Crypto Morning Brew: BTC, ETH Consolidate Pre-Key Macro Risk Events, Two DeFi Tokens Surge

Key Points

• Major cryptocurrencies are still in consolidation mode ahead of upcoming macro risk events.
• Bitcoin continues to trade in thin intra-day ranges in the mid-$31,000s.
• Tron and Waves’ native tokens have surged on Wednesday amid recent DeFi capital inflows.

State Of The Market

Amid a subdued tone to broader macro trading conditions on Wednesday with market participants globally in wait-and-see mode ahead of key upcoming market risk events, cryptocurrency trade on Wednesday has been uneventful, much like trade on Tuesday. The total market capitalization of cryptocurrencies remains close to but just below $1.30 trillion, having held on to but not extended earlier weekly gains that saw market cap jump from closer to $1.20 trillion.

The widely watched US ISM Manufacturing PMI survey for May, which will give a timely insight into business/economic conditions in the US industrial sector, is scheduled for release at 1400GMT on Wednesday. It is expected to signal that growth in the US economy remains robust, though continuing to wane from its 2021 peaks amid ongoing global headwinds such as rampant inflation and supply chain snags as a result of the Russo-Ukraine war and recent lockdowns in China. Meanwhile, a couple of important Fed policymakers will be speaking later in the session.

In terms of the playbook for crypto traders, anything that suggests a better growth outlook, as well as an easing of inflationary pressures/easing of the pressure on the Fed to hike so aggressively in H2 2022 and 2023, would likely be good for stocks and crypto and vice versa. But ahead of the release of US private payroll firm ADP’s estimate of employment change in the US in May on Thursday and then the release of the official US labor market report for May on Friday, traders are unlikely to overly commit to big new positions. That suggests trading conditions might well remain subdued on Wednesday.

Bitcoin Continues Consolidation In Mid-$31,000s

Bitcoin continues to trade in tight intra-day ranges in the mid-$31,000s, not far below earlier weekly highs closer to $32,000, leaving it with a market cap of around $600 billion according to CoinMarketCap. For now, support in the form of the 15 May highs in the $31,400 area is holding up, while bulls continue to eye a potential test of early 2022 lows in the $33,000 area and around $34,200, though any such move will likely have to wait until this week’s aforementioned macro risk events are out of the way.

Turning to ethereum, the world’s second-largest cryptocurrency by market cap continues to consolidate close to its 21-Day Moving Average in the mid-$1,900s and is roughly flat on the day. That leaves its market cap around $233 billion.

In terms of some of the notable major altcoin movers, Cardano, Avalanche, Solana and Polygon are all underperformers, posting losses of between 3-6% over the last 24 hours, according to CoinMarketCap data.

Meanwhile, the native token on the Binance Smart Chain BNB has barely budged in the last 24 hours, despite Binance announcing a new technical roadmap designed to enhance the network’s decentralized structure, and infrastructure capacity for sidechains, as well as the potential for decentralized application development. The new roadmap comes after Binance merged its Binance Chain and Binance Smart Chain back in February.

DeFi, NFT Update: Tron, Waves Ecosystems Experience Rapid Capital Inflow

Trade Value Locked (TVL) into Decentralised Finance (DeFi) smart contracts on the Tron blockchain surged above $6 billion on Tuesday before hitting $6.2 billion on Wednesday, data on DeFi Llama showed, its highest level since last November, when the broader crypto market was just beginning a pullback from record highs reached earlier in the month. Recent inflows have coincided with fresh upside in Tron’s native token TRX, which was last up over 10.0% in the last 24 hours according to CoinMarketCap data, despite the broader subdued tone to crypto trade.

The surge in Tron TVL from under $4.0 billion as recently as mid-way through last month comes at a time when the rest of the DeFi market is struggling to attract/retain capital. According to DeFi Llama, TVL across the entire space remains close to $100 billion on Wednesday, roughly in line with where it has been for the past few weeks and still substantially lower than its pre-TerraUST collapse levels of closer to $200 billion.

Another bright spot in the DeFi space this week has been a new surge of flows into the Waves ecosystem. After surging to nearly as high as $4.75 billion in late March thanks to the attractive stablecoin yields on offer on Waves’ Vires Finance DeFi protocol, the depegging of Waves’ algorithmic stablecoin USDN triggered a massive outflow and, over the past weekend, TVL fell to as low as $900 million.

However, over the weekend Waves released a plan to revive its DeFi ecosystem, even as its algorithmic stablecoin USDN continues to struggle to maintain its 1:1 peg to the US dollar. USDN is currently changing hands just under $0.95. As a result of the new revival plan, Waves has seen its TVL jump back $1.0 billion and towards $1.1 billion, while Waves’ native token WAVES has surged more than 90% in the past three days to around $4.50 to closer to $9.0.

Meanwhile, the broader rebound in cryptocurrency markets in recent days seems to have helped the price floors of major non-fungible token (NFT) collections find support. The minimum price to get your hands on one of the 10,000 Bored Ape Yacht Club NFTs fell under $150,000 over the weekend but has since rebounded to about $170,000. Meanwhile, the price floor to secure one of 10,000 CryptoPunks NFTs is back above $90,000 having dipped as low as $80,000 at the end of last week.

In notable NFT-related news, popular self-help, motivation, and business advice entrepreneur Gary Vaynerchuk, who has already established a strong presence in the NFT space, is set to launch his own NFT consulting business, according to a trademark filing back on 25 May. According to the filing, the firm will offer “technical consulting in the field of non-fungible tokens, cryptocurrencies, and other metaverse and Web 3 activities and assets”. Vaynerchuk has already launched his VeeFriends NFT collection, conducted an NFT conference (VeeCon), and created the “FlyFish Club”, a restaurant that requires NFT ownership for entrance.

Crypto Adoption: UAE Rolls Out Binance Pay, Crypto Sponsorships 2^nd Most Profitable For NBA

Binance Labs on Wednesday announced that it has raised a $500 million fund to focus on supporting Web3 and blockchain start-up companies. However, in a recent report, Morgan Stanley outlined that it expects venture capital investments in the crypto space to slow for the remainder of the year, given that the era of “easy money” is finished (the bank thinks). According to the report, a record $30 billion was raised by crypto startups in 2021, while investments are currently still tracking for a new record high in 2022, despite the slowdown.

29 malls, 13 hotels and four mixed-use communities in the United Arab Emirates (UAE) are now accepting payment in crypto via Binance Pay, crypto media reported on Tuesday. Crypto enthusiasts view the rollout of Binance Pay as a new testing ground for the viability of crypto as an alternate payment means.

A report by IEG suggested that cryptocurrency partnerships are the second most profitable sponsorship category for the NBA. Analysts suspect this bodes well for the spread of crypto advertising/sponsorships across other industries/franchises, which will help bring crypto further into the mainstream.

Singapore’s central bank, the Monetary Authority of Singapore (MAS) launched Project Guardian on Tuesday to test new blockchain-based ideas surrounding the potential tokenization of digital assets. Regulated financial institutions including JP Morgan and DBS Bank will take part in the project, serving as so-called “trust anchors”. The project will see MAS explore potential applications of DeFi in the wholesale funding market, with the central bank to set up a liquidity pool of tokenized bonds and deposits through which it will execute borrowing and lending, all via a public blockchain network.

Executives from two of Australia’s largest four banks, speaking at the Australian Financial Review Banking Summit on Tuesday, ruled out allowing retail customers to engage in cryptocurrency trading. Maile Carnegie, an executive at ANZ, reasoned (somewhat patronizingly according to critics) that “the vast majority of them (retail customers) don’t understand really basic financial well-being concepts”.

Regulation News: Anti-crypto Lobby Sends Letter To US Lawmakers, Basel Committee To Regulate Banks’ Crypto Exposure

26 anti-crypto signatories wrote a letter to leading US lawmakers criticising crypto and blockchain technology, reported the Financial Times on Wednesday, in what it said was the first major attempt to counter lobbying by the crypto industry. The letter, signed by a mixture of tech experts and academics, said “we urge you to resist pressure from digital asset industry financiers, lobbyists, and boosters to create a regulatory safe haven for these risky, flawed, and unproven digital financial instruments”. The crypto industry spent around $9 million on lobbying in the US in 2021, more than triple the amount of 2020, with that number expected to have further risen this year.

Elsewhere, global banking standards setter the Basel Committee on Banking Supervision said on Wednesday that it would set new norms to govern banks’ exposure to crypto-assets later this year. “Recent developments have further highlighted the importance of having a global minimum prudential framework to mitigate risks from crypto-assets,” the committee stated, which analysts said was a likely referral to the recent collapse of Terra’s US dollar-pegged stablecoin UST.

“The committee plans to publish another consultation paper over the coming month, with a view to finalizing the prudential treatment around the end of this year,” they continued. The Basel Committee last year proposed rules that banks should hold $1 in capital for every $1 of crypto they hold, a proposal that received significant opposition from the likes of global megabanks including JP Morgan and Deutsche Bank, who said these standards were overly restrictive.

Meanwhile, the director of the United Nations’ (UN) International Computing Centre (the UNICC) Sameer Chauhan is “smitten” with crypto, various crypto market commentators said on Wednesday citing his recent remarks in a conversation with Cointelegraph at the World Economic Forum (WEF) last week. Chauhan said he sees “massive opportunities” in crypto.

“It’s a tool,” he noted. “You could use it for good or you could use it for profiting—which is not bad… In the future, crypto will be a very strong component of how the world interacts and how they transact, making it a more level playing field.”