Wednesday, 3 May 2023

Market Summary

Market Summary 3 May 2023

Bitcoin Price: US$ 28,669.86 (+2.14%)
Ethereum Price:
US$ 1,870.08 (+2.15%)  


Crypto analytics firm Kaiko reported that borrowing rates for TrueUSD (TUSD) soared to over 100% annualized on popular lending protocols Aave and Compound, as traders took advantage of the depegging event to capture a potential 20% gain by betting against TUSD from its elevated price. Kaiko noted that the lack of liquidity backing TUSD’s intended $1 peg likely caused the depegging, and that Binance’s recent promotion of TUSD has made it one of the highest-volume pairs in crypto, despite its relative obscurity among stablecoins. In other news, Singapore-based options trading firm QCP Capital warned that bitcoin and ether could face risks from a potential short squeeze in the heavily shorted US dollar, which has recently found a “double bottom” price floor against major fiat currencies.

Centralized cryptocurrency exchanges Binance and Coinbase have seen significant outflows of staked ether (ETH) since Ethereum’s Shanghai upgrade, with investors turning to decentralized rivals. Coinbase’s staking platform has seen a net outflow of $367m in staked ETH since April 12, while Binance’s staking service has experienced a net outflow of $340m. In contrast, decentralized liquid staking protocols Frax Finance and Rocket Pool have recorded net inflows of $56m and $68m, respectively. Meanwhile, the cryptocurrency market has experienced bearish sentiment for the second consecutive week, with outflows reaching $72m across all geographies and providers.

The share of Ether held by large investors, or “whales,” has decreased since the Shapella upgrade on the Ethereum network in mid-April, indicating a bearish outlook in the near term. Glassnode data shows that on May 1, the amount of Ether held by addresses with 1,000-10,000 ETH was over 14.033 million, compared to 14.167 million on April 12 when Shapella was launched. In a separate news, Bitcoin daily transactions hit an all-time high with over 3 million inscriptions, with fees paid for ordinal inscriptions topping 272 BTC or around $7.6 million. On the other hand, Binance users deposited over $4 billion to farm the SUI token ahead of its mainnet launch, with an average investment of one dollar only reaping 0.016 SUI due to crowding of the pools.

Last week saw a surge in the usage of Ethereum Virtual Machine (EVM)-compatible blockchains due to the consistently high gas fees on Ethereum, with daily new unique addresses peaking at 6.77 million on April 25, according to The Block’s Data Dashboard. Kevin Peng, research analyst at The Block, noted that this growth in EVM-compatible chains can be seen as a proxy for interest in an Ethereum-like user experience on-chain, as these chains provide a consistent experience for users and developers familiar with Ethereum. Meanwhile, the Biden administration has reiterated its desire for all crypto mining operations, particularly Bitcoin miners, to pay a new tax priced at 30% of their electricity costs in order to reduce mining activity in America, citing the negative environmental effects, energy consumption and risks to local utilities and communities associated with mining.




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