Good Morning. Here's what happened:
Prices: Bitcoin and other major cryptocurrencies in the green, but market sentiment remains bearish.
Insights: investors are changing their stablecoin preferences.
Technician's take: BTC is well on its way to a positive momentum signal on the daily chart.
PricesBitcoin
(BTC): $30,466 +1.6%
.Ether (ETH): $2,092 +3.1%
Biggest winners
| Asset | Ticker | Income | DACS Sector |
|---|---|---|---|
| Litecoin | LTC | +7.8% | Currency |
| Algorand | ALGO | +7.5% | Smart contracts platform |
| Polygon | MATIC | +7.3% | Platform for smart contracts |
Biggest Losers
There are no losers today in the CoinDesk 20.Bitcoin and other major cryptocurrencies in the green
Bitcoin and other major cryptocurrencies were mostly in the green late Tuesday as the market continued to firm, but the small rise appeared to be a temporary reprieve rather than a reversal in the bearish sentiment that intensified last week during the TerraUSD stablecoin (UST) implosion.
The largest cryptocurrency by market cap recently traded above $30,400, up more than 1% in the last 24 hours. Ether rose about 3% over the same period and has frequently held above $2,000 recently. ALGO and MATIC each rose over 7%. SOL, CRO, and ADA recovered from their midday declines and rose about 4%.
"The crash in UST stablecoin [Terra] has heralded the end of a significant bull market," Tim Frost, CEO and founder of Yield App, wrote in an email. "The market is 54% below" its "all-time high and won't go much higher anytime soon as we face a painfully prolonged bear market."
Cryptocurrencies followed equity markets, which rose amid encouraging reports on U.S. retail spending and industrial production, as well as cautiously optimistic comments from Federal Reserve Chairman Jerome Powell. The technology-heavy Nasdaq rose 2.7%, while the S&P 500 and Dow Jones Industrial Average gained 2% and 1.3%, respectively.
The U.S. Commerce Department reported Tuesday that retail sales rose 0.9% in April. This is the fourth consecutive monthly increase and evidence that rising inflation has not completely dampened consumer appetite for goods and services. According to the report, spending on electronics, cars and clothing increased, even as consumers spent less on gasoline, which has been a major driver of cost increases in recent months. Meanwhile, the Federal Reserve said industrial production rose 1.1% in April, also marking the fourth consecutive monthly increase.
In his remarks at The Wall Street Journal's Future of Everything Festival on Tuesday, Powell called restoring price stability "a non-negotiable necessity. "It's something we have to do," he said, adding that he hopes the Fed can tame inflation without triggering a massive rise in unemployment or a deep recession. "It's a difficult task, made more difficult in recent months by global events," Powell said. "It's a challenge because unemployment is already very low and inflation is very high.
Frost of Yield App said UST's collapse is "nothing short of staggering."
"Any thorough due diligence would have concluded that this asset could not withstand a bank run," he wrote, "and indeed it did not withstand a bank run.
Still, he optimistically added that other protocols will learn from the UST disaster and use the resulting bear market to develop the next generation of decentralized financial products. As we enter the next bull market, the fruits of their labor will be the world's new financial system. "
MarketsS&P500
: 4,882 +2%
DJIA: 32,654 +1.3%
Nasdaq: 11,984 +2.7%
Gold: $1,814 -0.6%InsightsInvestors change
their stablecoin preferences
.The collapse of LUNA and UST is still reverberating through the broader crypto market. Bitcoin has fallen significantly in recent months and now appears to be stuck at the $30,000 mark.
The main impact on the market is not the erosion of crypto prices from the beginning of the year, a trend that the collapse has accelerated, but an emerging crisis of confidence in the stablecoin sector.
Data from Glassnode shows an inverse relationship between Tether (USDT) and USD coin (USDC) issuance, as well as Binance USD (BUSD). Tether tokens are being withdrawn from circulation through redemption (exchange for cash), while more USDC and BUSD are being issued due to demand.
"USDT redemptions were about $7.5 billion, while USDC supply increased by $2.64 billion and BUSD by $1 billion. So all in all, we had an increase in supply of about $3.64 billion and a decrease of $7.5 billion, for a net outflow of $3.76 billion," James Check, an analyst at Glassnode, wrote in an email to CoinDesk.
DAI, another algorithmic stablecoin but structured differently than UST, also saw a 24.4% drop in circulating supply as $2.067 billion was burned.
"What we may be seeing is a changing preference for which stablecoins the market prefers," Check said.
Check suspects that one or more major traders used the momentum of the "UST-depeg" narrative to lean on the USDT peg in hopes that it would trigger downside fears, which he believes happened.
"We saw the [Luna Foundation Guard's] [$]80K BTC emergency selloff, and a few days later USDT pairs came under pressure on some exchanges, which created a perfect storm for a sophisticated short-side trade," he said.
However, it is important to note that despite all this, the USDT dollar rate recovered quickly. A large, rapid volume of redemptions occurred in a short period of time, and the system continued to work.
"As stablecoins are increasingly integrated into the market as basic infrastructure, the shockwaves of a depegging event, especially in the largest stablecoin USDT, will have far-reaching effects," Check wrote in a note published last week. "This event will also undoubtedly draw the attention of regulators, and with greater speed and urgency."
USDC has a long way to go before Tether ever "flips." But the data can't be ignored: With a crisis of confidence brewing for stablecoins, traders want USDC (and BUSD), not Tether.
Tech opinionBitcoin rises
to $30K; resistance at $35K
.Bitcoin (BTC) continues to trade around $30,000, which is near the bottom of a year-long price range. The cryptocurrency appears to be stabilizing, although resistance at $33,000 and $35,000 could hold off a price rebound.
BTC has remained roughly flat over the past 24 hours and is down 24% over the past 30 days. The recent sell-off extended Bitcoin's short-term downtrend despite oversold conditions on the chart.
The Relative Strength Index (RSI) on the daily chart is rising from an oversold level reached on May 12, when BTC fell towards $25,300. Normally, oversold signals precede a price rise, as was seen in late January.
Moreover, on the daily chart, BTC is on track to receive a positive momentum signal from the MACD indicator for the first time since late March. Nevertheless, the momentum signals on the weekly and monthly charts remain negative, suggesting that the upside potential from here is limited.
ImportantEventsConferenceonPermissionFreeDeFi
G7 Finance Ministers Meeting
8:30am HKT/SGT(12:30pm UTC): Australia Wage Price Index (MoM/YoY/Q1)
CoinDeskTVIn
case you missed it, here is the latest episode of "First Mover" on CoinDesk TV
:Interest in crypto, blockchain use cases, UST devaluation, BTC and ETH move above support levels
Paul Brody, Principal and Global Innovation Leader at Ernst & Young, discussed the state of cryptocurrencies after the UST and Luna crashes with "First Mover." Can blockchain also help solve the global supply chain crisis? Also, Andre Portilho of BTG Pactual provided analysis of crypto markets and Ron Hammond of the Blockchain Association talked about cryptocurrency regulation.
HeadlinesHow
not to run a cryptocurrency exchange: At Liquid, the Japanese exchange recently acquired by FTX, warnings were ignored, violations went unreported, and employees were berated and cursed at, insiders say.
Big-money investors who drove up the bitcoin price may now cause it to crash: Everyone celebrated the arrival of institutional investors in the bitcoin market as their rising adoption helped drive prices higher. Now, with correlations to traditional markets at an all-time high, fingers are being pointed at the market plunge.
Terraform's legal team leaves in wake of Terra stablecoin affair: Marc Goldich, Lawrence Florio and Noah Axler left the Terra ecosystem supporter in May, according to their LinkedIn profiles.
A16z Addresses Downturn in Launch State of Crypto Report: The report discusses Web 3 trends and why Ethereum remains the dominant blockchain.
Blockchain investment firm Fortis Digital raises $100M fund: The fund focuses on altcoins and requires potential investors to have a minimum net worth of $2.5 million.
Read longerMeltemDemirors
: 'If I dress like a disco ball, let me': She's a crypto OG. Classy. Blunt. And a priestess of her own cult. Demirors is a speaker at CoinDesk's Consensus Festival in June.
Today's crypto explainer: what can you buy with bitcoin?
Other Voices: Cryptoverse: Stablecoins meander shakily into the unknown (Reuters)
Said and heard
"Web 3's open access eliminates the power hierarchy and allows creators to take control of their businesses. Spencer (Dinwiddie] noted that "our New Money conversations have taught us the urgency of creators being able to make money directly, without the interference of a third party," and that newly developed, decentralized platforms offer more efficient ways for transactions between creators and fans." (Calaxy COO and co-founder Solo Ceesay) ... "We have both the means and the determination to push back on inflation," [Federal Reserve Chairman Jerome] Powell said during an appearance at the Wall Street Journal's Future of Everything Festival, adding that the Fed is fully focused on that task. The central bank is raising interest rates as part of its most aggressive effort in decades to contain inflation. "We need to see inflation come down in a convincing way," Powell said. "Until that happens, we will continue." (The Wall Street Journal) ... "Retail sales - a measure of spending in stores, online and at restaurants - rose a seasonally adjusted 0.9% last month from March, the Commerce Department reported Tuesday. This was the fourth straight month of higher retail spending." (The Wall Street Journal)