Coin360 Weekly Dispatch | Crypto Market Updates & Highlights | May 11 - May 17, 2024

Crypto Weekly Market Update

Table of Contents

Crypto Market Updates

• Crypto Weekly Recap

Big Firm's Bitcoin Strategy

• El Salvador's Bitcoin Venture Yields $57.4 Million Profit
• Institutional Investors Fuel Bitcoin ETF Growth

Stock and Memecoin Market Movements

• GameStop Stock and Memecoins Surge Dramatically
• Pump.fun Faces $2 Million Exploit by Ex-Employee

Cryptocurrency Tokens and Exchanges

• Most New Tokens on Binance Underperform
• Bybit Faces Regulatory and Operational Challenges
• Notcoin Launches with Over $1 Billion Trading Volume

Cryptocurrency Security Concerns

• Worldcoin Foundation's Privacy Move Amid Accusations
• Sonne Finance and Others Suffer Significant Hacks

NFT Market Trends and Legal Issues

• Pudgy Penguins NFT Toys Achieve Major Sales Milestone
• 95% of 2024 NFT Market Valued as Worthless
• Dolce & Gabbana Sued Over NFT Losses
• LVMH and BlockBar Launch NFT Edition of Garrus Rosé

Crypto Weekly Recap

Bitcoin

• Weekly change: +6.67%
• Bitcoin is expected to close its best week since March.
• After dropping from nearly $63,000 to $60,400 last Friday, BTC was uneventful over the weekend.
• On Monday, BTC dropped to $60,000 before jumping to $63,100. El Salvador unveiled its public Bitcoin mempool, showcasing nearly $353 million holdings, and institutions like Bracebridge & UBS revealed their investments in BTC ETFs.
• On Tuesday, the Producer Price Index (PPI) met expectations at 2.2%, marking a 3-month consecutive increase. Coinbase’ sudden outage contributed to the price drop.
• BTC dropped to $61,000 until Wednesday noon, then rose in anticipation of macro data releases.
• In April, the U.S. Consumer Price Index (CPI) rose 0.3%, indicating eased inflation. Year-over-year CPI was 3.4%, and core CPI was 3.6%. Bitcoin surged to its weekly high of $66,500 that night.
• BTC maintained its upward trend with 600 firms investing $3.5 billion into ETFs.
• Bitcoin reached $67,000 by Friday afternoon (UTC) After CPI data, both crypto and stocks rebounded, with bitcoin over $66,000 and ether above $3,000.
• Bitcoin spot ETF inflows returned, starting Monday with $66 million, with the following days recording over $100 million each.
• Digital asset investment products saw inflows after 5 weeks of decline.
• The U.S. Senate voted disapproving SEC's SAB121.
• Long-term holders retained Bitcoins. On-chain data showed new Bitcoin whales buying 200,000 BTC weekly. Short-term holder whales' demand decreased post-ATH but they still bought 200,000 BTC weekly.
• U.S. spot Bitcoin ETFs bought 11,188 Bitcoins, five times the total mined, with $257 million in net inflows. Grayscale's GBTC hit record inflows.
• Stablecoins' market capitalization surged by 25% last week, and the Tether Treasury minted an additional $1 billion USDT tokens.

Ethereum

• Weekly change: +4.96%
• ETH price action was boring during the first half of the week.
• It flirted with $3,000 since Monday but didn't reach it until Wednesday after the CPI announcement.
• Roaring Kitty's return fueled memecoin rises, leading to a surge in Ethereum memecoins like PEPE, FLOKI, APU, MOG, and SHIB, causing a slight increase in average transaction fees and ETH burnt, but active addresses didn't change much.
• On Wednesday, aside from the CPI, a recent SEC filing raised concerns about spot Ethereum ETFs' approval. Classification issues regarding ETH might lead to strategic denials, with legal terms indicating slim odds for approval.
• Despite the news, ETH broke $3,000 after the CPI and headed to $3,100 today, as Ether's sell-off paused, yet Ethereum still underperformed Bitcoin due to a weaker capital rotation trend.
• A Coinbase research report suggested Ethereum (ETH) was positioned for an upside surprise due to its market strength, lack of major supply-side pressures, and central role in decentralized finance. Analysts highlighted ETH's resilience, supported by staking and layer 2 growth. Anticipation of potential approval for U.S. spot ETH ETFs could lead to positive surprises.
• ETH performance seemed outshined by Solana as it was the leading blockchain by weekly altcoin inflows (CoinShares), the #1 blockchain by new tokens born in April, and had staking in Europe enabled by Robinhood.

Altcoins

• Tether attacked Ripple CEO over USDT FUD, calling him an "uninformed CEO".
• Runes protocol saw significant decline in activity.
• North Korean hackers deployed "Durian" malware targeting crypto firms.
• US court seized 279 North Korean crypto accounts as hackers used new malware.
• BounceBit mainnet launched amid phishing scam alert.
• Antonio Juliano stepped down as CEO of dYdX.
• More crypto AI alliances emerged following a $7.5B token merger.
• Meme coin HarryPotterObamaSonic10Inu announced its layer-3 blockchain.
• Crypto exchange OKX launched a local regulated entity in Australia.
• A critical $5 million security flaw was found in the Aptos Wormhole Bridge.
• Rain Exchange assured safe customer funds following a $14.8M exploit revelation.
• RWA Platform Re debuted a tokenized reinsurance fund on Avalanche with a $15M commitment from Nexus Mutual.
• Falcon Labs was fined $1.7M for illegally funneling U.S. users into crypto.
• Peter Thiel's Founders Fund and Vitalik Buterin backed a $45M investment in Polymarket.
• Zero-knowledge identity project Humanity Protocol hit a $1B valuation after the latest funding round.
• Solana-based Cypher developer confessed to gambling away $300K of user funds.
• Coinbase director revealed 1 million new tokens were created in April.
• Bitget Wallet launched a $10M ecosystem fund alongside Onchain Layer.
• Huobi Hong Kong withdrew its license application for the second time.
• FLOKI was up 45% on the month and voted on a 15B token burn.
• PEPE jumped to an all-time high following Roaring Kitty's return.
• Chinese police cracked down on a $1.9B smuggling ring involving USDT.
• KuCoin halted Naira-based peer-to-peer trading, citing compliance.
• Degen Chain came back online after a 50-hour outage.
• Stablecoin issuer Circle eyed a US move, setting the stage for a rumored IPO.
• IOTA launched its IOTA 2.0 public testnet.
• Robinhood launched Solana staking in Europe plus a new customer rewards program.
• Goldman Sachs alumni launched crypto VC Neoclassic Capital.
• Intent-centric DeFi protocol Shogun raised a seed round at a $69 million token valuation.
• Blast Network unveiled June 26 for the highly anticipated BLAST token airdrop.
• ShibaSwap 2.0 launched on Shibarium, boosting SHIB token burn.
• Canada’s "Crypto King" and associate were arrested and charged with fraud in an alleged $30M Ponzi scheme.
• CME Exchange launched Bitcoin trading for hedge funds and institutions.
• Bitpanda expected record-high profit in 2024 as over $100M revenue was reported in Q1.
• MakerDAO announced PureDai, a decentralized stablecoin to replace DAI.
• Tornado Cash developer appealed a Dutch judge’s jail verdict.
• Tether and TON teamed up with a mobile app for USDT-to-fiat transactions.
• Arbitrum-based L3 ApeChain integrated Supra's real-time oracle data and randomness protocols.
• PancakeSwap offered to pay off interface fees for Uniswap users.
• Fantom (FTM) turned "insanely fast" after an upgrade, with its token trading near a monthly peak.
• Solana DEX Drift launched a 120 million token airdrop.
• HBAR took over Qatar with a $50M digital assets venture studio.
• Sei token popped on a V2 roadmap.
• OpenAI will mix "authentic" Reddit content into its AI training data.
• DTCC and Chainlink completed a pilot project to accelerate fund tokenization.
• Binance partnered with Taiwan authorities in a $6.2M money laundering crackdown.
• A Binance executive was denied bail in a Nigeria money laundering trial.
• Avalanche price soared amid the tokenization of a wine investment fund.
• Synthetix's sUSD stablecoin slipped below the dollar peg to $0.96 amid a sell-off.
• Lido proposed an alliance promoting an stETH-based restaking ecosystem.

El Salvador's Bitcoin Venture Yields $57.4 Million Profit

El Salvador's pioneering Bitcoin venture, started in September 2021, is backed by a $360 million treasury holding 5,748.76 BTC. The nation's strategic acquisitions, including the recent purchase of 7 BTC for over $438,000 and 31 BTC for $1.94 million, reflect President Nayib Bukele's "buy one Bitcoin daily" initiative. The average Bitcoin purchase price of $43,097 has resulted in an unrealized profit exceeding $57.4 million.

However, the adoption rate among Salvadorans remains modest at 12% in 2023. In contrast, institutional inflows into U.S. spot Bitcoin ETFs have turned positive with $413 million worth of net inflows. El Salvador's transparent strategy is applauded, with a new token bond indicating significant economic potential.

Institutional Investors Fuel Bitcoin ETF Growth

Institutional investors spearhead a surging interest in Bitcoin ETFs, with over 600 companies injecting $3.5 billion into these funds in a recent quarter. Noteworthy financial giants like Morgan Stanley and JPMorgan, along with prolific hedge funds such as Millennium Management, are prominent players in this burgeoning ETF space. 

Millennium leads the pack with a hefty $1.9 billion stake across diverse Bitcoin ETFs, setting the pace for the institutional rush. This wave of capital infusion, representing a fraction of total ETF assets, signifies a bullish stance on Bitcoin's future, underpinned by strategic institutional bets and confident investment maneuvers.  

GameStop Stock and Memecoins Surge Dramatically

On May 14, 2024, GameStop's stock soared by 74.4%, with a $9.32 billion market cap, paralleled by meme coins like AMC. "Roaring Kitty," Keith Gill's return caused a surge in GameStop call options. Short sellers faced $852 million losses. A GameStop meme coin, GME, surged by 2,291%, reaching a $100 million market cap. Solana-based tokens based on GameStop boomed. PEPE, a meme coin, hit an all-time high at $0.00001151 after Keith Gill's resurgence. 

The market saw revived risk appetite, with PEPE's derivatives volume surpassing $5 billion, driving a bullish trend. Frog-themed memecoins, inspired by Gill, surged up to 30%. Jay Clayton cautioned about the ethical issues of meme stock frenzies.

Pump.fun Faces $2 Million Exploit by Ex-Employee

The Solana-based meme coin launchpad Pump.fun was struck by a $2 million exploit orchestrated by a former employee, "Staccoverflow," resulting in the theft of approximately 12,300 SOL. Utilizing flash loans, the attacker manipulated Pump.fun's bonding curve contracts, paving the way for the theft. Staccoverflow claimed personal grievances against the project and expressed intent to "kill" it. 

Pump.fun swiftly paused trading, upgraded contracts, and announced compensation plans. The affected protocols reinforced their security postures following the exploit. Daily revenues of over $1.2 million reported prior to the incident underscored the platform's substantial user activity. Enhanced security measures and regular audits were identified as critical needs in Solana's ecosystem. 

Most New Tokens on Binance Underperform 

According to pseudonymous crypto researcher Flow, over 80% of the newly listed tokens on Binance are in the red, raising concern for investors. Only five out of 31 analyzed tokens, including Memecoin (MEME), Ordi (ORDI), Jupiter (JUP), Jito (JTO), and Dogwifhat (WIF), have appreciated in value. 

This signals a challenging market environment and highlights the lack of real user base despite high initial valuations. Tokens launched on Binance act as "exit liquidity" for insiders due to limited retail access to quality early investment opportunities. Additionally, memecoins, such as Ordi and Dogwifhat, have experienced notable growth driven by retail interest and independent operation from the altcoin market. 

Bybit Faces Regulatory and Operational Challenges

Bybit faces significant regulatory and operational challenges. The French AMF reminded the public that Bybit has been blacklisted since May 20, 2022, for unauthorized cryptocurrency services. Concurrently, Bybit's CEO apologized for the Notcoin listing debacle where not all users received their airdrop before trading, causing price discrepancies and promising compensation for affected users. 

Additionally, Bybit withdrew from Canada and the UK due to strict regulations. Despite these hurdles, Bybit maintains a high trust rating and remains one of the top centralized exchanges.

Notcoin Launches with Over $1 Billion Trading Volume

On May 16, 2024, Notcoin's NOT token was launched with an airdrop of over 80 billion tokens, involving 35 million players. Trading began on major exchanges like Binance, OKX, and Bybit, quickly reaching over $1 billion in trading volume. Notcoin, developed by Open Builders, has 67.9 trillion minted tokens and 16 trillion burned. 

Initially priced at a $1 billion market cap, it saw a volatile price drop post-launch. The tap-to-earn Web3 game allows token mining and referrals, amassing a large Telegram community. Trading pairs include BTC, USDT, BNB, and FDUSD, and staking rewards are available.

Worldcoin Foundation's Privacy Move Amid Accusations

The Worldcoin Foundation launched an advanced secure multi-party computation (sMPC) system for iris code encryption to enhance privacy safeguards, developed with TACEO. 

Conversely, on May 14, 2024, DeFi^2, a top Bybit trader, accused the Worldcoin team of manipulating their system for profit, alleging predatory tokenomics and a $200 million WLD token sale to trading firms. The trader highlighted concerns about hyperinflation due to upcoming token unlocks and emissions, predicting daily devaluation and significant sell pressure, thus benefiting insiders over the public.

Sonne Finance and Others Suffer Significant Hacks

On May 14, 2023, Sonne Finance reported a $20M hack affecting its operations and assets including WETH and USDC, triggering a pause in market operations on the Optimism network. Following the hack, a portion of the funds was moved and swapped, indicating an attempt to launder through protocols like Tornado Cash. On a separate note, BlockTower Capital experienced an undisclosed amount of assets stolen, confirmed by a Bloomberg report on May 15, 2023. 

This firm has previously been impacted by other financial setbacks, including the closure of crypto-friendly banks. Additionally, ALEX Lab faced a $4.3M loss from its XLink bridging service due to a suspected private key compromise, reported on May 15, 2023. The ALEX team has offered a 10% bounty for the return of the stolen funds, with assurances of no legal pursuit if the funds are returned by May 18, 2023.