In this Week's Rollup
With fear gripping the crypto market following Terra's implosion, investors have gone risk-off. This flight to safety has seen Bitcoin dominance regain market share, as altcoins continue to bleed with many major assets like AVAX and SOL reaching new lows for the year. The 'move-to-earn' sector has been a notable exception to the trend, with some constituents seeing a rise of over 40%.
- Portugal’s Parliament blocks bill that aims to tax digital assets. Portugal is currently refraining from taxing cryptocurrencies in an attempt to encourage innovation in the space.
- Andreessen Horowitz (a16z) announces a $4.5 billion USD crypto fund. $1.5 billion will be allocated to seed investments, with the other $3 billion allocated to venture funding.
- A reorganisation of Ethereum’s beacon chain occurred on the 25th of May which lasted seven blocks. This was Ethereum’s largest reorganisation in years and raised concerns for the chain’s stability going into the merge.
- Bitcoin extends record streak of weekly losses to nine consecutive weeks.
This week has seen some relief in traditional markets, with major stock indices such as the S&P 500, Nasdaq and Dow Jones all making gains. The last few months have seen markets consistently trending lower, making this bounce a welcome change. Oil has continued to rally, now costing $115 per barrel, levels which have not been seen since March 2022. The cryptocurrency market has remained fairly muted during this period, with a significant drawdown observed on Thursday the 26th. The total market cap for crypto started the week at approximately $1.295 trillion dollars and ended the week at $1.272 trillion dollars (-1.77%).
Bitcoin has remained within a tight range over the last few weeks, largely trading between $28,000 and $30,500. The market has continued to consolidate since the Terra (LUNA) fallout. The attempt to defend UST’s peg saw over 80,000 (~$2.5 billion) bitcoin sold at market within a short period of time. During this period, altcoins bled significantly more than Bitcoin, causing Bitcoin dominance to rise.
Ethereum has continued to underperform Bitcoin. Over the last week, Ethereum has dropped another 12% against Bitcoin. While the beacon chain (the proof of stake network that Ethereum will eventually merge with to enable proof of stake) suffered a small chain re-org, Ethereum’s poor performance relative to Bitcoin likely stems from the way in which these cryptocurrencies tend to trade against each other. While Bitcoin trends down, Ethereum tends to trend down harder. With Bitcoin tanking and capitulation in many altcoins, it’s not surprising to see Ethereum significantly underperform Bitcoin.
While Ethereum lost almost 6% of its value this week, most altcoins fell even further, establishing new lows for the year. Some notable examples of this over the last week include Avalanche (AVAX) dropping by 11.5% and Solana (SOL) dropping by 9.5%. Two assets that managed to outperform were Tron (TRX) and Polkadot (DOT). DOT traded 2% higher in a brutal week for crypto, while TRX managed to trade 9.25% higher.
While the downtrend continued this week the DOT ecosystem showed great resilience with considerable gains ranging from 15-25%. The charge was lead by Polkadot’s largest De-Fi protocol - Acala, who just released their rewards scheme for liquidity providers. Additionally, the decentralized money market AstridDAO announced a partnership with Microsoft on May 24th, regarding the release of their own stablecoin (BAI).
The ‘Move-To-Earn’ sector, which has garnered lots of traction in 2022, also displayed relative strength this week with some constituents seeing a rise of over 40%. This comes despite China banning the sectors leading project - STEPN (GMT), causing the price to plummet by 40% last Thursday.
On the 23rd of May, GameStop launched their Beta crypto wallet to integrate with their upcoming NFT marketplace. It will exist as a self custodial web browser extension on the Ethereum blockchain allowing users to receive, send and store Ether, ERC-20 token and NFT’s. The wallet runs on Layer-2 protocol Loopring (LRC), which boasts low trade and transaction costs. This comes after it was claimed the marketplace would have no gas fees and be 100% carbon-neutral in an announcement made earlier this year. Subsequently Loopring (LRC) spiked 27%, and GameStop (GME) is holding a 40% gain.
Lawmakers in the United States are moving to protect the country from the potential impacts of the global adoption of China’s digital currency. Tom Cotton, Mike Braun and Marco Rubio introduced a bill that aims to reduce the use of China’s central bank digital currency in the United States.
Recommended reading: Why are Meme Coins so Popular?
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