Weekly Market Update: Alts on Bitcoin causing chaos

The launch of BRC 20 tokens onto the Bitcoin network has caused a spike in network fees as well as network congestion. While it’s a boon for the miners and goes a long way to delivering more utility, it may be a case of being careful what you wish for.

In the macro news, the US delivered a no surprise rate rise and got close to saying ‘pause’. Meanwhile, in Europe, they look like they have more work to do on their inflation. Depressingly, the parallels to US bank trends are adding up.

Large parts of Asia, particularly India, looks like they returned to form as an engine of global economic growth, however questions about China’s recovery remain. 

The sentiment in the crypto market had some wild oscillations and has slid back into neutral territory.

This week, the trend in the top 30 assets has been predominantly downwards in price.

Trend highlights this week:

• At the time of writing, BTC closed the weekdown 2%
• ETH bucked the trend up 1%, BNB and ADA were down 5%, whilst XRP dropped 9%.
• Our biggest gainer this week was Kava (KAVA) up a modest 6%.
• Render (RNDR) was our biggest loser this week, giving up all of the previous week’s gains to be down 21%.

View all top gainers: Visit the top gainers page to find out more. 

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Highlights from the crypto space

‘Altcoins’ have come to the Bitcoin network in the form of BRC 20.  As with ERC 20 tokens, now just about anyone can launch a token on the Bitcoin network, which led to this weekend’s network congestion. Oh boy.

New to altcoins? Read up with our guide.

Adding to this, Trustless Computer has recently deployed Uniswap V2 contracts onto the Bitcoin network and as of now you can use it to Swap your BRC 20 tokens. 

The Biden administration is proposing a 30% tax on Bitcoin miners in a penal play at managing energy consumption

Chief strategist at Creative Planning, Charlie Bilello, has analysed total returns on assets since 2011… Macro cycle anyone?

Speaking of cycles, a friendly reminder that we are now approximately 1 year out from the next Bitcoin halving.

Kaiko reports that the average trade size for BTC is still below 2021 levels.

Kaiko also said BTC and ETH liquidity continues to fall.  Watch out for volatility folks, NFA. 

One month on from the successful Shapella upgrade, deposits now outpace withdrawals and the staked ETH balance has surpassed the pre-Shapella levels.

TLDR: Supply continues to reduce. 🤯

Voyager will self liquidate its assets now the Binance US has withdrawn from its asset acquisition process, crypto holders will only get 36% of their assets back.  

Binance is facing another probe, this time about avoiding the Russian Sanctions. And Bittrex has come out saying what a lot of us are thinking, 100-year old rules applied to a disruptive space don’t work. 

Reuters and GWI research have found that crypto ownership has spiked in Turkey and Argentina, probably due to their incredibly high inflation rates.

Other notable highlights from around the crypto space:

• Kraken is standing its ground in a request from the IRS for user information. Interesting times ahead on this. 
• Bittrex US filed for Chapter 11 Bankruptcy on Tuesday.  Bittrex Global is unaffected. 
• NFT marketplace Blur, has launched P2P perpetual loans for NFT’s in an effort to boost market liquidity.
• Major players are chiming in on the UK proposed crypto regulatory framework in an effort to get something more temperate. 
• Coinbase launched its international perpetuals exchange, for users outside the US. And in big news, a US judge ruled the SEC has 10 days to respond to Coinbases rulemaking petition. The pressure is on.
• Sui, a new layer 1 blockchain, launched its Mainnet. Surprisingly, its price did very well on the first day of trading.  Expect some airdrop noise and as always, be careful. 
• Sports Illustrated is building a blockchain ticketing solution based on Polygon’s network.

With that said, we’ll continue to dive deeper onto other macro economic news and developments from around the globe.

Starting off with global news 

The price of Lithium continues to drop, down 70% on its November 22 peak. Obviously this is good for the BEV market which is increasingly competitive. 

🌎 Macro news TLDR: Banking woes continue.

U.S. economic news

As widely expected, the Fed raised the fed funds rate by 25 bps. The all important commentary afterwards walked a tightrope of saying we are pausing without actually saying we are pausing.

And Markets are now pricing in 100% certainty that this was the last rate hike in the US.

Many are pointing to the speed of the fed rate rises as the leading candiate for causing the banking distress.

Meanwhile the fallout from the banking crisis continues post First Republic seizure. Regional bank stocks continue to take a hammering.

The US labour market is a hot mess, US job openings fell for the 3rd straight month, with the JOLTS report showing openings down to April 2021 levels of 9.6m.

At the same time, Non-Farm payroll massively exceeded expectations, adding 253,000 jobs. nationally, wages were also up 5.8% annualised. 

Finally the circus that is the US debt ceiling continues on with Treasury Secretary Yellen sounding the alarm. 

Meanwhile, in Europe

European CPI increased 0.1% in April to 7%. Simultaneously, PMI’s in the block’s major economies all contracted below 50, with Germany’s sitting at 44. More evidence that inflation is turning. European Producer Price index (a measure of wholesale inflation) fell in March, indicating a year on year change of 5.9%, while at the same time EU unemployment rate for March fell. 

In response the ECB has raised its benchmark rates 25 bps to 3.25%. The ECB later said that rates may need to raise rates longer than expected.

Europeans are mimicking the US by moving low return savings from banks to higher returning money market funds. Remember the ECB rate was zero in July last year….where have we heard that before???

UK food price inflation hit 15.7% year on year. Major retailers are signalling that prices should fall “soon”…bet consumers can’t wait. 

In Ukraine news, President Zelenskiy has indicated a lack of interest from Russia on the Black Sea grain deal, however, hints that there are other partners.  

And in Asiapac…

The IMF has raised Asia’s economic forecast to 4.6% this year, driven primarily by China (5.2%, and India (5.9%). India in particular is powering ahead, their Services PMI grew substantially in April. Japanese Services PMI is also rocking, at a near 20 year high of 55.4. 

China’s import volume has fallen 7.9% year on year highlighting the weakness in the domestic economy.  The Malaysian central bank surprised markets by raising its rate 25 bps, as did Hong Kong to now be at 5.25%.  Indonesian GDP is up 5% year on year.  And, finally, some good news regarding Taiwan, with inflation steady at 2.35%

In Australia, they have posted an increase in their Trade surplus substantially beating estimates. No surprises, it was mainly driven by mining exports to China.

Australian Business Confidence has improved slightly, but it’s still way down on its historical average.  This week the Government Budget came out. The fiscal surplus got lost in the news that the Goverment is going to pour $14.6bn into cost of living relief that “won’t make the inflation problem worse”.  

The New Zealand unemployment rate for the March quarter has remained unchanged at 3.4%. Alarmingly wage growth came in at 8.2% annualised, way higher than the RBNZ forecast 7.6%.  Food price inflation is real, Supermarket supplier costs are up 10% year on year.

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