is Alchemy, whose developer suite helped build almost every major NFT platform including OpenSea, which saw its valuation jump to $10.2 billion from $505 million last year. Analytics giant Chainalysis also saw its valuation rise to $8.6 billion, while Dapper Labs, the creators of CryptoKitties and a slew of other popular blockchain games, was valued at $7.6 billion.

Gemini, a cryptocurrency exchange founded by Tyler and Cameron Winklevoss, received a valuation of $7.1 billion, just barely surpassing ConsenSys and its $7 billion valuation.

Yuga Labs, the home of some of the most popular NFT collections in the world including BAYC, also found its spot on the list with a valuation of $4 billion. Celsius, the world’s largest crypto lending and borrowing platform, was valued at $3.5 billion, while crypto payments company MoonPay received a $3.4 billion valuation.

Crypto infrastructure company Blockstream was valued at $3.2 billion, and Circle, BlockFi, and Sky Mavis, the creators of Axie Infinity, all received a $3 billion valuation.

Kraken, Paxos, CoinDCX, Coinlist, Boba Network, CoinTracker, Phantom, 0x, Bitfury, Matrixport, Worldcoin, and Mobilecoin join the list with valuations ranging from $1 to just under $3 billion.

The dense world of unicorns

The sheer number of unicorns doesn’t mean that the companies are equally distributed throughout the world. According to TradingPedia, while 47 countries have at least one unicorn, 612 of them are in the U.S.

Unicorns are also highly concentrated in China and India, with the two countries having 174 and 65 unicorns, respectively. In Europe, the U.K., Germany, and France have 43, 29, and 24.

Grouping the unicorn dataset by cities reveals the unicorn capital of the world — San Francisco. The capital of Silicon Valley is home to 162 unicorns, while 109 unicorns have their headquarters in New York.

When it comes to their valuation, fintech unicorns have a total valuation of $926 billion, while internet software and services companies accrued just over $618 billion in valuation.

Brian McColl, a financial analyst at TradingPedia, believes that the pandemic highlighted the advantages of digital payments and led to many fintech companies receiving billions in funding.

“2021 saw a 144% YoY increase in Fintech investments, according to a recent Deloitte report,” he said. “Society is on the brink of the Fourth Industrial Revolution and digital finances are a fundamental cornerstone of that. I expect another double or triple digit percentage increase in fintech investments on a YoY basis in 2022.”

The post Crypto unicorns on the rise as unicorn startups exceed 1K in 2022 appeared first on CryptoSlate.

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There Goes The Fed’s Inflation Target: Goldman Sees Terminal Rate 100bps Higher At 3.5%

There Goes The Fed’s Inflation Target: Goldman Sees Terminal Rate 100bps Higher At 3.5%

Two years ago, we first said that it’s only a matter…

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March 19, 2024

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There Goes The Fed's Inflation Target: Goldman Sees Terminal Rate 100bps Higher At 3.5%

Two years ago, we first said that it's only a matter of time before the Fed admits it is unable to rsolve the so-called "last mile" of inflation and that as a result, the old inflation target of 2% is no longer viable.

Then one year ago, we correctly said that while everyone was paying attention elsewhere, the inflation target had already been hiked to 2.8%... on the way to even more increases.

And while the Fed still pretends it can one day lower inflation to 2% even as it prepares to cut rates as soon as June, moments ago Goldman published a note from its economics team which had to balls to finally call a spade a spade, and concluded that - as party of the Fed's next big debate, i.e., rethinking the Neutral rate - both the neutral and terminal rate, a polite euphemism for the inflation target, are much higher than conventional wisdom believes, and that as a result Goldman is "penciling in a terminal rate of 3.25-3.5% this cycle, 100bp above the peak reached last cycle."

There is more in the full Goldman note, but below we excerpt the key fragments:

We argued last cycle that the long-run neutral rate was not as low as widely thought, perhaps closer to 3-3.5% in nominal terms than to 2-2.5%. We have also argued this cycle that the short-run neutral rate could be higher still because the fiscal deficit is much larger than usual—in fact, estimates of the elasticity of the neutral rate to the deficit suggest that the wider deficit might boost the short-term neutral rate by 1-1.5%. Fed economists have also offered another reason why the short-term neutral rate might be elevated, namely that broad financial conditions have not tightened commensurately with the rise in the funds rate, limiting transmission to the economy.

Over the coming year, Fed officials are likely to debate whether the neutral rate is still as low as they assumed last cycle and as the dot plot implies....

...Translation: raising the neutral rate estimate is also the first step to admitting that the traditional 2% inflation target is higher than previously expected. And once the Fed officially crosses that particular Rubicon, all bets are off.

... Their thinking is likely to be influenced by distant forward market rates, which have risen 1-2pp since the pre-pandemic years to about 4%; by model-based estimates of neutral, whose earlier real-time values have been revised up by roughly 0.5pp on average to about 3.5% nominal and whose latest values are little changed; and by their perception of how well the economy is performing at the current level of the funds rate.

The bank's conclusion:

We expect Fed officials to raise their estimates of neutral over time both by raising their long-run neutral rate dots somewhat and by concluding that short-run neutral is currently higher than long-run neutral. While we are fairly confident that Fed officials will not be comfortable leaving the funds rate above 5% indefinitely once inflation approaches 2% and that they will not go all the way back to 2.5% purely in the name of normalization, we are quite uncertain about where in between they will ultimately land.

Because the economy is not sensitive enough to small changes in the funds rate to make it glaringly obvious when neutral has been reached, the terminal or equilibrium rate where the FOMC decides to leave the funds rate is partly a matter of the true neutral rate and partly a matter of the perceived neutral rate. For now, we are penciling in a terminal rate of 3.25-3.5% this cycle, 100bps above the peak reached last cycle. This reflects both our view that neutral is higher than Fed officials think and our expectation that their thinking will evolve.

Not that this should come as a surprise: as a reminder, with the US now $35.5 trillion in debt and rising by $1 trillion every 100 days, we are fast approaching the Minsky Moment, which means the US has just a handful of options left: losing the reserve currency status, QEing the deficit and every new dollar in debt, or - the only viable alternative - inflating it all away. The only question we had before is when do "serious" economists make the same admission.

They now have.

And while we have discussed the staggering consequences of raising the inflation target by just 1% from 2% to 3% on everything from markets, to economic growth (instead of doubling every 35 years at 2% inflation target, prices would double every 23 years at 3%), and social cohesion, we will soon rerun the analysis again as the implications are profound. For now all you need to know is that with the US about to implicitly hit the overdrive of dollar devaluation, anything that is non-fiat will be much more preferable over fiat alternatives.

Much more in the full Goldman note available to pro subs in the usual place.

Tyler Durden Tue, 03/19/2024 - 15:45

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Household Net Interest Income Falls As Rates Spike

A Bloomberg article from this morning offered an excellent array of charts detailing the shifts in interest payment flows amid rising rates. The historical…

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6 hours ago

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March 19, 2024

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A Bloomberg article from this morning offered an excellent array of charts detailing the shifts in interest payment flows amid rising rates. The historical anomaly was both surprising and contradicted our priors.

10 Key Points:

  1. Historical Anomaly: This is the first time in the last fifty years that a Federal Reserve rate hike cycle has led to a significant drop in household net interest income.
  2. Interest Expense Increase: Since the Fed began raising rates in March 2022, Americans’ annual interest expenses on debts like mortgages and credit cards have surged by nearly $420 billion.
  3. Interest Income Lag: The increase in interest income during the same period was only about $280 billion, resulting in a net decline in household interest income, a departure from past trends.
  4. Consumer Debt Influence: The recent rate hikes impacted household finances more because of a higher proportion of consumer credit, which adjusts more quickly to rate changes, increasing interest costs.
  5. Banks and Savers: Banks have been slow to pass on higher interest rates to depositors, and the prolonged period of low rates before 2022 may have discouraged savers from actively seeking better returns.
  6. Shift in Wealth: There’s been a shift from interest-bearing assets to stocks, with dividends surpassing interest payments as a source of unearned income during the pandemic.
  7. Distributional Discrepancy: Higher interest rates benefit wealthier individuals who own interest-earning assets, whereas lower-income earners face the brunt of increased debt servicing costs, exacerbating economic inequality.
  8. Job Market Impact: Typically, Fed rate hikes affect households through the job market, as businesses cut costs, potentially leading to layoffs or wage suppression, though this hasn’t occurred yet in the current cycle.
  9. Economic Impact: The distribution of interest income and debt servicing means that rate increases transfer money from those more likely to spend (and thus stimulate the economy) to those less likely to increase consumption, potentially dampening economic activity.
  10. No Immediate Relief: Expectations for the Fed to reduce rates have diminished, indicating that high-interest expenses for households may persist.

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One more airline cracks down on lounge crowding in a way you won’t like

Qantas Airways is increasing the price of accessing its network of lounges by as much as 17%.

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6 hours ago

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March 19, 2024

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Over the last two years, multiple airlines have dealt with crowding in their lounges. While they are designed as a luxury experience for a small subset of travelers, high numbers of people taking a trip post-pandemic as well as the different ways they are able to gain access through status or certain credit cards made it difficult for some airlines to keep up with keeping foods stocked, common areas clean and having enough staff to serve bar drinks at the rate that customers expect them.

In the fall of 2023, Delta Air Lines  (DAL)  caught serious traveler outcry after announcing that it was cracking down on crowding by raising how much one needs to spend for lounge access and limiting the number of times one can enter those lounges.

Related: Competitors pushed Delta to backtrack on its lounge and loyalty program changes

Some airlines saw the outcry with Delta as their chance to reassure customers that they would not raise their fees while others waited for the storm to pass to quietly implement their own increases.

A photograph captures a Qantas Airways lounge in Sydney, Australia.

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This is how much more you'll have to pay for Qantas lounge access

Australia's flagship carrier Qantas Airways  (QUBSF)  is the latest airline to announce that it would raise the cost accessing the 24 lounges across the country as well as the 600 international lounges available at airports across the world through partner airlines.

More Travel:

Unlike other airlines which grant access primarily after reaching frequent flyer status, Qantas also sells it through a membership — starting from April 18, 2024, prices will rise from $600 Australian dollars ($392 USD)  to $699 AUD ($456 USD) for one year, $1,100 ($718 USD) to $1,299 ($848 USD) for two years and $2,000 AUD ($1,304) to lock in the rate for four years.

Those signing up for lounge access for the first time also currently pay a joining fee of $99 AUD ($65 USD) that will rise to $129 AUD ($85 USD).

The airline also allows customers to purchase their membership with Qantas Points they collect through frequent travel; the membership fees are also being raised by the equivalent amount in points in what adds up to as much as 17% — from 308,000 to 399,900 to lock in access for four years.

Airline says hikes will 'cover cost increases passed on from suppliers'

"This is the first time the Qantas Club membership fees have increased in seven years and will help cover cost increases passed on from a range of suppliers over that time," a Qantas spokesperson confirmed to Simple Flying. "This follows a reduction in the membership fees for several years during the pandemic."

The spokesperson said the gains from the increases will go both towards making up for inflation-related costs and keeping existing lounges looking modern by updating features like furniture and décor.

While the price increases also do not apply for those who earned lounge access through frequent flyer status or change what it takes to earn that status, Qantas is also introducing even steeper increases for those renewing a membership or adding additional features such as spouse and partner memberships.

In some cases, the cost of these features will nearly double from what members are paying now.

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