Once a week, we help you sort through the most noteworthy events in the market. We not only track trends but also focus on the underlying logic and narratives. In the information explosion of the crypto market, DA Labs refines opinions for you, highlighting content that truly impacts your decision-making and understanding.
Market Perspective
FTX payment initiates second round of repayments
On May 30, 2025, according to Cointelegraph, the FTX bankruptcy restructuring trust fund (FTX Recovery Trust) initiated the second round of repayment distribution totaling over $5 billion for eligible creditors.
This repayment is directed towards clients who have completed the pre-allocation requirements, covering Dotcom, US clients, and other categories of creditors. The trust announced on May 28 that Convenience Claims will receive a 120% return amount, while other categories will receive different levels such as 72% or 54%.
Industry insiders are closely watching the potential effects of this large-scale capital injection into the market, as these funds, if liquidated or reinvested into the market, will significantly impact cryptocurrency prices.
DA Labs Perspective:
This is one of the largest creditor repayment actions in the history of the crypto market, symbolizing significant progress in the FTX restructuring process and partial compensation for affected users. The distribution of $5 billion not only involves a large number of global traders but also has a landmark impact on investor confidence.
For the market, this means a large amount of liquidity will be released soon, potentially changing some users' attitudes towards holding or cashing out. Massive capital flows have dual effects: on one hand, if most creditors choose to redeem cryptocurrencies after receiving payments, it may exert selling pressure on major currencies, causing short-term volatility or even declines; on the other hand, if the funds flow back into the market for continued investment or to seek yield opportunities, it may boost demand for crypto assets.
Highlights from the 'Bitcoin 2025' Global Conference
On May 28, 2025, US Vice President and former Ohio Senator J.D. Vance delivered a speech at the 'Bitcoin 2025' Global Conference in Las Vegas, publicly supporting cryptocurrency. In his speech, he stated that cryptocurrency is an important tool for hedging against Washington's policy failures, serving as a financial barrier against soaring inflation while also resisting risks from centralized financial systems through its decentralized nature.
Additionally, he mentioned the Senate-passed (GENIUS Act), pointing out that the issuance of stablecoins will be placed under a federal regulatory framework of 1:1 high-quality reserves, providing more transparency and confidence to the market.
DA Labs Perspective:
The public support for cryptocurrency from the US Vice President signifies that the new US administration may adopt a more friendly policy towards the crypto market, accelerating the mainstreaming of blockchain technology and digital assets. This is also the first time a senior US official has sent a clear signal at a top Bitcoin conference, marking a milestone.
Macroeconomic Perspective
Bond Market: Japanese bond supply shift affects US bonds, with strong demand for short-term US bonds.
In early May, US bond yields soared, attracting significant market attention. However, this week, a major change occurred as the Japanese government unusually sought market opinions on its national debt issuance plans, leading to speculation that Japan might consider reducing the issuance of long-term government bonds, causing Japanese bond yields to decline, which in turn also lowered US bond yields, particularly with a more pronounced drop in long-term US bond yields.
At the same time, the US Treasury auctioned approximately $70 billion in two-year and five-year government bonds this week, with winning bid rates of 3.955% and 4.071%, respectively, indicating strong market demand for short-term government bonds, which led to a decline of 5.9 basis points in the yield of ten-year US Treasuries.
DA Labs Perspective: US short-term bonds show support, while long-term bonds may remain high over the next two years.
From this incident, we can extend our thinking about the current market attitude towards US bonds. Will there still be violent fluctuations in short-term and long-term rates?
This week, Japan's expected reduction in bond supply led to rising prices, which in turn boosted US bond prices, temporarily easing the pressure of rising US bond yields. From recent auction results and market sentiment, short-term rates may be close to their peak; while long-term rates have slightly declined, considering the existence of term premium, they may remain relatively high over the next two years.
The decline in short-term rates is influenced directly by multiple factors, including the Federal Reserve's policy rate (EFFR), the overnight reverse repurchase rate (RP) stability, and the decrease in Japanese supply expectations. However, to lower long-term rates, the most direct method currently appears to be a significant recession in the US economy, which would raise strong doubts about future growth, potentially leading to a substantial downward adjustment in long-term rates.
Supplement: Term premium is the additional reward to compensate investors for holding long-term bonds. It can be imagined that if both two-year and ten-year government bonds yield 4%, but in a highly volatile market, no one would buy the 4% ten-year bonds due to low demand, resulting in rates naturally exceeding 4%. Thus, the higher the uncertainty over time, the higher the term premium.
Supplement: The Effective Fed Funds Rate (EFFR) is the policy rate that controls the yield of two-year government bonds, while the yields of five-year, ten-year, and thirty-year government bonds are determined by market supply and demand. Additionally, the five-year government bond yield is often used as a benchmark for corporate bond rates (Corporate bond rate = 5-year government bond yield + credit spread), and the ten-year government bond yield serves as the discount rate for future cash flows in financial modeling.
Highlights from the May FOMC meeting minutes
The minutes from the May 28 FOMC meeting show that Federal Reserve officials generally believe that policy-making will face tough choices in the context of inflation potentially higher than expected and a slowdown in the job market, needing to strike a balance between suppressing inflation and supporting economic growth. The meeting also mentioned that fluctuations in the bond market and changes in the dollar's status as a safe-haven asset could have long-term effects on the economy.
The Federal Reserve internally estimates that inflation will rise significantly this year, while the unemployment rate may breach the long-term equilibrium level of 4.6% by the end of the year and remain high until 2027. They maintain a wait-and-see stance in the short term.
DA Labs Perspective: The US economy has not entered recession, and a rate cut of one to two basis points should occur by the end of the year.
In short, the Federal Reserve maintains a wait-and-see attitude as there are no clear signs of recession from the hard economic data yet, with market consensus expecting a rate cut of one to two basis points by the end of the year. As for why this conclusion is drawn, we can find some clues from the FOMC meeting and other economic data. First, Chairman Powell repeatedly mentioned 'waiting' in the post-meeting press conference, implying that it is unlikely to initiate rate cuts in the short term.
Additionally, from recent economic data observations, similar conclusions can be drawn. To observe a country's economy, one can breakdown into three major parts: the labor market, consumption and inflation, production and sales.
April non-farm payrolls increased by 177,000, showing moderate growth, while the unemployment rate remained stable at 4.2%, with no significant increase; initial claims for unemployment benefits reached 240K (above expectations of 229K and previous value of 226K), still within a reasonable fluctuation range, indicating a stable job market with no signs of slowdown.
From the consumer side, retail sales at 5.16 exceeded market expectations. This week's consumer confidence index jumped to 98 (better than expected 87, previous value 86), ending a five-month decline trend. The optimistic sentiment mainly comes from the postponement of US-China tariffs and smooth negotiations between the UK and the US, indicating strong consumption momentum.
From the production side, this week announced a month-on-month decrease of 6.3% in April durable goods orders (better than expected - 7.6% and previous - 7.6%). Additionally, approximately 90% of the components in the S&P 500 have reported earnings, with 62% exceeding expectations. Although this is slightly lower than the average performance over the past five and ten years, the overall earnings data is still quite acceptable. As for GDP, the quarter-on-quarter decrease is 0.2%. Observing the detailed composition, 'consumption' and 'government spending' show weak growth, while 'investment' and 'import' have significantly surged, reflecting the early inventory pull in the first half of the year. The second half is expected to face inventory accumulation and reduced pull, but it is still too early to talk about recession.
Considering all these economic data, there are no clear signs of recession yet. The Federal Reserve indeed has no reason to cut rates in June or July, and a reasonable rate cut would be expected at the end of 2025.
Other related news
Trump Media & Technology Group (DJT) builds a Bitcoin vault, raising $2.44 billion, replicating MicroStrategy (MSTR) by hoarding coins in the company's name, taking advantage of Bitcoin's scarcity.
The US International Trade Court ruled that Trump had no authority to impose tariffs globally, but the next day the appeals court overturned this, allowing tariffs to continue, causing the market to rise and then fall.
Image Source: The Japan Times, CNBC
