The fall of bitcoin, the rise of the Doge, the structure of…

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Cryptocurrency market review in May

summary

  • Major cryptocurrencies fell faster than the market, by 27% during the period under review. This could be due to negative news from Tesla and tightening regulations in China.

  • Several altcoins are on the rise. For example, Ethereum Classic grew 2.5 times, Cardano grew 32%, and Dogecoin 22%. Bitcoin’s dominance in terms of capitalization fell to 44%.

  • The supply of stablecoins continues to grow. Tether has disclosed its reserve structure – less than three percent of it is in cash.

  • Coinbase shares fall despite exponential growth in revenue and earnings. According to a recent report from Coinbase, institutional investors are the main audience for the exchange, accounting for 65% of trading volume.

  • In the United States, they plan to introduce mandatory reports of companies and individuals on transactions with cryptocurrencies of more than $ 10 thousand. In Turkey, a bill is being developed under which cryptocurrency platforms will share information with local financial regulators about transactions in the amount of $1200 and above.

  • DeFi blocked funds on the Binance Smart Chain platform are dropping faster than Ethereum. In total, across both sites, the indicator lost nearly $20 billion, or 20% at the end of May.

Bitcoin

During the month (25-25 April), cryptocurrency capitalization fell 17%, bitcoin price fell 27%. Taproot updates on the network are supported by the main mining pools, however, their total hash rate is not enough to reach consensus.

Cryptocurrency market cap. Source: Coinmarketcap

Among the possible reasons for the collapse of major cryptocurrencies are Tesla’s refusal to accept bitcoins when buying electric cars and rumors about the sale of the company’s cryptocurrency from assets. Tesla is the second largest company in terms of balance sheet cryptocurrencies, according to Coinecko on May 19. Elon Musk explains the change in company policy towards bitcoin with the negative impact of mining on the environment. This statement can also have a negative impact on the mining company’s capital.

The number of bitcoins owned by the company. Source: Blok
Capitalization of mining companies. Source: Blok

The second suspected reason is the tightening of regulations in China. The three major self-regulatory organizations and all companies under their jurisdiction are no longer allowed to operate in the cryptocurrency space and provide services to companies regarding digital assets. Shortly thereafter, Chinese regulators called for an end to illegal Bitcoin mining and trading activities.

Altcoins

In general, the cryptocurrency market is falling more slowly than bitcoin. Within a month, the dominance of major cryptocurrencies fell from 50% to 44%, according to Coinmarketcap. This is due to the fact that some of the major altcoins have increased in value, while the value of bitcoin has fallen.

Bitcoin’s dominance in cryptocurrency capitalization. Source: Coinmarketcap

Dogecoin grew by 22% in a month, currently its price exceeds $0.72 per token, but now the cryptocurrency has corrected and is trading at $0.33. Keep in mind that digital assets are considered a joke, the developers did not set the goal to create useful tools for users. However, the project managed to catch the attention of Elon Musk, whose tweets influenced Dogecoin quotes. The positive dynamics can be supported by the launch of cryptocurrency trading on the eToro platform and plans for listing on Coinbase.

Cardano token price increased 32% in May, and peaked at $2.4 per token. On May 25, the fee was $1.5. Perhaps, such a rapid growth is associated with the decision of cryptocurrency exchange Kraken to launch Cardano bet, which allows you to earn money from storing tokens.

Ethereum Classic surpassed all listed altcoins and grew by 2.5 times from April 25 to May 25. Cryptocurrency Internet Computer (ICP) reached the top 10. The initial token sale took place at the end of 2017, however, until May 7, 2021, tokens were frozen. With the start of trading, ICP entered the top ranking of cryptocurrencies in terms of capitalization, now it costs $134. The developer plans to create a secure blockchain with unlimited bandwidth and internet speed. Among other things, the network can be used to create websites, web services, and decentralized protocols.

stablecoin

The total supply in the stablecoin market is growing. The data is different: according to The Block’s estimates, the total supply of “stable currency” is $100 billion, according to Coinmarketcap – $163 billion.

The total supply of stablecoins. Source: Blok

This month, for the first time since 2014, Tether revealed support for the stablecoin. About 76% of the reserves are cash and cash equivalents, of which 65% are commercial securities. It is unknown from which company Tether bought it. Guaranteed loans accounted for 13%, while corporate bonds, funds and precious metals accounted for another 10%.

Read also: lie, big lie and Tether?

Facebook plans to release the US dollar-based stablecoin Diem. This time, the company will focus on tackling future central bank digital currencies (CBDCs). Silvergate, a California-based bank, is a project partner. The development team is working on a cross-border payments framework that will remain relevant until the CBDC starts operating on its own.

Read also: declare “crypt” – an oxymoron or the future of paper money?

Coinbase

In April, cryptocurrency exchange Coinbase was listed on Nasdaq – its placement can be judged successful. However, since the start of trading, quotes have declined, as of May 24, Coinbase’s price per share was $225, which is 31% lower than the closing price of the first day of trading.

Coinbase cryptocurrency exchange stock quotes. Source: Nasdaq

In May, Coinbase released its first post-IPO report. Gross revenue more than tripled in the first quarter, compared with the previous quarter, and reached $ 1.8 billion, net profit – almost 4.5 times and reached $ 771 million Trading volume on the exchange also increased almost four times – to $335 billion

Coinbase also plans to issue $1.25 billion convertible bonds maturing on June 1, 2026. The instrument is designed for institutional investors, coupons will be paid out twice a year. According to the stock exchange report, institutional investors accounted for about 65% of the total trading volume in the first quarter. More or less the same proportion was observed in the fourth quarter of 2020.

Coinbase Revenue and Revenue-to-Volume Ratio. Source: Blok

Regulation

In 2023, the US will tighten cryptocurrency tax regulations. Companies and individuals must report all cryptocurrency transactions over $10,000. In addition, the IRS will withdraw cryptocurrency from citizens to pay debts. This is possible because digital assets are recognized as property, and property can be confiscated to pay off liabilities.

Meanwhile, a new bill is being prepared in Turkey. This will require cryptocurrency exchanges to share information on cryptocurrency transactions over $1200 with the Financial Crime Investigation Board (MASAK). Earlier, in April, the Central Bank of Turkey imposed a ban on the use of cryptocurrencies to make payments.

DeFi and NFT

The amount of funds blocked on DeFi on the Ethereum platform from April 28 to May 26 fell 4% to $63 billion, according to Defipulse. However, during this period, its value hit a record high of $88 billion. The same figure, but on the Binance Smart Chain platform, fell 45% and was equivalent to $20 billion, according to Defistation. This is also due to a 30% reduction in the value of the Binance Coin token this month.

The amount of funds blocked in DeFi on the BSC platform. Source: Defistation

In May, the PancakeBunny DeFi protocol based on Binance Smart Chain was attacked. Hackers discovered a vulnerability associated with instant loans, they managed to get $45 million Another project at BSC is suspected of being a scam – the developer of the DeFi100 protocol embezzled $32 million in investor funds and disappeared, said the cryptocurrency analyst with the nickname CryptoWhale on his Twitter account.

On the eBay trading platform, it became possible to buy NFT tokens with US dollars. The seller must meet the site requirements. eBay is also interested in launching cryptocurrency payments.

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