Coin360 Weekly Dispatch | Crypto Market Updates & Highlights | May 27 - June 2, 2023

Crypto Weekly Market Update

Written by Van

Table of Contents:

U.S. Fiscal and Crypto Regulatory Updates

• U.S. Raises Debt Ceiling; Crypto Taxation Remains Ambiguous

Crypto Exchanges and Platforms

• Tether Ventures into Bitcoin Mining; Hits $83.2B Market Cap
• Disappearance of Multichain CEO Sends Shockwaves Through the Industry
• Crypto Giants Binance, Nansen Announce Workforce Reductions

Cryptocurrency Performance

• Bitcoin Closes May with 4% Loss Amid Dollar Rally Uncertainties
• Ethereum Self-Custody Hits ATH; Gas Fees Drop 70%
• Optimism Tokens Faces Price Decline After Massive Unlocks

Crypto Regulatory Compliance

• Binance to Delist Privacy Coins in Four European Countries

Stablecoins

• Circle to Launch USDC on Arbitrum; Drops U.S. Treasury Bonds
• Shanghai Police Detain Stablecoin Team; FDUSD Stablecoin Planned

NFT News

• Hong Kong Police Launch CyberDefender to Tackle Metaverse Crime
• NFT Market Plummets as Blue Chip Collections Take a Hit
• Crypto Critic Peter Schiff Surprises with "Golden Triumph" NFT Collection
• Reddit's Collectible Avatars Gain Massive Holders 
• ANA Launches GranWhale NFT Marketplace for Art and Culture

U.S. Raises Debt Ceiling; Crypto Taxation Remains Ambiguous

The US has agreed to raise its debt ceiling, avoiding a default on obligations. There are no new crypto taxes with the proposed 30% tax on electricity used by miners being abandoned. However, the subject of U.S. crypto taxation remains unclear despite President Biden's association of "crypto traders" with "wealthy tax cheats." 

The complex definition of cryptocurrencies adds complexity to taxation and regulatory issues. The use of cryptocurrency in the fentanyl trade was highlighted during a Senate hearing, with calls from U.S. Senator Elizabeth Warren to disrupt crypto payments in the illegal trade. 

Tether Ventures into Bitcoin Mining; Hits $83.2B Market Cap

Stablecoin issuer Tether has entered the Bitcoin mining business following investment in energy production and partnership with a local licensed company in Uruguay. Tether is committing to environmentally responsible mining with a focus on upholding the most secure monetary network, whilst aiming to become a global tech leader promoting energy innovation and the future of cryptocurrency. 

Uruguay’s 94% renewable energy, predominantly wind and solar power, provides ideal conditions for a steady stream of clean and sustainable energy. Tether also previously stated it would invest 15% of its net realized operating profits in Bitcoin. With its market dominance persisting, the Tether USDT stablecoin has achieved a market capitalization of more than $83.2 billion, marking a new all-time high (ATH).

Disappearance of Multichain CEO Sends Shockwaves Through the Industry

Reports suggested that the Chinese authorities had apprehended the Multichain team and seized a wallet containing estimated $1.5 billion to $1.7 billion in crypto assets. Concerns have been mounting due to the lack of transparency from the Multichain team, which has adversely impacted the MULTI token's value. 

At the same time, discussions on social media platforms, especially Twitter, have raised questions about a potential connection between Gate.io and Multichain. While Gate.io has swiftly denied all illiquidity concerns, data analytics firms have noted significant inflows of MULTI tokens to the exchange, adding to the complexities surrounding this situation.

Crypto Giants Binance, Nansen Announce Workforce Reductions

Both Binance and Nansen announced their plans for workforce reductions. Binance is conducting a workforce evaluation of its top roles, and reevaluating resource allocation to optimize operations. Meanwhile, Nansen has recently announced a 30% reduction in its workforce, citing aggressive hiring during the bull market, and the challenging bear market. 

Overall, the crypto industry has witnessed ongoing layoffs as companies adjust to market conditions, with Coinbase and Digital Currency Group also reducing their workforce. However, Binance has denied rumors of a 20% staff cut and remains committed to talent optimization and cost efficiency. 

Bitcoin Closes May with 4% Loss Amid Dollar Rally Uncertainties

Bitcoin (BTC) closed May with a 4% loss, leading to bearish sentiment among traders. Short-Bitcoin positions saw $11 million outflows for the sixth consecutive time, totaling over $270 million. Market focus shifts to the mid-June FOMC meeting and the $28,000 level, considered a key obstacle by long-term BTC holders. 

The U.S. Dollar Index (DXY) has been on the rise since late April, reaching levels unseen since the banking crisis in March. This has raised concerns due to the inverse relationship between the DXY and Bitcoin. However, signals suggest the dollar rally may be ending, affecting BTC. Bitcoin whales have increased their holdings since April 17, diverging from previous trends. The legitimacy of the DXY's rise is questioned, adding uncertainty to bearish outlooks. 

Ethereum Self-Custody Hits ATH; Gas Fees Drop 70%

Ethereum's self-custody is on the rise, with its supply on exchanges hitting an all-time low of 9.9%. This trend suggests growing interest in long-term ETH holdings, potentially tightening the market and driving up prices. With fewer tokens available for purchase, increased demand could have a significant impact. Self-custody aligns with the ethos of decentralization and mitigates risks associated with hacking and system failures.

Ethereum's deflationary nature, marked by negative supply growth of 1.46%, may further bolster its price in the event of increased demand. Additionally, the gas fee for Ethereum transactions has dropped by nearly 70% in less than a month, making the network more affordable and enhancing its utility.

Optimism Tokens Faces Price Decline After Massive Unlocks

On May 30, Wintermute prepared for the unlock of Optimism (OP) tokens by transferring them to a Binance wallet. On May 31, 386 million OP tokens, worth approximately $587 million, were unlocked, accounting for 9% of the total supply. The significant token unlock led to a decline of over 20% in OP's price, which dropped to $1.37, the lowest since January and a 50% decline from its 2023 highs. 

Further selling pressure is expected with another token unlock of 24.15 million tokens scheduled for the end of June. Optimism's upcoming upgrade called "Bedrock" aims to reduce transaction fees and enhance compatibility with the Ethereum network, scheduled for June 6.

Binance to Delist Privacy Coins in Four European Countries

Binance will delist 12 privacy tokens in France, Italy, Poland, and Spain starting from June 26. The affected tokens include Monero, Zcash, Decred, Dash, and others. Binance cites compliance with local regulations as the reason behind the delisting, and users will no longer be able to buy or trade privacy tokens on the platform. 

Privacy-focused tokens aim to enhance user privacy by obfuscating blockchain transactions, but governments worldwide express concerns about money laundering and terrorism financing. This delisting follows regulatory pressures, such as the implementation of AML regulations and the Financial Action Task Force's Travel Rule. Privacy coin projects object to the delisting, emphasizing their transparency and confidentiality features.

Circle to Launch USDC on Arbitrum; Drops U.S. Treasury Bonds

Circle, a leading cryptocurrency firm, is set to launch a new native version of its stablecoin, USD Coin (USDC), on the Arbitrum network on June 8th. This update aims to improve transaction speed and eliminate withdrawal delays by leveraging cross-chain transfer protocols (CCTPs). The migration involves renaming the current Ethereum-based version of USDC to "USDC.e," while the new Arbitrum-based version will be called "USDC." 

Notably, Circle has removed all U.S. Treasury bonds from the backing reserves of USDC, valued at $29 billion, to safeguard against potential turbulence in the bond market during the U.S. debt ceiling situation. The stablecoin market has also experienced a decline, with USDC's market capitalization shrinking from $55 billion to $29 billion in the past year.

Shanghai Police Detain Stablecoin Team; FDUSD Stablecoin Planned

The team behind CNHC and HKDC stablecoins has been detained by Shanghai police, with a judicial seizure notice found on their office door. China's ban on crypto trading, mining, and bank transactions is in effect, although the country is developing its own CBDC. 

Meanwhile, Hong Kong has proposed rules for crypto trading platforms, and First Digital Group plans to launch FDUSD, a USD stablecoin backed by high-quality reserves. The stablecoin will be issued on Ethereum and BNB Chain, and discussions with major exchanges for listing are underway. Regulatory restrictions exclude retail users in Hong Kong, and new regulations for stablecoins are being considered.

Top Weekly Altcoin Gainers and Losers

Gainers:

Injective INJ (+27.05%)

XDC Network XDC (+19.18%)

Quant QNT (+18.79%)

The Graph GRT (+13.54%)

Ripple XRP (+13.54%)

Losers:

Optimism OP (-11.42%)

Pepe PEPE (-11.15%)

Flare FLR (-10.11%)

Gatechain Token GT (-8.63%)

Toncoin TON (-7.41%)

NFT Market Map

Hong Kong Police Launch CyberDefender to Tackle Metaverse Crime

The cybersecurity unit of the Hong Kong Police Force has launched CyberDefender, a metaverse platform aimed at increasing public awareness of potential Web3 risks. An exploring the Metaverse event was held, with a focus on crime prevention strategies within the metaverse. The Police plan to increase technology crime educational initiatives, especially for teenagers, through the CyberDefender Metaverse platform. 

NFT Market Plummets as Blue Chip Collections Take a Hit

Sought-after NFT investments like Doodles and Invisible Friends have lost up to 95% of their value in Ether. Blue chip NFT collections have decreased in value by over 40% on average, with the Blue Chip Index falling from 12,394 ETH in July 2022 to 7,446 ETH. Despite this, some investors remain bullish on NFTs. Meanwhile, the number of blue-chip NFT holders increased by over 90%. 

Crypto Critic Peter Schiff Surprises with "Golden Triumph" NFT Collection

Peter Schiff, a well-known critic of Bitcoin and other cryptocurrencies, has also unexpectedly revealed a collaborative NFT art collection called "Golden Triumph" on the Bitcoin network. The collection comprises physical paintings, prints, and digital versions that have been inscribed as Ordinal NFTs on the Bitcoin blockchain. While some members of the crypto community find this announcement amusing or perplexing, others view it as hypocritical given Schiff's prior negative views on crypto.

Reddit's Collectible Avatars Gain Massive Holders 

Reddit Collectible Avatars have over 10 million holders following a surge in uptake during the first few months of launch; only one avatar is held by the majority of holders. The market capitalization of the avatars is $38.4 million, with sales worth $32.6 million since their launch in July 2022. There are a total of 13.7 million NFT avatars in the Reddit collection. 

ANA Launches GranWhale NFT Marketplace for Art and Culture

All Nippon Airways (ANA) has launched a non-fungible token (NFT) platform called "ANA GranWhale NFT MarketPlace" to trade art and photography collectibles through its metaverse subsidiary ANA NEO. The marketplace allows artists and creators to sell their works as NFTs, and certain NFTs will be up for trading. ANA NEO has partnered with Hokkaido's government to showcase its nature, food, and culture through its metaverse platform. 

This article has been refined and enhanced by ChatGPT.