Thursday, 11 May 2023

Market Summary

Market Summary 11 May 2023

Bitcoin Price: US$ 27,598.75 (-0.11%)
Ethereum Price: US$ 1,840.84 (-0.31%)  


The U.S. Bureau of Labor Statistics reported that the annual U.S. inflation rate slowed to 4.9% in April from 5.0% in March, and the price of Bitcoin rose more than 1% to just above $28,000 following the news. However, the core Consumer Price Index (CPI), which strips out food and energy costs, rose 0.4% in April versus forecasts for 0.4%, indicating higher inflation rates. Meanwhile, Binance, the world’s largest cryptocurrency exchange, saw its spot trading volume drop for the second consecutive month in April, falling 48% amid declining transaction levels across the industry, according to CCData.

The reduced trading activity of influential market makers, Jane Street and Jump Crypto, in the cryptocurrency market has the potential to disrupt liquidity, according to an analyst at Kaiko. Jane Street and Jump are scaling back their crypto trading operations in the U.S. amid regulatory pressures following the collapse of FTX in November. The industry is still grappling with the lack of liquidity since the collapse of Alameda, and the slowdown from these market makers could further impact liquidity. Additionally, while cryptocurrency derivatives trading volume on centralized exchanges decreased in April, the market share of derivatives trading reached a new all-time high of 77.6%. This rise in market share was driven by a significant decline in spot trading volume, highlighting the speculative nature of the crypto market amid uncertainties surrounding potential rate hikes by the Federal Reserve.

The Ethereum price has been trading within a tight range between $1,820 and $1,950 for the past three weeks, with professional traders showing a reluctance to add neutral-to-bullish positions using derivatives contracts. The recent memecoin frenzy, which increased Ethereum network demand, did not inspire confidence in investors. High gas fees have led users to layer-2 solutions, potentially indicating weakness in the Ethereum chain. Some analysts believe that the Ethereum Foundation’s sale of $30 million worth of Ether contributed to the inability of ETH to break above $2,000. In a separate news, Roblox, an online multiplayer game, has seen a surge in its user base, with daily active users reaching a new record high. Roblox reported strong performance in its first-quarter earnings, with revenue and user counts up 22% year-over-year. Despite increased sales, the company reported a net loss, primarily attributed to expenses related to developer exchange fees, personnel costs, and infrastructure. Roblox aims to be a technology platform that empowers creators and is often considered a precursor to the metaverse concept. However, it operates within a closed “Web2” ecosystem, limiting the transferability of digital items and virtual currency to other platforms.

Tether, the issuer of the world’s largest stablecoin, reported a significant net profit of $1.48 billion in the first quarter of 2023. The company’s assurance report prepared by BDO Italia revealed that Tether’s reserves reached a record high of $2.44 billion, primarily held in cash and cash equivalents, with only 1.8% held in Bitcoin. Tether expressed optimism for the future in its blog post. In other news, decentralized exchange Uniswap surpassed Coinbase in daily trading volume, fueled by the craze surrounding Pepecoin (PEPE), a meme coin that achieved a market cap of over $1 billion. Uniswap’s volume exceeded Coinbase’s, with the difference continuing to widen in the following days across different blockchains.

Bitcoin developer Luke Dashjr has called on other Bitcoin developers and miners to implement “spam filtration” to block Ordinals and BRC-20 tokens, which have been causing congestion and increased transaction fees on the Bitcoin network. Dashjr emphasized that spam filtration has been a standard part of Bitcoin Core since its inception and proposed implementing the filter as a bugfix without waiting for a major release or soft fork. In other news, Binance, the leading cryptocurrency exchange, has launched Capital Connect, a platform that connects institutional investors with crypto investment fund managers. The platform provides information on funds’ assets under management, performance records, and minimum investment amounts, enabling institutional investors to safely and efficiently access the crypto market. Currently available to Binance VIP-level users, Capital Connect aims to establish information disclosure standards for market participants with different investment needs.

U.S.-based bitcoin mining firm Marathon Digital has disclosed that it received a new subpoena from the Securities and Exchange Commission (SEC) related to an investigation into its facility in Montana. The SEC is reportedly looking into potential violations of federal securities laws, and Marathon is cooperating with the agency. This comes after Marathon received an initial subpoena in November 2021. In other news, Argentina’s central bank has issued new guidance tightening its control over cryptocurrency transactions in the country. Registered payment service providers are now prohibited from conducting operations with unregulated digital assets. The central bank aims to mitigate risks associated with these assets for users of financial services and the national payment system. Despite rising crypto use in Argentina as a hedge against inflation, concerns about volatility and scams have hindered widespread adoption.




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