Weekly Market Update: $4bn Worth of ETH is Queued for Staking

In crypto, ETH’s macro economics continue to change as the impact of staking withdrawals flows though. Bitcoin innovation continues with new products and initiatives coming out, while Ripple makes some more strategic moves. Ledger walked back on its social recovery service and Binance’s woes continued. 

In wider economic news, it’s PMI week with lots of economies putting out numbers, most showing declining manufacturing output across the major economies. Perversely, Services PMI continues to hold up.

Markets have been on edge most of the week as the US debt ceiling debate, and the corresponding uncertainty it brought to both US and global markets meant people were in watch and see mode.

The tentative agreement formed early in the week gave some certainty and the crypto market appeared to like what it saw.

The sentiment in the crypto market has remained in neutral territory despite the macro uncertainty of the US debt ceiling.

This week, most of the top 30 assets have posted gains, with a noticeable uptick on the back of the US debt ceiling deal announcement.

Trend highlights this week:

• At the time of writing, BTC closed the week up 2.5%.
• ADA, UNI and LINK. ETH was up 3.5%.
• DOGE and AVAX bucked the trend to be down 1%. 
• Our biggest gainer this week was Ripple (XRP) 13% on top of the prior weeks 10%.
• Optimism (OP) was our biggest loser of the week, down a 15%.

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

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Highlights from the Crypto Space

Ledger has walked back on the launch of their recovery service, and won’t go live until an open source version is available.  

Apple continues to soften its stance and has let Stepn trade NFTs within the app.

Ultrasound Money reports that $4bn worth of ETH is queued for staking, with the backlog at ~40 days. It’s probably no coincidence that ETH on exchanges is at a 5 year low.

Bitcoin payments App Strike adds USDT support for non US customers.

Bitcoin has been trading in a very narrow range since March. Even Bloomberg has noticed the lack of volatility.

Bitcoin’s 30-day correlation with the NASDAQ has fallen to its lowest level since December 21.

As part of the same research, K33 also modelled the impact if you had included just 3% BTC in your portfolio.

Other notable highlights from around the crypto space:

• Rounding out BTC news this week are two articles showing there is plenty of innovation coming on that network.
• A company called Stably is planning to launch a stablecoin for Ordinals on the BTC network. Additionally,  Ark is undertaking a redo of lightning layer 2’s for Bitcoin  payments.
• DCG missed a $630m debt obligation to Gemini. Then, this week, they shuttered their newly acquired institutional trading platform Tradeblock. This isn’t over by a long run.
• Neither is Coinbase’s run in with the SEC, they have filed a writ to the court, asking the court to have the SEC “properly fulfil their official duties or correct an abuse of discretion.”
• A Reuters investigative report found that Binance US co-mingled customer funds and corporate accounts, a big no-no. Binance is also starting NFT lending, starting with ETH loans.
• Hong Kong will let retail crypto trading occur under new rules. Hong Kong’s friendly crypto stance is paying off with quite a bit of exchange interest coming through.
• A Private Equity fund called Fahrenheit has won the right to take over the defunct Celsius, here is what it means if you are a creditor.
• TLDR: If your Celsius bag is more than $5000, you become shareholder in mining / PE company.
• Leaked documents suggest European lenders may be able to treat stablecoins the same as fiat on their books.
• Optimism (OP) has a big token unlock event on the 31st of May, TLDR;  154 million tokens vesting for early investors.
• The Solana Foundation has integrated with ChatGPT.  Staying with AI, a company linked to OpenAI founder Sam Altman has raised some cash to do retina scanning for Worldcoin. I’ll be honest I don’t get it.
• Ripple’s lawyer penned a thoughtful piece on the SEC action against the sector and how far they are overreaching. Ripple has completed a deal to buy a minority stake in Bitstamp.

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

In a potential signal of more oil production cuts coming, the Saudi Oil minister warned those shorting oil to ‘watch out’.

🌎 Macro news TLDR: US PCE surprises, while China continues to disappoint.

Big Banks in the UK have been accused of anti-competitive behaviour around bond market pricing. 

Russia and China have signed an agreement to strengthen economic cooperation as the new world geopolitics continues to evolve.

Finally, Container Freight rates continue to fall, possibly reflecting softer global shipping demand.

U.S. economic news

The last week has been largely dominated by the US debt ceiling debate. As expected, a last minute deal was constructed which has yet to be agreed to by both parties.

Like all deals there are compromises and in an increasingly partisan world, getting those could be a big ask.  Both sides are weighing up the economic cost versus the voter cost in doing so.  

US Manufacturing PMI for May showed a slight decline, however services slowed a slight rebound. US retail sales are not looking good and are way below the inflation level you’d need to hit just to stand still. US corporate profits for Q1 were down 6.8%; below forecast.

On top of this, the FMOC minutes showed the committee are divided on whether more tightening is needed.

That announcement makes sense now that the Core PCE reading for April is out, this came in at 4.7% annualised vs a forecast of 3.9%.

Meanwhile, in Europe

European flash PMI for May came out, TLDR manufacturing continues to contract, and is now at a 36 month low, however services continue to do very well.

Things aren’t great in Europe’s largest economy, Germany. Investor sentiment is going backwards, and they entered a recession in Q1. 

In Turkey, the people have re-elected President Erdogan, now into his 3rd decade as ruler.

The IMF came out and said that the UK will likely avoid a recession in 2023 with its GDP forecast to grow 0.4%. 

However, the UK’s inflation remains stubbornly high and is not dropping as fast as expected, Core CPI actually rose and is now at its highest level since 1992.

In Ukraine news, the ramp up in sanctions activity from last week’s G7 conference has begun.

In actual fighting news it looks like a summer escalation is underway, with reports of incursions into Russia and key oil infrastructure being targeted by the Ukraine.

And in Asiapac…

China’s local Government debt is hitting headlines again, looks like stuff is about to get real on the $23 Trillion they owe.

The muted China rebound is now becoming more globally accepted within markets as China’s manufacturing sector continues to disappoint. Backing this, Industrial profits are down 18% year on year.

Japan’ May PMIs show things are humming along in the world’s 3rd largest economy.  Singapore’s inflation rose unexpectedly in April, increasing from 5.2 to 5.7%, added to this their economy shrank relative to Q4 last year.

Meanwhile, Taiwan’s industrial production is taking a hammering, down 22.8% year on year. The bank of Korea held rates flat, as did Indonesia.  

In yet more PMI news, Australia’s flash PMI indicates a continued softening in that economy. Services PMI came back and manufacturing hit a 20 month low. 

In New Zealand, the RBNZ delivered a 0.25bps rise to the OCR, taking it to 5.5%. This was largely expected, however there was a surprise in that the bank indicated that this would be the last rise in this cycle.

The higher OCR rate appears to be working with Stats NZ reporting that retail spend for Q1 was down 1.4%. An ANZ poll on retail confidence was unchanged in May, holding at a pessimistic 79.2.

That’s a wrap for this week. Thanks for reading!

Stay tuned for the next update.

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