Thursday, 2 June 2022

Market Summary

Market Summary 2 June 2022

Bitcoin Price: US$ 29,805.83  (-6.27%)
Ethereum Price: US$ 1,817.95 (-6.38%) 


Decentralized Forex, Vesta Farms, Friktion Volts

  • DFX Finance is an AMM designed for forex swaps between multiple fiat-backed stablecoins. They have recently launched dfxStablecoins, a fractional-algorithmic stablecoin similar to how FRAX works. These dfxStablecoins are made up of three non-USD stablecoins, XSGD, CADC, and EURS, creating a forex 3pool.
  • DFX has seen its growth ramp up in 2022, especially in April and May, as yields on stablecoins became dry and capital-efficient money found its way to DFX. DFX has seen above-average yields for stablecoins, ranging from 14%-79% APR, paid out in DFX. However, do note that you take up forex risks of other currencies when LP-ing in these pools.
  • Cumulative volume on DFX recently crossed $350M, dominated mostly by XSGD and EURS. XSGD seems to be the most popular as retail users can easily swap XSGD back to SGD.
  • Decentralized forex is definitely an untapped sector in crypto as USD stablecoins dominate most exchanges. The forex market is the largest financial market in the world. It will be interesting to see how the crypto forex industry matures.


Illuvium Land Sale, X2Y2 Climbs & A Dive Into Pixel Vault

  • NFT trading volumes continue to decline through May, with weekly OpenSea sales hitting yet another low for this year ($280M). Since this is in dollar terms, it is partially related to the drop in ETH price, now down approximately 35% since the end of April. This week, we have added data from X2Y2, another LooksRare/OpenSea competitor.
  • The number of unique wallets (on Ethereum) that purchased an NFT in May remains relatively high at around 300,000, although down from the previous month. A rise in the number of buying wallets over time signals the growth of the overall NFT market. The average transaction value has remained steady over the past months, at around $1225 (~0.63 E).
  • The competition among NFT marketplaces is fierce. While overall trading volumes have fallen through May, X2Y2 has continued to increase its market share, overtaking LooksRare. This is likely due to a combination of:
    • Lowering its trading fees to 0.5% for May (and now extending into June).
    • More people using NFT aggregation platforms such as Genie & Gem and are thus marketplace-agnostic, picking the lowest prices. Because they provide a better user experience, the shift to using marketplace aggregators instead of purchasing directly from individual marketplaces will likely continue into the near future.
  • It remains to be seen if X2Y2’s market share will be sustainable once the trading fee rebates end. Meanwhile, it’s a great place for trades.
  • A narrative that received some traction last year was that ‘blue-chip’ NFTs could be a hedge for ETH prices and that they would hold their value in USD terms. Looking at the data over the past 8 months, it was a reasonable idea between Oct’21 – Jan’22. as BAYC floor prices (in ETH) rose even as ETH fell. However, we can see that this is no longer the case, and both BAYC floor prices and ETH prices have been trending in only one direction in May — downwards.


Canadians buy the dip as Purpose Bitcoin ETF holdings reach new highs

  • Despite May’s price correction, which took Bitcoin (BTC) as low as $23,800, institutional investors seem unwilling to lose confidence in the cryptocurrency.
  • The Purpose Bitcoin ETF, launched in February 2021, has been seeing a consistent inflow over the last five trading days. The fund’s holdings have increased to 43,701.7 BTC as of Tuesday, according to Glassnode data reported by Jan Wustenfeld. That’s the highest level on record.
  • Notably, the Canadian spot Bitcoin ETF purchased 2,006 BTC on Thursday and 2,780 BTC on Tuesday.
  • The inflows seem to align with a broader short-term tendency of institutional buyers investing in crypto again. Data from Coinshares reveals that digital asset investment products saw $87 million in cumulative inflows last week, with Bitcoin products accounting for $69 million of that total.
  • This news comes as a relief from the digital asset outflow caused by last month’s market collapse, which saw $141 million in total outflows from institutional funds in the week of May 24. That was the highest outflow since July 2021.


Binance’s CZ says he is ‘skeptical’ about the Terra relaunch

  • Binance CEO Changpeng Zhao, also known as CZ, expressed skepticism around the revival plan for the Terra ecosystem and the launch of the new LUNA token.
  • “I try not to predict what the community will do. […] Many are skeptical. I’m one of those guys,” said CZ in an exclusive interview with Cointelegraph.
  • Following the collapse of TerraUSD (USD), the Terra ecosystem’s stablecoin, CZ criticized its team for not handling the crisis properly and pointed at the project’s flaws that led to the crash. Still, Binance is now actively participating in Terra’s revival plan by hosting the airdrop of its new LUNA token.


Tether’s reported bank partner Capital Union shares its crypto strategy

  • Capital Union, a Bahamas-based bank that reportedly holds a portion of reserves by the Tether (USDT) stablecoin issuer, has been actively involved in the cryptocurrency industry.
  • The banking institution has rolled out crypto trading and custody services to its professional clients as part of the bank’s trading desk, a spokesperson for Capital Union told Cointelegraph on Tuesday.
  • “We work with a few selected trading venues and liquidity providers and a handful of custodians and technology providers, which allows us to support a large variety of digital assets as part of our trading and custody services,” the firm’s representative said.
  • Capital Union’s crypto-related services still represent a “fairly small portion” of its business, which is mainly focused on providing traditional wealth management and investment services, the representative noted.
  • The spokesperson did not elaborate either on what cryptocurrencies are supported on Capital Union’s platform or when they were launched, stating:
  • “We do not have a directional view on crypto markets or on any specific coins but as a forward looking financial institution have chosen to enable our professional clients to trade in this new asset class should they desire to do so.”


Goldman Sachs reportedly eyes crypto derivatives markets with FTX integration

  • Goldman Sachs, one of the leading investment banks in the United States is reportedly trying to onboard some of its derivatives products into FTX.US crypto derivatives offerings.
  • Goldman Sachs has been in talks with FTX over regulatory and public listing help, and aims to expand into offering crypto derivatives by leveraging some of its own derivatives tools and services, reported Barron’s.
  • FTX.US, the U.S. subsidiary of global cryptocurrency exchange FTX is currently seeking to offer brokerage services for its derivatives offerings. This would allow the crypto exchange to handle the collateral and margin requirements internally rather than depending on “futures commission merchants” (FCMs). FTX.US president Brett Harrison said:
  • “We have multiple FCMs already committed to integrating technologically with the exchange. There are several large ones you can probably name.”


Binance Labs’ $500M fund to catalyze crypto, Web3, blockchain adoption

  • Binance Labs, the investment arm of crypto giant Binance, launched a $500 million fund in partnership with global investors including DST Global Partners and Breyer Capital to drive innovation across the crypto, Web3 and blockchain landscape.
  • Binance Labs plans to allocate the latest $500 million fund to projects across various stages — incubation, early-stage and late-stage growth.
  • Sharing his take on accelerating the adoption of the crypto ecosystem, Changpeng “CZ” Zhao, CEO of Binance, revealed the importance of a connection between values, people and economies:
  • “The goal of the newly closed investment fund is to discover and support projects and founders with the potential to build and to lead Web3 across DeFi, NFTs, gaming, metaverse, social, and more.”


Fed money printer goes into reverse: What does it mean for crypto?

  • The United States Federal Reserve is starting the process of paring back its $9 trillion balance sheet that ballooned in recent years in a move called quantitative tightening (QT). 
  • Analysts from a crypto exchange and financial investment firm have conflicting opinions about whether QT, starting on Wednesday, will put an end to a decade of unprecedented growth across crypto markets.
  • Laypeople can consider QT the opposite of quantitative easing (QE), or money printing, which the Fed has been engaged in since the start of the COVID-19 pandemic in 2020. Under QE conditions, more money is created and distributed while the Fed adds bonds and other treasury instruments to its balance sheet.
  • The Fed plans on shrinking its balance sheet by $47.5 billion per month for the next three months. In September of this year, it plans on a $95 billion reduction. It aims to see its balance sheet reduced by $7.6 trillion by the end of 2023.

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