Newsletter Volume 28

Artile 1 — The Market This Week

The cryptocurrency markets experienced a mix of gains and losses throughout the week, with Bitcoin and Ethereum both trading in the red on Tuesday and Wednesday before rebounding slightly on Thursday. Despite the fluctuations, the overall trend for the week was positive, with encouraging macro factors and controlled inflation helping to boost the market.

On Monday, Bitcoin posted a gain of 1.82% to reach $27,335, while Ethereum crossed the $1,800 level. The global cryptocurrency market cap rose 1.42% to $1.14tn, and the total volume in DeFi was $1.66bn, or 6.3% of the total crypto market 24-hour volume. Despite a fall of around 11% the previous week, Bitcoin’s market cap rose to $529bn, and the cryptocurrency’s dominance was at 46.48%, up 0.19% over the day. Meanwhile, Litecoin surged by over 7%, and BNB, Polygon, Dogecoin and Solana all traded with gains.

Major Cryptocurrencies including Bitcoin and Ethereum were trading in the red, with Bitcoin falling by 1.22% to $27,043 and Ethereum slightly above the $1,800 level. The global cryptocurrency market cap also fell by 1.26% to approximately $1.12tn in the last 24 hours. Other major cryptocurrencies such as Solana, Polkadot, BNB, Polygon and Dogecoin were also trading with cuts. Despite bullish sentiment, crypto-cautious investors continued to observe from the sidelines.

The cryptocurrency markets were trading mixed on weak global cues amid debt ceiling negotiations in the US on Wednesday. XRP, Dogecoin, and Litecoin were trading with gains, while Bitcoin, Ethereum, and BNB were trading with cuts. Bitcoin fell 1.39% to $26,851, whereas Ethereum was just above the $1,800 level. BTC volume in the last 24 hours stood at approximately $12.14 billion, falling 2.93% in the last 24 hours. The total volume in DeFi was currently 2.11 billion, 7.45% of the total crypto market 24-hour volume. The volume of all stablecoins stood at $25.79 billion, which is 91.17% of the total crypto market 24-hour volume.

On Thursday, the global cryptocurrency market cap was trading lower around $1.12 trillion, falling 0.84% on the day. The market cap of Bitcoin was around $520 billion, and Bitcoin’s dominance was currently 46.35%, a decrease of 0.27% over the day, The cryptocurrency market was trading higher on Thursday amid improved sentiment on progress in debt ceiling negotiations in the United States. Bitcoin rose 0.90% to $27,230, whereas Ethereum was just above the $1,800 level. BTC volume in the last 24 hours stood at approximately $15.1 billion, rising 23.23% in the last 24 hours. Other top crypto tokens were also trading higher on Thursday, with Polygon surging nearly 3%.

The annual U.S. inflation rate decreased to 4.9% in April, as reported by the Bureau of Labor Statistics’ CPI report. This was in line with economist predictions for 5.0%. Bitcoin’s price increased by over 1% following the news, reaching slightly above $28,000. The CPI increased by 0.4% in April, surpassing expectations for 0.4% and compared to 0.1% in March. The Federal Reserve stated that it may halt its rate hikes if data showed a significant decrease, despite inflation remaining above its 2% target. The latest CPI reading has cooled since its peak in June 2022, but the report contains mixed news on inflation, with 0.4% monthly and 8.1% annual increase in shelter costs, which account for about one-third of the CPI weighting and indicate a significant inflation driver. The Federal Reserve officials will need to consider additional factors before determining the extent of further rate hikes, including elevated inflation levels and banking sector stress.

Overall, while the cryptocurrency market may be volatile and uncertain in the short term, there is reason to believe that it will continue to grow and evolve over time. As more investors become interested in cryptocurrencies and more businesses begin to accept them as payment, the market is likely to become more stable and secure, providing a valuable alternative to traditional financial systems.

Key Metrics:

The global crypto market cap: $1.12T

The current market cap of Bitcoin: $518.63B

The current market cap of Ethereum: $217. 37 B

Eth/btc: 0.06 BTC

Eth Gas price: 64 Gwei.

DeFi TVL: $46.87b

Fear and Greed Index: 48 (Neutral)

Federal Reserve Balance Sheet: $8.63T

Article 2 — Weekly Review of IC15

The cryptocurrency market had a mixed week due to various macro factors and regulatory developments. At the beginning of the week,, the market saw a rise due to encouraging macro factors and controlled inflation. The IC15 Index, which measures the performance of the crypto market, was up 456 points to 38,069. All the constituents in the Index were positive, with Litecoin leading the market gains with a 7.51% increase.

The Bank of Korea and Samsung Electronics signed a MoU to conduct CBDC research on offline payments, while the Reserve Bank of Zimbabwe sold gold-backed digital currency to stabilize its economy. Florida State Governor signed a bill prohibiting US Fed CBDC and foreign CBDCs use in the state under Florida’s Uniform Commercial Code (UCC). OpenAI CEO Sam Altman is in talks to secure $100 million in funds for the Worldcoin project, which aims to create a collectively owned and globally distributed cryptocurrency.

The market experienced minor selling pressure on Tuesday with the IC15 Index down by 504 points to 37,565. Most constituents in the Index were in the red, with Avalanche, Solana, Polkadot, and Polygon leading the market fall in the 1–3% range. However, Litecoin, Tron, and Chainlink were up in the 0–3% range. The G7 is pushing to regulate the crypto industry as the finance ministers and central bank governors discussed supervision and regulation ahead of the G7 summit. Finance ministers of the European Union nations approved the landmark Markets in Crypto Assets (MiCA) rules, with this EU becoming the first jurisdiction with licensing regime for crypto in the world.

The market moved in a narrow range of 400 points amid US debt ceiling negotiations and weak global markets. The IC15 Index was down by 114 points to 37,451. The major gainers in the Index on Wednesday were XRP, Litecoin, Dogecoin, and Uniswap in the 1–6% range, while the major losers were Chainlink, Solana, Shiba Inu, and Avalanche in the 0–1% range. The UK is moving forward to regulate digital assets as their Treasury Committee’s crypto report said that unbacked crypto-assets should be treated as gambling rather than financial securities. Updated European Council tax rules revealed that crypto assets transfers to include in the tax reporting and VASPs to collect information on crypto assets transfers for identifying suspicious transactions.

On Thursday, the market rose as US President Joe Biden declared the country would not default on its debt, boosting investors’ morale. The IC15 Index was up 395 points to 37,846. All the constituents in the Index were positive, with XRP, Uniswap, Cardano, and Polkadot being the major gainers in the 2–4% range. Australia completed the first foreign exchange transaction using its CBDC, the eAUD, in a live pilot study. The Indian crypto community is seeking the government to restore the Unified Payments Interface (UPI) for the crypto industry as they have made two proposals to the government. According to GWI research, Turkey recorded the highest crypto ownership growth in one year, with 27.1%, followed by Argentina and the Philippines, with 23.5% and 23.4%, respectively. The Captain Haiti Foundation raised $5 million from Dargent Group, a private equity firm, to use blockchain technologies to improve Miami’s housing crisis and the gentrification of the Haitian community in Miami.

Overall, the cryptocurrency market remains volatile, with various factors affecting its performance on a daily basis. However, developments such as the G7’s push for regulation and the EU’s approval of MiCA rules show that the industry is becoming more mainstream and accepted by governments and regulators.

Article 3 — Battle of Bull and Bear

Crypto bulls and bears jockeyed for position as the March consumer price index (CPI) was released, there was a sense of anticipation among crypto enthusiasts and skeptics alike. The positive outlook it presented suggested that the U.S. Federal Reserve might not need to consider reducing interest rates when it convenes in May.

Inflationary pressures in the United States have been easing for several months, with the latest readings continuing this trend. The Personal Consumption Expenditure price index (PCE) released on March 31 showed a 0.3% increase in prices, down from 0.6% the previous month. This data is considered by many to be Federal Reserve Chair Jerome Powell’s preferred inflation indicator. As a result of declining inflation and recent turbulence in the banking industry, investors are speculating whether the Federal Open Market Committee (FOMC) will pause rate hikes in 2023. However, the release of FOMC minutes at 2 p.m. ET provided little insight into the central bank’s future plans.

Meanwhile, the cryptocurrency market has seen fluctuations in response to these developments. Bitcoin’s price rose to $30,400 before briefly dipping below $30,000, while Ether (ETH) initially increased in value before plateauing. ETH investors are also considering the potential impact of the Ethereum Shanghai upgrade, which could cause stakers of ether to un-stake their tokens and potentially sell them. However, many analysts believe that the hard fork will have little impact on prices as traders who were aware of the upgrade would have already sold their holdings. Despite this, ETH has seen a 60% increase in value since the start of the year.

For investors monitoring unique wallet addresses in the cryptocurrency market, it is worth noting that the number of wallets holding between one and 99 BTC, as well as those with more than 10,000 BTC, has been growing since January. Additionally, the number of wallets holding between 100 and 9,999 BTC has also increased during this period. One possible explanation for this trend is that investors on the cusp of owning 10,000 BTC are optimistic and increasing their exposure to the asset. As a result, this may provide a base of support for BTC prices, given that investors who went long on the digital asset in January are up 80% year-to-date.

On Thursday, the prices of cryptocurrencies, particularly bitcoin and ethereum, experienced a decline. In the past five days, BTC has been down three times and is struggling to regain its $30,000 level from April, currently fluctuating in its $27,000 range. However, bitcoin has improved from its two-month lows recorded last Friday. In other news, Tether, a crypto company, has announced its plan to diversify the reserves for its USDT stablecoin by investing 15% of its net operating profit in buying bitcoin. Currently, Tether holds $1.5 billion in bitcoin in its reserves. Ethereum also experienced a dip, trading near $1,800 late Thursday, dropping from its early morning high of $1,830 to as low as $1,772. Despite this, Ethereum has soared nearly 50% year-to-date, peaking at $2,139 on April 16 — its highest level since last May — and surpassing $2,000 for the first time in almost a year following its Shanghai upgrade to a proof-of-stake network.

Article 4 — Weekly Spotlight

Digital asset investment funds experienced net outflows for the fourth consecutive week, with $54 million leaving in the seven days ending on May 14. The outflows were concurrent with significant declines in cryptocurrency prices, including Bitcoin’s drop from above $28,000 to below $26,500. Bitcoin-related products accounted for $38 million of the outflows, representing 80% of the total outflows for all cryptocurrencies in the past four weeks. Currently, it is still too early to know if a significant bottom has been struck, but we do know that BTC held horizontal support at the $27+/-0.5K zone.

However, it is below its declining (blue) 50-day Simple Moving Average, below resistance, and below the initial bounce highs. Bitcoin started the week with gains, rising to over $27,000 from a low of $25,800 on Friday. The cryptocurrency was trading at approximately $27,350, reflecting a 1.6% increase in the last 24 hours. Edward Moya, a senior market analyst at Oanda, noted that upcoming debt ceiling discussions would provide insights into investors’ perception of Bitcoin as a safe-haven asset despite regulatory uncertainty.

Ether, the second-largest cryptocurrency, rose over 1% and was trading around $1,830 on Monday afternoon. Other digital assets, such as LDO and GRT tokens, experienced price increases of 11% and over 12% respectively.

Investors have been concerned about the low liquidity in crypto markets, with market makers Jane Street and Jump Crypto stepping back from crypto trading in the U.S. due to regulatory uncertainties. BTC’s and ETH’s liquidity, as measured by the 1% market depth, decreased by 4% and 2% respectively over the past month. Altcoin liquidity suffered even more, declining by roughly 17% on a monthly basis.

About DeFi, Despite the decline in yields from it since the crypto market peak in November 2021, there is a new source of yield gaining popularity in the DeFi space: Real World Assets (RWAs). This innovative crypto asset class is bridging the gap between traditional finance and DeFi, and is generating interest from investors.

Unlike most DeFi yield products that rely on transaction volume and market activity, RWAs are introducing DeFi products that are backed by real value in the form of traditional assets. These off-chain assets, such as real estate, stocks, gold, credit, and other traditional products, are being tokenized on the blockchain (on-chain) to represent their ownership and rights digitally.

Tokenization has always been the ultimate goal of DeFi, and now stakeholders are making significant strides in integrating traditional assets with on-chain economies, thanks in part to the bear market. As a result, the future of DeFi looks promising with RWAs leading the way.