1. Summary of Industry Dynamics
This week, the crypto market maintained a narrow range of fluctuations, and the trend continued to decouple from the Nasdaq. As of the time of writing on May 28, the price of BTC was around 27,130, rebounding by about 1.47% during the week, with an amplitude of only 6%; the price of Ethereum was around 1,840, with an increase of about 2% during the week, with an amplitude of only 6.1%. In the past two weeks, the market has been extremely sluggish, with both amplitude and trading volume falling. Taking Binance as an example, the BTC/USDT spot trading volume has shrunk to only US$6 billion, and even in January this year when the BTC price was only around 17,000 during the deep bear market, the weekly trading volume of this product was as high as US$18.7 billion. From this point of view, the crypto market makers that have withdrawn due to US regulation since May have had a huge impact on the market activity.
On Tuesday, the Hong Kong Securities and Futures Commission held a press conference on virtual asset trading platforms and announced the proposed regulatory provisions applicable to operators of virtual asset trading platforms licensed by the Securities and Futures Commission, which will take effect on June 1. Among them, the biggest positive content is that licensed virtual asset trading platforms are allowed to provide services to retail investors. CCTV2 Financial Channel reported this regulatory news in the Economic Information Network.
On the other hand, the Nasdaq has seen a gratifying rise this week. The Nasdaq once fell back by more than 2% at the beginning of the week, and then rose violently due to the impact of Nvidia's better-than-expected financial report, closing up 2.51% for the week. The US PCE price index and core PCE price index for April released on Friday both exceeded expectations and reversed the downward trend, exceeding the previous month. As a result, the Fed's expectations for a rate hike in June have clearly increased, from an 80% probability of no rate hike to a 64% probability of a further 25bp rate hike.
However, this negative impact did not significantly affect the U.S. stock market. Led by technology stocks led by NVIDIA, the Nasdaq continued to rise on Friday, significantly surpassing the Dow and S&P. NVIDIA's single-day market value increase reached the highest in human history of US$198 billion. . Since the beginning of this year, the gains in U.S. stocks have basically been rounded out by large technology companies. Nvidia, Microsoft, and Apple alone have contributed nearly 60% of the S&P 500's gains. Currently, all U.S. stock funds are concentrated in artificial intelligence and related fields.
In contrast to the hot market sentiment, Wall Street short seller and Bank of America chief strategist Micheal Hartnett published a research report that the valuations of US AI companies such as Nvidia have already bubbled and are currently in the baby bubble stage, which will burst sooner or later. It is not a buying stage now and should be sold at highs. He also believes that the S&P 500 index is at a staged peak at around 4,200.
Industry data
1) Stablecoins
According to glassnode data, as of May 27, 2023, the combined supply of the top five stablecoins (USDT, USDC, BUSD, DAI, TUSD) was approximately 124.3 billion, a decrease of approximately 540 million (-0.43%) from last week, and has been decreasing slightly for three consecutive weeks.
Among legal stablecoins, the supply of USDT continues to rise, with an increase of approximately 218 million (0.26%) in a single week, and the growth rate of USDT has slowed down significantly. USDT is the only stablecoin that has grown in a single week.
The supply of USDC continued to decline this week, decreasing by about 485 million (-1.64%). Since the Silicon Valley Bank incident, the supply of USDC has continued to decline and has not improved. In addition, macro events such as the tightening of US cryptocurrency regulation and the debt ceiling have further prompted the continued outflow of US funds. The supply of USDC has decreased by 15.5 billion compared to the beginning of the year, and the current supply is only about 29 billion.
The supply of BUSD continued to decline this week, decreasing by about 213 million (-3.88%). Since Paxos has been banned from minting BUSD, it is expected that the supply of BUSD will continue to decline and gradually fade out of history. The supply of TUSD, as an alternative, fell slightly this week, with a weekly supply reduction of 24 million (-1.19%).
Overall, although the outflow of funds in the currency market has slowed down, the market funds are still tight and the liquidity is poor. It is expected that the market will maintain a structural trend and it is difficult to see a general rise.
2) BTC Miner Balance
The BTC miner address balance shows the total BTC holding balance marked as miner addresses on the chain, including Foundry USA, F2Pool, AntPool, Poolin, Binance and other addresses.
This data is usually used to judge miners' interest in the current BTC price. When the miner's balance increases, it usually means that the chips are in a state of accumulation; when the miner's balance decreases, it indicates that miners are selling or pledging their BTC.
According to OKLink data, as of May 27, the miner balance decreased slightly last week. Although miners are still accumulating chips this month, the speed has begun to slow down. Similar levels of shipments also occurred in early May, with the BTC price adjusting from 29,000+ to around 26,000. Although there was a rare decrease in miner balances this week, the amount was small, and the market is still in a narrow range of fluctuations. We tend to believe that the depth of the market correction will not be too large, and the probability of maintaining fluctuations is relatively high. The transaction value of the market is relatively low recently. It is recommended to watch more and do less, and avoid chasing shorts and longs easily.
Judging from historical data, miners are a relatively stable group of coin holders and will not sell their coins until there are at least multiple confirmed declines or greater negative market conditions.
3) ETH deflation & staking withdrawal data
As of May 28, according to ultrasound.money data, the supply of ETH decreased by approximately 15,000 last week. Based on the data of the past week, the annualized inflation rate is -0.65%. The activities on the Ethereum chain have stabilized, and the deflation rate has been significant. Slow down.
Since The Merge was completed, the supply of ETH has been reduced by 265,000 (about $475 million). Ethereum on-chain activity continues to decline. Last week, Ethereum gas fees reached a high of 179 Gwei and an average of 37 Gwei, and on-chain costs have returned to normal.
According to OKLink data, the amount of ETH pledged has continued to rise significantly in the past week, significantly exceeding the amount of withdrawals. This situation has lasted for three weeks. Currently, the queue time for withdrawing ETH has dropped to 5 days, while the queue time for validators to enter and wait for activation has been extended to more than 30 days. As we previously expected, after the first batch of withdrawals ended, the amount of ETH pledged increased instead of falling, a large number of chips entered the pledge, and the price support of ETH was significantly stronger than that of BTC.
The current Staking APR remains high at about 8.7%, but has dropped slightly from before. As on-chain activities become flat and the number of stakers increases, the APR is expected to slowly drop to the 4-5% range. Even so, affected by the actual deflation of ETH, ETH staking is still quite attractive compared to other POS public chains.
The ETH pledge rate continued to rise slightly to about 15.54%, and it is expected that the ETH pledge rate will increase further.
2. Macro and Technical Analysis
The market fluctuated sideways
Strong economic data raises market expectations for rate hikes
Led by NVIDIA, the Nasdaq surpassed 13,000 and reached the top
arh999：0.6
BTC holding addresses basically fluctuate sideways
The number of ETH holding addresses begins to decline
III. Summary of Investment and Financing
Investment and Financing Review
From May 22 to May 28, 2023, the crypto VC market disclosed 19 investment and financing events, with a cumulative financing amount of more than US$2.42; (https://www.rootdata.com/Fundraising)
During the reporting period, there were two projects with large investment amounts and participation of leading institutions, namely;
Project Type Funding Amount Investors Participation Possibility Growminer Cryptocurrency Exchange Platform USD 48 million Claiming to be participated by the world's top funds, investment groups and professional investment institutions Existing Worldcoin Inclusive cryptocurrency network USD 115 million a16z, Blockchain Capital, Coinbase Ventures, Muticoin etc. Existing
Organization News
4. Dynamic tracking of non-performing assets
FTX bond market latest developments:
Bankruptcy Exchange Dynamic Tracking:
Crypto exchange FTX has successfully recovered more than $7 billion in total assets
At a recent hearing in Delaware, lawyers said FTX has recovered more than $7.3 billion in assets, an increase of $800 million from January this year. FTX said that they have taken various measures to strive to recover assets to repay part of the loan. Currently, the price of FTX's over-the-counter debt market has dropped slightly, from 25% to 22%.
FTX current CEO John J. Ray III has confirmed FTX 2.0 plans
FTX's management is currently considering the possibility of restarting the exchange from all aspects. FTX's creditors committee has released some key information from FTX's court documents on the Internet. FTX's current CEO John J.Ray III has confirmed the FTX 2.0 plan, which includes reviewing and completing materials for restarting the 2.0 version of the exchange, and reviewing the 2.0 bid list.
However, S&C's lawyers believe that it will take time, money and possibly a whole new brand to repair the massive amount of negative sentiment that has been created by the SBF and Alameda Research fraud allegations. FTX co-founder Sam Bankman-Fried pleaded not guilty to charges including wire fraud and money laundering in January. FTX's new CEO John J. Ray III also announced last week that he had formed a working group to study restarting the exchange. The restructuring plan is expected to be submitted in the third quarter of this year, and it may take until mid-2024 to decide whether to restart the exchange. The lawyers also indicated that the restart faces many difficulties, including repairing the damage to the brand image caused by bankruptcy, solving technical problems and restoring customer trust. Finding investors or lenders willing to fund the restart is also a key problem.
FTX will also need to establish through litigation that the recovered assets belong to the company rather than its customers, and may need to fund a restart through asset recovery. The whole process takes time, and the risk of a successful restart is borne by the creditors. So given the brand damage and the many unanswered questions surrounding the technology, risk management engine, and software on which the exchange operates, it is likely that FTX will find it difficult to restart under the FTX name.
Media company Semafor has raised $19 million to buy back SBF's investment in it
Media company Semafor raised $19 million last week from investors including Yahoo co-founder Jerry Yang and KKR & Co co-founder Henry Kravis to buy back the investment made by former FTX CEO Sam Bankman-Fried (SBF).
At present, due to the significant impact of the FTX incident, as long as the lawsuits against FTX for various unknown investment funds and transfers are filed by the bankruptcy court and the US Department of Justice DOJ, the companies and institutions involved are actively cooperating in various ways to return the investment funds. However, the events currently disclosed in the market may only be the tip of the iceberg, and it will take time to recover most of the assets that can be used to return creditors.
BlockFi receives court injunction ordering it to withdraw unapproved restructuring plan
The U.S. Bankruptcy Court ordered the cryptocurrency lending platform BlockFi to withdraw its May 13 statement mentioning its restructuring plan because the statement was not approved by the court. The correction letter issued by BlockFi shows that creditors and other parties do not support BlockFi's restructuring plan. The main reason is that BlockFi's management has a big dispute with creditors, who accused the company's poor management and subsequent restructuring plan of indirectly leading to BlockFi's closure.
BlockFi owes nearly $1.3 billion to the top 50 creditors. Selling BlockFi may not bring much value to creditors
Last week, BlockFi outlined its Chapter 11 reorganization plan in a filing with the U.S. Bankruptcy Court in New Jersey. The company said that selling BlockFi might not bring enough value to creditors because it owes nearly $1.3 billion to the top 50 creditors. In response, BlockFi creditors filed another court document on May 15, saying that BlockFi deliberately took steps to delay the trial. (BlockFi creditors said that in the days after the FTX collapse, BlockFi converted about $240 million in cryptocurrency into fiat currency, and BlockFi also spent $22.5 million in customer funds to purchase $30 million worth of insurance for its directors and executives.)
5. Crypto Ecosystem Tracking
NFT
Blue chip index: In the process of shock bottoming, it has not hit a new low, but there is still a lack of new narratives
According to ETH, after the overall market value rebounded last week, it declined slightly this week, but the transaction volume continued to shrink.
top collection：
In addition to punks, bayc, and mayc, which are ranked in the top three, it is worth paying attention to several rising stars, Captainz (the leading project of the top meme community 9GAG, with strong community cohesion), Degods (formerly Solana's top project, and later left Solana to enter the ETH ecosystem after FTX collapsed)
Gamefi Chain Games
As of writing, the top 7 blockchain games (5 up, 2 down) have a limited overall fluctuation range. Sandbox, which performed strongly some time ago, has performed well again in this new wave of speculation on Hong Kong concepts.
https://degame.com/zh/ranking/game/ALL_GAME
DeFi & L2 Track
As of writing, the TVL of each public chain has fallen as the market has fallen in the past week, and market sentiment is poor. ETH and its Layer2 have fallen severely.
Focus on the rollup projects that have not issued tokens. Zksync is still rising steadily, and the rise is more obvious after the gas price drops. In addition, polygon zkevm has risen by 45%, which is the chain feedback that the founder of polygon proposed to give to the community after the airdrop.
BRC20
The overall sentiment has receded, but it is judged that the narrative has not yet ended. With the entry and accumulation of funds by major exchanges, the next period of forgetting cycle may be a good time to build a position.
ORDI: Founding project, the current floor price is still around 9.5
VMPX: BRC20 project of XEN founder, with continuous empowerment by IP, but the price has dropped from $0.14 to $0.08 in two weeks
