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Crypto Market Sees Steep Decline in May 2023 Amid Meme Coin Frenzy and Macroeconomic Uncertainty

The crypto market capitalization decreased by 6%, marking the steepest fall of the year so far.

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In May 2023, the crypto market experienced significant volatility and a sharp decline in overall market capitalization. This came as a result of macroeconomic news and developments, with uncertainty surrounding the US debt ceiling casting a shadow over financial markets.

The crypto market capitalization decreased by 6%, marking the steepest fall of the year so far.

However, amidst the market turmoil, there were positive regulatory developments in Asia as Beijing released a whitepaper emphasizing Web3 innovation and development, signaling China’s growing openness to blockchain technologies. Also, Hong Kong announced its decision to permit retail trading of cryptocurrencies, starting from June 1, with digital asset exchanges now able to apply for licenses.

During May, XRP emerged as the strongest performer among the top 10 coins. Ripple made strategic moves to expand its capabilities, including the launch of a new platform enabling the issuance of digital currencies by central banks, governments, and financial institutions.

On the other hand, DOGE and SHIB, two popular meme coins, were the weakest performers in May. Despite the meme coin frenzy that took place throughout the month, these coins couldn’t escape the broader market declines. Notably, Dogecoin experienced a surge in daily transaction volumes after the introduction of “DRC-20 tokens,” but it remains to be seen if this heightened activity will be sustained.

In the decentralized finance (DeFi) sector, markets experienced a 3.4% decline in total value locked (TVL), amounting to $47.9 billion. The distribution of TVL across the top blockchains remained relatively unchanged, with Ethereum holding 58.1%, Tron with 11.9%, and BNB Chain with 9.3%.

Ethereum witnessed a slight decrease in TVL, reaching $27.9 billion, which was part of a broader pullback in on-chain liquidity. Fantom, however, experienced the steepest drop, losing over one-third of its TVL due to rumors and uncertainty surrounding Multichain.

In the non-fungible token (NFT) market, trading volume slightly increased in May, reaching just over $740 million.

The total number of buyers and sellers hit a yearly high at 1.67 million, with a total of 8.92 million transactions. Despite this, the Nansen’s NFT-500 index continued its decline as the floor prices for notable NFT collections dropped.

Noteworthy sales of major collections, such as Doodles and Mutant Ape Yacht Club (MAYC), occurred during the month. The meme coin frenzy may have played a role in traders selling their NFTs to join the rapidly growing meme coin trend.

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Bitcoin

Bitcoin Holds Above $67,000 Amid Trump Win Bets

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Bitcoin is holding above $67,000 after yesterday’s correction after breaching the $69,000 level and rising to its highest level since late July.

Yesterday’s correction comes after an upward trend that investors are pushing to continue in light of a set of supporting factors, whether from the massive inflows into cryptoinvestment products or from more bets on Donald Trump winning the White House again.

Cryptocurrency investment products recorded massive inflows last week, reaching $2.2 billion, which represents the highest level since last July, with Bitcoin accounting for most of these flows that went to US spot ETFs, according to CoinShares. Net flows to these funds amounted to more than $294 million yesterday alone, according to SoSo Value.

This comes with two weeks left until the US presidential election. While the Polymarket betting market indicates that Republican candidate Trump is likely to win with a 63% probability, the betting site has sparked controversy over who is behind the significant increase in Trump bets. In contrast to Polymarket’s results, the poll average indicates that Democratic candidate Kamala Harris is ahead by 48.2% compared to 46.4% for Trump, according to FiveThirtyEight.

While this disparity and fluctuation in polls and predictions is likely to keep cryptocurrencies vulnerable to sharp volatility in the coming days, as the identity of the winner of the White House presidency might shape the future of the industry.

However, the futures market is presenting a mixed story and is questioning the sustainability of Bitcoin’s bullish trend. Bitcoin futures open interest regained its record level of more than $40 billion yesterday, according to CoinGlass, despite the price correction. This correction only resulted in a very small liquidation of the long positions of about $28 million yesterday.

Of that $40 billion, $12.5 billion was on the Chicago Mercantile Exchange (CME), which also represents a new record high for Bitcoin futures on the US’s largest futures exchange. This reflects the increasing involvement of institutional investors in driving price action.

What is concerning is the decline in the long/short ratio from 1.04 on Sunday to 0.94 today, which may reflect increasing bearish bets in futures market, which in turn may indicate a possible reversal of the bullish trend and a renewal of yesterday’s losses soon.

Written by Samer Hasn, Senior Market Analyst at XS

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Cryptocurrency

Binance Expands Crypto Access in West and Central Africa With Mobile Money Integration

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Binance, the world’s leading blockchain and cryptocurrency infrastructure provider continues to drive innovation and expand access to cryptocurrency in Africa, now allowing users in Benin, Cameroon, Ivory Coast, Democratic Republic of Congo (DRC), Togo and Senegal to purchase crypto directly through mobile money payments enabled through local partnerships. 

This new functionality further strengthens Binance’s commitment to providing simple and secure access to cryptocurrency for users across the continent, reinforcing the platform’s vision of financial inclusion.

Samantha Fuller, Spokeswoman for Binance says “We remain focused on advancing financial inclusion and delivering user-friendly solutions for crypto adoption across Africa. This expansion into West and Central Africa is a significant step in our mission to increase crypto adoption, providing millions of people with more direct access to the global digital economy”.

This new service currently supports only BUY transactions, further simplifying the entry point for new crypto users in these regions, while providing them with a reliable and secure platform to acquire digital assets.

How to buy crypto:

  1. Log in to your Binance app and select [Add Funds] from the homepage.
  2. Choose your local fiat currency you wish to use by selecting the currency in the top-right column.
  3. Follow the instructions to complete your crypto purchase.

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Bitcoin

Bitcoin Fails to Hold $63,000 Amid Weak Risk Appetite, Growing Selling Pressure

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Bitcoin remains below $63,000 after failing to hold above it over the past two days while Ethereum is also struggling to reclaim $2,440.

The crypto market has been trading sideways since the beginning of this week.

The cautious moves in the crypto market come amid uncertainty over a range of economic and political factors in the US and geopolitics in the Middle East.

Add to that the potential selling pressure that the US government may exert with its permission to sell around 70,000 Bitcoin.

The Supreme Court has allowed the US Marshals Service to proceed with the sale of 69,370 Bitcoins seized from the Silk Road online store, which would be the largest sale of its kind in history. While the nature and pace of this selling is not yet known, it will not necessarily put downward pressure on prices if it is done in over-the-counter (OTC)
transactions, according to Beincrypto.

As for the economic side, in light of the surprise labor market numbers that were much better than expected and Jerome Powell’s hawkish speech, hopes for a rapid continuation of interest rate cuts this year have diminished. While the relatively high rates remain for a longer period and the continued rise in Treasury bond yields will weaken appetite for risky assets in general, including cryptocurrencies.

Whereas, after the hypothesis of a half-percentage point cut at the next November meeting was the most likely, it has now become excluded in the Fed Fund futures market, and the probability of a quarter-percentage point cut has become 87%, according to the CME FedWatch Tool. The remaining 13% is for the possibility of keeping current rates unchanged.

The state of caution may also prevail in the markets in the coming weeks, as we anticipate the presidential elections in the United States, which will begin next month. While the outcome of these elections could cause a structural shift in the crypto industry.

Far away, in the Middle East, markets are still anticipating the nature of the expected escalation in the region, especially regarding the nature of the Israeli response to the unprecedented attack from Iran and the nature of the counter-response. While one of the most prominent scenarios is targeting energy facilities, which would bring inflation back to the forefront, which in turn may require central banks to keep interest rates high.

 

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