Weekly Market Update: Ledger’s Own Goal

This week’s crypto headlines have been dominated by the Ledger own goal. We reiterate that social recovery is absolutely a great idea, but not the way they have handled it.

In other news crypto adoption has grown rapidly outside the US, while Bitcoin now has over 1 million wallets holding more than 1 BTC.

In Macroeconomic news, the dance of the US debt ceiling continues on. We continue to get signals of a softening US economy. 

In Europe the Black Sea grain deal got extended, and G7 nations continue to look for ways to sanction Russia’s economy. 

In APAC, Japan looks to continue with its accommodating monetary policy while Australia sentiment and unemployment took a turn for the worse. Meanwhile, here in New Zealand the RBNZ looks to continue to ratchet up pressure by raising rates yet again.  

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

This week, there has been a trend of modest gains in the top 30 assets, with most coming in flat to 2% up on the week.

Trend highlights this week:

• At the time of writing, BTC closed the week up 1%, as did BNB and DOGE.
• ETH and ADA were both up 2%,  whilst  XRP regained all of last week’s ground to be up 9%.
• SOL bucked the trend to be down 3%.
• Our biggest gainer this week was Render (RNDR) 40% on the back of some big announcements this week.
• EOS was our biggest loser this week but still only down a modest  4%.

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

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Highlights from the Crypto Space

The Block reports that active addresses on Bitcoin are falling because of the relatively high fees.

At the same time, Bitcoin addresses with more than 1 BTC have hit an all time high and passed the 1 million milestone.

According to time of day analysis by Valkyrie, the US has become less dominant in BTC holdings since 2021 compared to other territories.

Lightning labs has launched a new, more efficient way to mint BRC 20 tokens. This does indicate that necessity drives innovation and that Ordinals will likely be a net positive development. 

The US Secret Service came out and said what we all know, blockchains are amazing at tracking money.

The SEC’s response to Coinbase’s petition was underwhelming.

TLDR: rules for crypto might take years to come and enforcement in the absence of rules was likely to continue.

In a major win for Ripple, a judge has ruled that the SEC cannot squash former SEC Commissioner’s speech where he very explicitly said that “current offers and sales of Ether are not securities transactions,”.

In more news, Ripple bought a Swiss based custodian as it gears up for more enterprise business. 

CFTC chairman Behnam has said decentralised exchanges can, and should, be regulated.

Meanwhile, outside of the US, Europe’s MICA legislation has passed its final approval with finance ministers signing off on it.  

We noted last week that Tether is making huge profits. This week they have said that they will spend 15% of their profits on BTC, on top of the $1.5b they already have. They are essentially going long on BTC. 🚀💎🙌

Other notable highlights from around the crypto space:

• In something of a PR disaster, Ledger launched an opt-in social recovery service, many users missed the “opt in” bit and well… crypto twitter lit up.
• Social recovery is a great idea, but you have to do it well. Finding itself in a hole, Ledger decided to keep right on digging. For the record, we have no doubt Ledger will resolve this situation. 
• Pimlico has launched a fully automated ERC 20 paymaster. TLDR: it will let you pay your transaction fees with any ERC 20 coin. Interestingly, Visa is exploring the same thing. 
• In a counter move to MEV profiteering (essentially front running), Flashbots has launched a service to offer protection.
• Binance Australia has lost its PayID access affecting both deposits and withdrawals to the platform. And, in a disturbing development, Westpac Australia is trialling a ban on sending to ‘selected’ Crypto exchanges, because all the scams go ‘to offshore’ exchanges.
• Apple surprised everyone by letting Axie Infinity onto the app store.

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 

Global freight container costs continue to fall, down 77% year on year and 35% below the 10 year average. Supports the view that most inflation is now domestic. 

🌎 Macro news TLDR: … .US inflation declines, Europe has more work to do.  

U.S. economic news

In a sign of increasing financial stress, US household delinquencies on debt increased in the first quarter. Notably, high interest credit card debt did not come down post the holiday season. 

US consumer debt went past $17tn (yep Trillion) for the first time. Do the maths on the interest payments, mind boggling.

The US Debt ceiling dance continues, with parties edging closer to a deal. The clock is on as the money runs out 1 June.

Meanwhile, in Europe

In the UK, Brexit fallout continues with car makers warning of a mass shutdown if the deal isn’t redone. German economic sentiment recorded a significant decline in May, dropping 14 points in April. 

In Ukraine news, the Black Sea Grain deal has been extended for 2 months which is good news for food prices globally.

While the G7 nations agreed to ratchet up actions to circumvent the sanctions against Russia. 

And in Asiapac…

China’s Industrial production increased by 5.6% for April, however this was way below the 11% expected. Retail sales were up though. China’s housing market looks dire with 61 of 70 markets recording price declines. In what looks like an opportunistic move, China announced grand plans for the Central Asia region that has traditionally been under Russian control. The PBoC has left its key rates unchanged now for the 9th straight month.

Japan’s GDP grew 0.4% in Q1, beating expectations and the new BoJ governor has reiterated that loose monetary policy is here to stay due to downside risks. Backing up this stance, inflation rose to 3.5% in April.

In Australia, the lastest Westpac MI survey has found that Australian consumer sentiment has “fallen back to just above dismal levels”. Unemployment rose to 3.7% in April, higher than the forecast 3.5%.

The Australian wage price index climbed 0.8% in Q1, with annual wage growth coming in at 3.7% to March 23, way below inflation levels (for context New Zealand wages rose 7.6%, while inflation ran at 6.7%).

The RBNZ is due to come out with another monetary policy update next week. Most Bank economists are predicting another OCR rise, ironically due to pressures from increased migration.

Adding a bit of spice to that consideration, the latest Government budget delivered $5bn of additional spending and is being seen as inflationary.

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

Stay tuned for the next update.

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