First Mover Americas_ Ether ends May down 35%, altcoins lose out

First Mover Americas_ Ether ends May down 35%, altcoins lose out

The latest movements in the crypto markets in the context of May 27, 2022.

Good morning and welcome to First Mover. I'm Lyllah Ledesma and I'll be updating you on the latest crypto market developments, news and insights.

  • Price Point: Ether ended May down 35% as investors look for safer risk investments.
  • Market Movements: Waning NFT interest causes Ethereum's trading volume to drop significantly.
  • Notable: Stepn is banned in China, driving up its GMT token.

Price Point.

Bitcoin (BTC) is down 1% in the last 24 hours, trading at around $28,850. BTC was on track for a ninth consecutive weekly decline, the longest losing streak ever, based on price data dating back to 2011.

Ethereum is down 10% on the day, trading around $1,700. Ether opened the month at $2,800 and has since fallen 64%. Bitcoin, by comparison, fell 23% in May.

Other altcoins also slipped: Avalanche's AVAX fell 10%, Solana's SOL fell 7%, and NEAR Protocol fell 7%.

As altcoins continue to suffer and Bitcoin's dominance increases (currently at 46%), traders see Bitcoin as having a "safer risk profile compared to altcoins," according to Sean Farrell in Fundstrat's weekly crypto note.

In traditional markets, stock futures edged higher Friday. S&P 500 futures rose slightly. Bitcoin has largely followed the S&P 500 lower this year - but it seems the recent rally hasn't helped the crypto market.

Market Movements.

On-chain metrics

Activity on Ethereum has declined. According to data from IntoTheBlock, Ethereum transaction volume is down 80%, which is one-fifth of what it was a year ago.

According to IntoTheBlock, activity on Ethereum and most smart contract platforms has suffered from declining interest in NFTs (non-fungible tokens).

"As large NFT sales have become rarer and there is less demand for blockchains, the volume traded on Ethereum has declined," said IntoTheBlock research director Lucas Outumuro.

"The declining interest in NFTs along with the lower returns in DeFi have caused volume to drop significantly."

NFTs saw gains in Q1 2021, unlike other assets, but the recent decline has impacted activity on the Ethereum network.

For Ether, this means there will be less demand for Ether in the near future, as that is the main currency used to buy NFTs.

"It also means that less Ether will be burned, as NFT drops used to be the biggest source," Outumuro said.

In the money, out of the money

The percentage of addresses profiting from their Ether positions has also fallen to its lowest level since July 2020, according to data from IntoTheBlock.

A metric used to see whether investors are profiting or losing from their investments, referred to as In/Out of the Money (IOM), identifies the average price at which tokens were purchased and compares it to the current price. If the current price is higher than the average cost, the investor is "in the money"; if the current price < average cost, the address is "out of the money."

Currently, 55% of addresses holding Ether are "in the money" and 43% are "out of the money".

The metric shows when prices were at similar levels and compares the percentage making profits and gets an idea of whether more or fewer investors are profiting.

"The IOM around price is helpful in determining price areas where buying activity has been concentrated and shows an on-chain equivalent of support and resistance levels," Outumuro said.

Matthew Dibb attributes recent price action in altcoins to a rotation from major cryptocurrencies and altcoins to BTC. This trend is likely to continue if market weakness persists, as the BTC dominance index has risen to multi-month highs.

"Speculators are shifting their exposure from altcoins to bitcoins in search of a more stable asset to hold during market volatility," Dibb said in an interview with CoinDesk.

Last Headlines.

  • New Terra blockchain expected to launch Saturday, LUNA airdrop to follow The move is part of a broader plan to revitalize the Terra ecosystem and related tokens.
  • Ether accounts for nearly half of $520M liquidations, though on-chain data is weak Traders of Ether futures saw liquidations nearly double those of Bitcoin in an unusual move.
  • The Curious Case of Coinbase's Indian Communications Strategy The reverberations of the company's ill-fated Indian launch remain.
  • Terra devs need a home. Other blockchains are courting them. Armed with multimillion-dollar ecosystem funds, chains like Polygon and Kadena are trying to woo programmers whose jobs are threatened by Terra's collapse.

Feature: Stepn wants to ban gameplay in China and sends up 'move-to-earn' token GMT

By Cameron Thompson

Solana-based "move-to-earn" game Stepn will no longer play in China starting in mid-July, the company announced Thursday, sending its GMT token plummeting as markets digested the news.

Stepn said it will stop offering GPS services to users whose IP address or GPS location shows them in China starting July 15. Without GPS services, players who own the membership-like shoe non-fungible token (NFT) will not be able to earn tokens for their steps.

GMT's price has dropped 38% in the last 24 hours, according to CoinGecko. Stepn NFT shoes were trading at about 8.5 SOL on Magic Eden at press time, 3.5 SOL below Wednesday's price.

"STEPN has always placed great emphasis on compliance obligations and always strictly adheres to the relevant requirements of local regulatory authorities," the company said in a tweet, without naming a specific policy. It further stated that Stepn has never done business in China.

However, China's crypto regulatory landscape is vague, and scrutiny of NFTs by Chinese banking associations has increased. Considering that users must purchase NFT sneakers to participate in the game, Stepn could be the next target for a crackdown.

Stepn did not respond to a request for comment by press time.

Today's newsletter was edited by Lyllah Ledesma and produced by Parikshit Mishra and Stephen Alpher.