Crypto Market Update: Macro Intelligence 2 Partners Co-Founder Warns of Extensive Credit Crunch Beyond Crypto Banking
Written by Van - Perfected by ChatGPT
Macro Intelligence 2 Partners co-founder Julian Brigden argues that markets have not yet seen the full impact of the SVB collapse, and the credit crunch will extend far beyond crypto banking to every sector of the market. The banking system is a “con trick” at best, and banks fractionally lend more money than they can provide back to depositors at once. The profitability of lending dictates the amount of money a bank can lend, and when the central bank starts raising short-term rates, and the curve starts to flatten, it becomes very hard for banks to lend money profitably, which leads to a liquid nitrogen lending freeze, tightening the credit cycle. Accompanying the credit crunch, a sudden hysteria-fueled rush to withdraw deposits can push banks to the precipice, similar to what happened with Silvergate and SVB. Redistributions of capital are coming, and they will cause volatility, Brigden warns.
Web3 Funding Drops by 82% YoY in Q1 2023
According to a report by Crunchbase, venture capital funding for Web3 startups dropped 82% YoY from Q1 2022 to Q1 2023, declining from \(9.1 billion to \)1.7 billion. Deal flow also saw a significant drop of 33% YoY. The decline in funding is attributed to investor’s risk-off approach and seeking opportunities in familiar industries, such as cybersecurity or SaaS, rather than the promise of Web3. The report did highlight the significant price rallies of Bitcoin and Ether since the start of the year. Another report by Galaxy Research showed that all crypto firms experienced an 80% decline in capital investment YoY, from \(13 billion in Q1 2022 to \)2.4 billion in Q1 2023. However, the number of VC crypto deals had increased by approximately 20% in Q1 2023 compared to Q4 2022.
Bitcoin’s Market Capitalization Plummets as Analysts Warn of Further Decreases
Bitcoin experienced a surge in price in early April, reaching a high of over \(31,000. However, its value dropped to around \)27,000 on May 19, its lowest in almost two months. Bitcoin’s market capitalization has also decreased significantly. Its dominance over other cryptocurrencies has also decreased.
On April 22, Bitcoin barely held onto the \(27,000 mark after suffering another round of losses, leaving bulls with little power. Experts warn of a return to the \)25,000 range, with BTC/USD down 10% for the week and 4% in April overall. However, some analysts insist that the long-term uptrend remains intact and that a retest of \(25,000 would be logical and healthy. Financial information resource Stockmoney Lizards predicts slow and steady growth after previous large gains, while crypto analyst CryptoCon notes a breakout of a 6-year downtrend in the Weekly RSI. Finally, trader Skew expects stronger buy interest near \)25,000.
Addresses with more than 0.1 Bitcoins are accumulating increasingly. However, miners are selling their Bitcoin holdings, possibly due to the recent increase in mining difficulty, indicating a bearish sentiment among miners. The increase in miner outflow could lead to increased selling pressure and potentially lower Bitcoin prices in the short term. Overall, there are mixed signals from the market.
Ethereum Drops to Lowest Price Since April 9 Despite Shanghai Upgrade Implementation
Ethereum has dropped to its lowest price since April 9, erasing all of its recent rally gains following the implementation of the Shanghai upgrade. The cryptocurrency has declined by nearly 14% from its high of \(2,118 on Tuesday, with a 3% drop over the past 24 hours and is currently valued at above \)1,850. ETH declines come amid concerns around inflation, stock market earnings, and recession.
The implementation of the Shapella update on Ethereum led to concerns that massive withdrawals would lead to a crash in the price of ETH, but staked assets have begun to return to pre-Shapella levels, indicating increasing confidence among validators in the staking process. The update also resulted in a significant increase in ETH burns, which could be linked to the recent spurs in PEPE and CHAD meme tokens. The burning mechanism was implemented to transition ETH into a deflationary asset in the future, decreasing its supply and increasing its value.
Cardano Foundation Releases First Annual Report Detailing Achievements in 2022
The Cardano Foundation has released its first annual report detailing its achievements in 2022, including technical assistance leading up to the Vasil hard fork, establishing a blockchain-based supply chain for Georgian wine, and partnerships with UNHCR, Veritree, and the University of Zurich. The foundation also supported the development of Ogmios and launched the Kupo v2 lightweight chain-indexing solution. Despite industry risks in 2022, the Cardano Foundation largely avoided direct effects due to its cold storage solutions.
IOG also released its weekly development report detailing progress in different areas such as core technology, wallets and services, smart contracts, scaling, and governance. Key updates included improvements in code and UI, bug fixes, and making progress on new services. The report also included an infographic highlighting the ecosystem’s growth and achievements. 124 projects have been launched, over 8.15 million tokens created, and 1,227 projects are building on Cardano, with 65 million transactions processed.
Dogecoin Futures Market Shows Strong Inflows and Contrarian Signals
On Dogeday, the price of Dogecoin dropped by 12% at one point due to the failed test launch of SpaceX’s Starship rocket and a downturn in the broader crypto market. However, the open interest volume for Dogecoin futures contracts remains elevated at $470 million, indicating robust capital inflows.
The long-to-short ratio of the futures market shows a greater inclination toward short orders, acting as a contrarian signal for further upside. At the same time, the funding rate for perpetual swap contracts has turned positive since the dip, raising the possibility of more downturn from a long squeeze. Despite this setback, the recent dip in prices and increased selling by DOGE whales suggest further downside risks.
Ethereum Whale Buys Over 300 Billion Shiba Inu Tokens After Price Dip
A large cryptocurrency whale on the Ethereum network, known as “BlueWhale0073,” has purchased over 300 billion tokens of the meme-inspired cryptocurrency Shiba Inu (SHIB) for about $3.32 million in two separate transactions after a dip in its price. This accumulation comes as the cryptocurrency becomes more accessible through recent partnerships with BitPay and CoinGate. Shiba Inu’s burn rate has recently increased by over 3,500%, reducing its circulating supply. Shytoshi Kusama, SHIB’s lead developer, believes that new technologies and utilities are needed for Shiba Inu to experience a significant increase in value.
Trust Wallet Recovers from Major Vulnerability, Refunds Affected Users
Trust Wallet, a popular crypto wallet, discovered and resolved a major vulnerability in its core software library that impacted wallet addresses on Ethereum and other blockchains generated through the Trust Wallet browser extension between Nov. 14 and Nov. 23, 2022. The vulnerability was related to the use of WebAssembly (WASM) format. Trust Wallet stated that it had conducted more frequent security audits and engaged external auditors to assess their security measures in response to the issue. While an estimated loss of about $170,000 was reported due to potential hacks leveraging the issue, the project will issue refunds and has created a reimbursement system to support affected users.
Three Major Investors in Crypto Exchange OPNX Deny Involvement
OPNX, a bankruptcy claims exchange founded by the same people who started now-failed crypto hedge fund Three Arrows Capital (3AC), claimed that three major investors - Susquehanna International Group (SIG), DRW, and Nascent - were backing their exchange. However, these investors denied any association with OPNX. OPNX responded by criticizing the firms for seeking financial gain while denying association due to fear of social media backlash. OPNX was previously known as CoinFLEX and had partnered with 3AC founders Su Zhu and Kyle Davies to get the exchange going.
Rocket Pool Price Tumbles as Large Whales Cash Out at Local Top
The price of Rocket Pool has faced downside pressure near \(45, with whales selling right at the [local top](https://twitter.com/santimentfeed/status/1649234344702263296) of \)61.87, causing a dip in its price. Despite RPL’s rally during the Shapella upgrade, the cryptocurrency reached its all-time high on April 16, 2023, before losing momentum. The 70 large whale transactions signaled the top for the RPL price and is the second largest whale dump for RPL after the 111 large transactions on November 8, 2021. Although RPL has experienced a 14% increase over the past month, declines over the last two days have caused RPL/USD to shed more than 25% from its recently hit all-time high.
Zilliqa Emerges as Top Altcoin on AltRank Amid EVM Integration
Zilliqa topped the list of the top 10 cryptocurrencies by AltRank in the market as per LunarCrush. This was attributed to its upcoming activation of the Ethereum Virtual Machine compatibility on its mainnet, which will simplify the transfer of NFTs and fungible tokens between EVM and Scilla interfaces, and improve speed and scalability. However, ZIL’s social dominance has witnessed a sharp drop based on Santiment’s data, indicating a lack of active interest in the altcoin, and development activity has been slow-moving.
Summary of Market Events and Price Action
As a summary of today’s events and price action in the market, it is crucial to note the following key points:
- Expert predicts severe credit crisis beyond crypto banking
- Web3 funding drops 82% YoY in Q1 2023
- BTC’s market cap drops; further decline warned
- ETH price hits April 9 low despite Shanghai upgrade
- ADA releases first annual report for 2022
- RPL whales sell the top
- Ethereum whale buys 300B SHIB after price drop
- DOGE futures market shows positive signals
- Trust Wallet refunds affected users after vulnerability
- VCs deny OPNX involvement, FLEX drops sharply
- ZIL ranks top altcoin with EVM integration
Top Altcoin Gainers and Losers
XDC Network XDC (+2.82%)
Arbitrum ARB (+2.09%)
Flare FLR (+1.92%)
OKX OKB (-9.50%)
Conflux CFX (-9.25%)
Frax Share FXS (-7.45%)
NFT Market Map
Yuga Labs, the creators of the Bored Ape Yacht Club (BAYC), have won a court battle against RR/BAYC co-creator Ryder Ripps. Yuga Labs had filed a complaint alleging trademark infringement, false advertising, and unfair competition. During a pre-trial summary judgment on April 21, a US court found that Ripps and co-founder Jeremy Cahen had infringed Yuga Lab’s trademarks. The court ruled that Yuga Labs is entitled to an injunction and damages that will be determined at trial. Ripps created the BAYC derivative NFT collection RR/BAYC in May 2022 as a protest against Yuga Labs, using the same imagery from the BAYC NFTs. Ripps also alleged that BAYC contains racist caricatures and Nazi symbology, but the court did not address these claims.
Meanwhile, Bluesky, a decentralized social media platform known as a rival of Twitter, is starting to attract prominent NFT creators, artists, and collectors. In recent days, notable NFT and Web3 projects have established accounts on Bluesky, and their creators, along with other artists and personalities, have also expanded from Twitter. Bluesky’s federated model allows profile transfers between AT Protocol platforms and lets users control content-serving algorithms for increased trust in online spaces. As it starts to take shape, the decentralized protocol backing it is another selling point for Web3 enthusiasts, perhaps pulling in some early adopters.