The total crypto-asset market has fallen to 1.22 trillion in market capitalization over the past week. On May 4, the Federal Reserve raised its benchmark interest rate by half a percentage point in response to inflationary pressures. In response, the Dow Jones Industrial Average and Nasdaq Composite fell 3.12% and 5%, respectively, the next day. Bitcoin And Ethereum It is down 54% and 50% since its all-time highs in November 2021.
Thanks to the Bitcoin backed loan, MicroStrategy owns about 129,218 Bitcoins, acquired at an average price of about $30.7 thousand per bitcoin. If the bitcoin price drops below $21,000, the software analytics company will either have to sell some of its holdings to back the loan or deposit more bitcoin as collateral. On the other hand, Tesla suffers a greater loss, as it owns about 43,200 bitcoins, acquired at an average price of 34 thousand dollars.
Figure 1: Bitcoin buying and selling movement over the years
The bear case here is that if these large institutional investors decide to divest their Bitcoin holdings, we expect the price to drop to around $20,000. However, this is not a new exercise in the Bitcoin price movement over the years. The first time the bitcoin price halved was in February 2018, it fell to $8k after crossing the $19,000 mark in December 2017. It took bitcoin two calendar years to recover. However, in the following years, the recovery time was reduced to only a few months. As in the market, the accelerating leverage can be spotted in a recovery through the increasing institutional adoption of cryptocurrencies, especially Bitcoin. We can safely expect a recovery to occur over the next quarter.
Regulations and Accreditation
Argentina’s central bank took the decision to ban cryptocurrency trading against the backdrop of alleged pressure from the International Monetary Fund, which gave the country a $44 billion relief package in 2017. This decision comes a few days after Argentina’s largest private bank, Banco Galicia, decided to add trading Cryptocurrencies. Uganda is also imposing a nationwide crackdown this week on digital payment providers that facilitate crypto transactions.
Nigeria is upgrading its central bank digital currency (CBDC) eNaira for use in a wide range of goods and services. On the other hand, Nigeria’s central bank is tightening its grip on crypto assets, crippling the country’s fintech sector, according to a United Nations report.
On a higher note, Japanese e-commerce site SBI Motor Japan has announced that it will begin accepting Bitcoin and Ripple for auto sales. This will be the first time that Ripple has been published on a cross-border e-commerce site in Japan. On May 4, when Bitcoin was trading at $38,000, Gucci announced that it will accept crypto payments in some US stores at the end of this month and plans to expand the beta to all stores in North America.
In a win for DeFi adoption, Jane Street secured a $25 million USDC loan from BlockTower Capital through Clearpool, a decentralized capital markets provider built on Ethereum. Clearpool enables institutions to borrow unsecured loans through a network of lenders backed by venture capital firms, including Arrington Capital and Sequoia Capital.
DeFi and NFTs
Algorithmic stablecoins are undergoing battle tests as Terra (UST), the largest in the market, lost its peg last week, dropping to $0.66 on May 10 and to $0.3 the following day. The Luna Foundation Guard plans to lend $750 million worth of bitcoin and $750 million to market makers to return the treasuries to its currency peg. Read our statement on UST and LUNA to find out more.
Figure 2: 7-day floor tank price performance
Despite the market bloodbath last week, developments in the world of DeFi are still going strong. The new algorithmic stablecoin US dollar from Tron has been officially launched on the blockchain. Tron is offering an additional guarantee of $10 billion in bitcoin and other cryptocurrencies to prop up the US dollar. The new stablecoin will be available on Ethereum and BNB Smart Chain.
Polkadot has also launched XCM, a new cross-chain communications protocol that aims to eliminate the need for complex bridging procedures that have cost the crypto industry billions in cyber attacks. Being as secure as Polkadot’s primary hub, the relay chain, XCM will allow communication between parachains and smart contracts.
Decentralized Oracle Network Chainlink has partnered with LaProp, a real estate token platform serving the Latin American real estate market. Leveraging the track record of Chainlink Keepers contract operators securing billions of dollars invested in the DeFi markets, LaProp will allow investors to purchase tokenized shares in a variety of real estate properties, generating a percentage of the income from lease payments. Chainlink Keepers is a decentralized automation service that performs smart contract tasks on the BNB chain.
On the NFTs front, Instagram is testing NFTs this week with select creators in the US. The supported blockchains for displaying NFTs on Instagram are Ethereum and Polygon. In other news, Dubai’s Virtual Asset Regulatory Authority (VARA) has revealed its headquarters in the metaverse, making it the first Sandbox government entity.
The returns of the five largest cryptocurrency groups during the last week of May 3-10 were as follows – BTC (-18.63%), ETH (-19.27%), BNB (-21.4%), SOL (-25.95%), XRP (- 18.23%).
Net Flows Per 21 Shares of ETP
Net outflows from ETPs reached $20 million in the last week of May 3-10. Find below the details of the inflows and outflows for each ETP.
We are pleased to welcome Karl Hagerup of State Street Global Advisors (SSGA) to our ever-growing team as 21Shares’ new Managing Director for the Nordic and Netherlands region. “The Nordic is an exciting market for 21Shares and we can see that there is a growing interest from Swedes to invest in crypto assets.” ETF Stream quotes Karl as saying. “The natural step for us is to begin expansion into Nordic countries and our goal is to continue to be an educating thought leader for potential and existing crypto investors in both Sweden and Nordic countries.”
Our research team made headlines this past week. Our Research Associate Adrian Fritz has been featured on Trend Report for a guest post on the metaverse. Exploring different sectors and technologies, Adrian also drew a comparison between centralized and decentralized metaverses, i.e. Meta and Sandbox Anatomy.
Carlos Gonzalez, who is also an associate research fellow at 21Shares, appeared in a Forbes explainer article about Litecoin. “While designed to get TPS faster than Bitcoin, Carlos González Campo, Research Analyst at 21Shares, says that “layer 2 solutions on top of Bitcoin like the Lightning Network” have speeded up Bitcoin transactions and may have reduced the need to use Litecoin as a faster payment network.” .
Binance Joins Elon Musk’s $500 Million Twitter Acquisition
According to documents filed with the Securities and Exchange Commission, trading giant Binance is backing Elon Musk’s $44 billion acquisition of Twitter with a commitment of $500 million. Other investors include venture capital firm Sequoia, which pledged $800 million, Fidelity $316 million, and a16z $400 million. “We hope to be able to play a role in bringing social media and web3 together and expanding the use and adoption of crypto and blockchain technology,” Binance CEO Changpeng Zhao said.
why does it matter?
Musk previously said that he will enhance the platform with new features; Make open source algorithms to increase trust, defeat spambots and befriend all humans. The priority in his roadmap will be to eliminate spam, scam bots, and bot armies on Twitter. Musk said that if he had one dogecoin for every cryptocurrency scam he saw, he would get a hundred billion dogecoins. In theory, this could be great news for Crypto Twitter. Having Binance on board may also encourage other crypto stakeholders to participate in the regeneration of the social network into a more secure and innovative platform for the crypto-asset industry.
Each week, the 21Shares Research team will publish their data-driven vision of the cryptocurrency world. Please direct any comments, questions or feedback to 21Shares.