Web3 Investment Research Weekly|The encryption market showed a trend of first fall and then pump in the week, the U.S. Spot Bitcoin ETF continued to have a net outflow of funds, and L2, Solana, and cross-chain zone performed relatively fall, taking the lead in Rebound

Quick Facts of the Week

This week, the encryption market as a whole showed a trend of falling first and then pumping. In the first half of this week, the overall market continued last week's downward trend, and began to show a Rebound trend near the weekend's closing session, especially L2, cross-chain, modular and other anti-fall zone took the lead in recovery.

The overall market capitalization rise of the encryption market fall slightly lower than the same period last week, fall from $2.38 trillion to about $2.21 trillion, the Bitcoin market capitalization share was lowered from 53.4% to 52.6% this week, and the fear and greed index retraced from fall 60 to around 47.

In terms of specific zone Fluctuation, the market has experienced a stress test coin fall BTC weak fall this week, and the value . The original most powerful meme zone were not spared, but while the market stabilized in the second half, some high-market capitalization mainstream MEME Rebound were also large. In addition, the zones that have recorded net pumps in price performance in the past 7 days are cross-chain, Layer 0, NFTFi, etc., but it remains to be seen whether these zones can further rebound strongly.

In terms of specific market trading data, Bitcoin's basis fall from 1.36% to 1.1% in the quarter, funding rate turned from positive to negative, and long liquidation hit a new high in nearly three weeks on April 30 and May 1, while Ethereum on-chain Gas continued to be at a low point and is currently tentatively trading at 5 Gwei.

In short, with the hype of Bitcoin ETF and Halving for a while, the market sentiment began to turn cold, but it also provided a lower chip position for some investors to be optimistic about the market short for a long time, and derivation Trading Volume began to pump slightly in the second half of the week, and the conversion of the Airdrop trend still needs some time to accumulate.

On the whole, this week, the overall market of the Crypto Assets market has turned from a fall to a stable Rebound, and under the pressure of the US dollar's high interest rate policy, the encryption market urgently needs a new narrative hype logic to boost the market. Although the current bull market is still off track, it may maintain a volatile momentum pattern in the short term, and it may take time for the general market to pump.

Encryption market

🔥 The encryption market as a whole has been on a downward trend this week, with a slight rebound near the end of the week.

🔥 According to SoSoValue and Lookonchain data, 9 Spot Bitcoin ETF in the United States (including grayscale) continued to have net outflows this week, including a total net outflow of $478 million on May 2, a total net outflow of $564 million on May 1, a total net outflow of $162 million on April 30, and a total net outflow of $51.5 million on April 29.

🔥 This week, the median Ethereum gas reached a three-year low, with gas fees falling as low as around 6.43 gwei on April 27 and May 2, and Ethereum's circulating supply has risen by more than 10,000 in the past seven days.

🔥On May 2, the Decentralization AI Summit in London was held at the Gatsby Centre for Computational Neuroscience at University College London, where long industry experts discussed the future of Decentralization-driven artificial intelligence, Decentralization cloud computing infrastructure Trias, distributed AI computing network Gensyn, AI privacy solution Flock.io, and more.

🔥 cross-chain interop protocol LayerZero announced that Snapshot #1 is complete and more long information will be announced soon.

🔥 For the first time since July 2019, the seven-day MA of the Bitcoin market capitalization-to-Money Laundering ratio was below Ethereum this week, according to TheBlock.

🔥In a social media post, Saylor noted that the company bought an additional 122 BTC in April.

🔥 Ethereum re stake platform Eigenlayer released its proposed White Paper for its new Token EIGEN on April 29 and unveiled its Token Airdrop plans on April 30.

🔥 The Ethereum Foundation sold 100 ETH ($290,000) via Cowswap on May 2 and transferred another 200 ETH to Kraken later.

🔥 Venture capital firm a16z has purchased about $90 million worth of Optimism's native OP Token, according to two people familiar with the matter, and the investment will be executed over a two-year vesting period.

🔥Tether added 8,900 BTC during the quarter, for a total of 75,353 BTC, or 0.38% of the total Bitcoin supply.

🔥 According to Tether's Q1 2024 report, as of the date of the report (May 1), Tether Group's strategic investments totaled more than $5 billion, covering long areas such as artificial intelligence and data, renewable energy, P2P communications, and BTC Mining.

🔥 The first batch of Spot Crypto Assets ETF in Hong Kong was active on the first day, with a turnover of over HK$87 million and a turnover of over HK$68.4 million on the second day.

🔥 ZA Bank said it will soon launch retail virtual asset trading.

🔥 Investment bank TD Cowen said the US SEC is unlikely to approve Spot Ethereum ETF before 2025.

🔥 U.S. lawmakers are urging the SEC to approve Bitcoin Spot ETF-based Options.

🔥 Australia expects to ratify Spot Bitcoin and Ethereum ETF by the end of 2024.

🔥 According to DTCC data, the Spot Ethereum ETF (FRANKLIN ETHEREUM TR ETHEREUM ETF) (symbol EZET) launched by asset manager Franklin Templeton is listed on the DTCC (American Securities Depository Settlement Corporation) website, and the Create/Redeem column is shown as Y.

🔥 Decentralization AI training platform Triathon, recently launched the second phase of TDO, TDO (Test Driving Offering) is the first encryption asset issuance platform in the Web3 industry launched by Trias ecological project Triathon.

🔥Aave Labs released the "Aave 2030" temperature check proposal, and plans to launch Aave V4 and more.

🔥Drift, a Solana ecological DEX derivation platform, has launched an airdrop inquiry entrance, with a total of 1 billion tokens, 12% of which will be used for airdrops.

🔥The AI gaming platform Ultiverse Gold Chip NFT sold 33,873 ETH, worth about $100 million.

🔥Wormhole announced that its ecosystem program includes three components: the Wormhole accelerator, the cross-chain ecological fund, and the xGrant program.

Regulatory & Macro Policy

🔥 Fed Chairman Jerome Powell said that inflation is still too high, further progress is uncertain, short-term inflation expectations have risen, and indeed believes that policy is tightening and putting pressure on demand, and decisions will be made on a case-by-case basis, and decisions will depend on upcoming data.

🔥 For the sixth time in a row, the Fed kept Benchmark Intrerest Rate unchanged in the 5.25%-5.50% range, in line with market expectations.

🔥 The Fed's FOMC statement showed that the Fed will slow the pace of balance sheet reduction starting in June, reducing the pace of its holdings of U.S. Treasuries from $60 billion per month to $25 billion, and keeping the pace of its holdings of mortgage-backed securities unchanged at $35 billion per month.

🔥 The U.S. House of Representatives Financial Services Committee issued a statement saying that the SEC's (SEC) claims about the security of Ethereum (ETH) contradict the statement of the agency's chairman, Gary Gensler. The U.S. Banking Commission said in a statement that it will continue to hold the SEC accountable for overregulation in the digital asset market, and that questions about the agency's classification of Ethereum are critical in the process of applying for the issuance first U.S. Spot Ethereum ETF.

🔥 Canada's prime minister has proposed a Capital Gains Tax on stocks and Crypto Assets.

🔥 Russia will implement Crypto Assets restrictions, exempting Miners and Central Bank projects. As of September 1, Russia will impose strict restrictions on the circulation of encryption assets such as Bitcoin. The issuance of digital financial assets is only permitted within its jurisdiction.

Encryption market highlights

⭐️ In the past week, the overall Crypto Assets market has continued to decline, and after the completion of the fourth Halving of BTC, the rune wealth creation effect is less than expected, macro liquidity is still tight, and the overall market sentiment has turned and triggered a downward adjustment. But at present, this round of falls no longer appears in the past altcoin section passive big dump, some data show that the current price of Bitcoin is very limited from the mainstream mining rig opening price shorter, Miners are reluctant to sell, but still need a new narrative to promote the market recovery.

⭐️ This week, the market as a whole declined, but there are still some zone coin kinds of relative resistance fall, of which Layer 2 zone previously fall larger, but in this round of downward trend instead maintained a relatively fall trend, and took the lead in strong Rebound, this week recorded a return of -4.99%, of which Optimism (OP) and Starknet (STRK) pump a week of 19.9% and 7.2% respectively. In addition, cross-chain, NFT and other zones are also relatively resistant to falling, Wormhole (W) pumped 12.1% this week, and the alt season seems to be brewing.

(Source: CoinGecko)

Bitcoin&Ether coin one-week performance

Bitcoin (BTC)

(Source: TradingView)

The price of BTC first falls and then pumps this week, and it has been five consecutive negative on a weekly basis, highlighting the state of the market's profit chips beginning to clear after the ETF and Halving hype were suspended. At the same time, the downward fall of BTC naturally led to the overall downward adjustment of the encryption market, and the market wealth creation effect declined.

At the time of writing, BTC had a one-week high of $64,721 and a low of $56,573 fall in a short period of time, and the long short is still in contention at the $60,000 mark. Although the current coin price is supported by the 120-day moving average, the downward falling sentiment has temporarily stabilized, but from the weekly point of view, the high MACD death cross has just appeared, and we should not be overly optimistic about the market recovery in the short term.

Another thing that can support the current view is that because the Fed's interest rate cut expectations have been repeatedly delayed, the market has become more cautious, and ETF funds have also continued to see large net outflows this week. In the current macro environment of tight liquidity, the withdrawal of funds will hit the bullish sentiment in the market, which is also in line with the law that the market began to pullback after the halving in the past.

In short, we believe that the long-term Favourable Information short of the Bull Market after the Halving is still effectively priced, but the market is not optimistic in the short term, at least for the current period of time, we need to adjust the strength of long short forces to build momentum for the next market.

Ether coin (ETH)

(Source: TradingView)

From a fundamental point of view, ETH has not performed well since the Cancun upgrade, lacking new innovation momentum, on the contrary, BTC, Solana and a number of new L1 ecosystems have developed rapidly, resulting in a slight decline in market share. On-chain gas fees also continued to fall below 6Gwei this week, and NFT sales were also overtaken by Bitcoin in April, highlighting the cold atmosphere after the strong market hype. However, based on historical experience, whenever on-chain gas falls to freezing, the market tends to usher in a considerable rebound, so we still expect a recovery to come.

It is worth mentioning that ETH/BTC has been in a weak downward trend for nearly a year and a half, and the US SEC's review of its Spot ETF has not been going well, so the price performance of ETH has not been long bright.

On the whole, the pump of BTC and ETH in this round of Bull Market has exceeded the past historical pattern, and the subsequent pump short will depend more long on the ability of US economic policy to curb the strength of the dollar.

In the coming period, we need to pay attention to the positive developments of new narratives such as modularity and restaking, which will be important drivers for the recovery of ETH.

Web3 Project Trends

In the context of the overall pullback, there are still 5 types of projects this week, and the total market capitalization shows a pump pace against the trend, due to the current lack of new hype narratives and the easing expectations of peripheral Liquidity are greatly discounted, the overall market is currently dominated by the rotation recovery of various super fall zone.

Specifically, there have not been out-of-the-circle projects like previous inscriptions, AI, DePIN, etc. in the market in recent times, so it is worth further observation whether the recent strong zone performance can be sustained.

The overall stronger zones this week include cross-chain, NFTFi, Telegram Apps, and the cat-themed MEME sub-zone.

Author: Carl Y. *This article represents the views of the author only and does not constitute any trading advice. *The content of this article is original, the copyright is owned by Gate.io, if you need to reprint, please indicate the author and source, otherwise you will be held legally responsible.