LBank Labs Weekly Digest (May 5–11) #44
*All on-chain data is dated as of 12:00 a.m. EST on Sunday, May 12th.
Welcome back to LBank Labs Weekly Digest! Here we list all you need to know about crypto market in the past week(May.5–11).
Author: LBank Labs Research team — Hanze, Johnny
Keywords: #FOMC #Layer2
Stickier-than-expected inflation data in recent weeks upended Wall Street’s expectations for interest-rate cuts. PHOTO: BRENDAN MCDERMID/REUTERS
1 Macro Market Overview
U.S. Stocks Log Weekly Gains in Hot Start to May. According to WSJ, stocks on Friday notched weekly gains, putting the market’s April doldrums further in the rearview. All three indexes have advanced by at least 3.7% so far this month. The Dow Jones Industrial Average rose 0.3%, or 125 points, enough to extend its longest winning streak of 2024 to an eighth consecutive-trading session. The S&P 500 inched 0.2% higher, while the tech-heavy Nasdaq Composite edged a hair lower. The May performance marks a reversal from April, when stickier-than-expected inflation data upended Wall Street’s expectations for interest-rate cuts, fueled a bond rout and weighed on the stock market. Since then, data showing a slowdown in hiring and growth in unemployment claims have calmed some investors’ nerves about how long inflation will remain higher than the Federal Reserve’s 2% target. Growing confidence that the economy will gradually slow has helped fuel a bond rally this month, pushing down yields. However, many Americans not on Wall Street are already concerned. Consumers’ outlook on the economy darkened in May, according to preliminary results from a University of Michigan survey. Respondents’ year-ahead inflation expectations rose to 3.5% from April’s 3.2%, weighing down sentiment in the poll to its lowest level in six months. Most of the so-called Magnificent Seven stocks were down on Friday. Nvidia and semiconductor counterparts including Qualcomm and Broadcom rose in the session after the world’s biggest contract chip manufacturer, Taiwan’s TSMC, reported blockbuster sales.
Last week saw gains across all three major U.S. indices, with the tech-heavy Nasdaq Composite Index rising by 1.2%, the Dow Jones Industrial Average increasing by 2.2%, and the S&P 500 Index climbing by 1.9%. In contrast, stocks related to web3 performed poorly, with COIN falling by over 10.2%, and MARA and MSTR declining by 1.9% and 3.2% respectively.
Left: Three Indexes, Right: Nasdaq, COIN & MARA & MSTR (Source: Yahoo Finance)
Macro indexes
Last week, the US Dollar Index (DXY) began to rise on Tuesday, then experienced a pullback on Thursday, closing at 105.314 by the end of last Friday’s trading session, showing an increase compared to 105.055 seven days earlier.
DXY (Source: TradingView)
The Federal Reserve announced at its May 2024 Federal Open Market Committee (FOMC) meeting that it would maintain the overnight federal funds rate at the current range of 5.25% to 5.5%. According to the latest data from the Chicago Mercantile Exchange (CME), influenced by the recent sustained overheating inflation data, only about 3.5% of investors currently expect the next FOMC meeting in June to witness the first interest rate cut of the year. More investors believe that the Federal Reserve will maintain interest rates unchanged.
Left: EFFR, Right: Target Rate Probabilities for June 2024 Fed Meeting (Source: Federal Reserve Bank of New York, CME FedWatch Tool)
Benchmark 10-year Treasury yields (US10Y) upward after the reading, settling at 4.500%. Yields rise as prices fall, basically unchanged from seven days ago.
US10Y (Source: TradingView)
Trump announces he will start accepting cryptocurrency for presidential campaign donations. FOX reporter Eleanor Terrett says the two competing candidates for the next president have expressed different views on cryptocurrency, with current President Biden explicitly stating he would support SEC regulatory enforcement. Former U.S. President Trump stated that he would cease his hostile stance towards cryptocurrency and “ensure” the acceptance of cryptocurrency for campaign donations.
(Source: Twitter@EleanorTerrett)
The current total net inflow of the Bitcoin spot ETF stands at $11.7 billion, with total net assets currently at $50 billion, accounting for 4.2% of the total market capitalization of Bitcoin. Over the past week, the Bitcoin spot ETF has continued to exhibit a net inflow trend. On Tuesday, Thursday, and Friday of last week, there were net outflows of $16 million, $11 million, and $85 million respectively. However, on Monday and Wednesday, there were net inflows of $217 million and $12 million respectively. Looking at the data from last Friday, Grayscale’s GBTC experienced a net outflow of $103 million in a day, with a total outflow reaching $18 billion. Meanwhile, BlackRock’s IBIT saw a net inflow of $12 million in a day, with a total net inflow reaching $16 billion.
Bitcoin Spot ETF Overview (Source: SoSo Value)
2 Crypto Market Pulse
Market Data
Last week, the total market capitalization of the cryptocurrency market continued its downward trend, with the current total market cap standing at $2.25 trillion. Over the past two weeks, there has been a net outflow of approximately $130 billion. Due to recent overheated inflation data, the Federal Reserve has maintained its current high-interest-rate policy in its latest May FOMC meeting, keeping pressure on crypto assets. As of the early morning of May 12th, the spot price of Bitcoin is $60,918, down nearly 4% over the past seven days. As the second-largest cryptocurrency, Ethereum is currently priced at $2,907, down nearly 6% over the past seven days. Additionally, the market capitalizations of Bitcoin and Ethereum are approximately $1.2 trillion and $351 billion respectively, accounting for approximately 53% and 16% of the total market cap. The gap in market share between Ethereum and Bitcoin continues to widen.
Left: Market Cap, Right: BTCÐ Price (Data: CoinMarketCap)
$TON, $AKT, and $RNDR emerged as Top 3 gainers, while $BONK, $CORE, and $STX were Top 3 losers. Last week, in the top 100 cryptocurrencies by market capitalization, cryptocurrencies related to artificial intelligence (AI) showed positive momentum in both social and market indicators, such as $RNDR, $AKT, $WLD, etc. Among them, $AKT and $RNDR had weekly gains of over 18% and 17% respectively, securing the second and third positions. Meanwhile, $TON claimed the first position as the top gainer with a weekly gain of over 20%. Toncoin ($TON) is a decentralized layer-one blockchain developed by the encrypted communication platform Telegram in 2018. The price increase of Toncoin occurred before the launch of the “play-to-earn” game Notcoin in May. Notcoin is a social click game running on the Telegram application, and its token $NOT will be traded on multiple cryptocurrency exchanges, particularly as the 54th project listed on Binance’s new coin mining program, where $NOT can be mined using $BNB and $FDUSD. Hence, the short-term bullish news surrounding the Ton ecosystem.
$AKT and $RNDR are both projects in the field of artificial intelligence. Akash Network ($AKT) is a Supercloud leading a paradigm shift in cloud computing, disrupting conventional cloud services, and pioneering a revolution in access to essential cloud resources. On the other hand, RenderToken ($RNDR) is a distributed GPU rendering network built on top of the Ethereum blockchain, aiming to connect artists and studios in need of GPU compute power with mining partners willing to rent their GPU capabilities. The recent surge in prices of these tokens is mainly driven by the continuous hype surrounding artificial intelligence and its potential applications in the blockchain space. With an increasing number of investors and traders seeking exposure to AI-related cryptocurrencies, tokens like $RNDR and $AKT are in a favorable position to benefit from the growing attention and capital inflows. Additionally, according to a report by Cointelegraph, during Apple’s keynote presentation last week, Tim Millet, Apple’s VP of Platform Architecture, briefly mentioned Octane, a creative workflow software supported by the Render network, running on the latest iPad with the M4 chip. Following this mention, $RNDR surged by 11%.
Top 10 Gainers & Losers (Data: CoinMarketCap, LBank Labs)
Last week, the growth rate of stablecoin total supply slowed down, remaining at around $151 billion. Over the past seven days, the net change in stablecoin supply holdings continued to show a positive trend, but the net growth rate has decreased. This indicates that the recent decline in expectations of a Fed rate cut, caused by overheated inflation data, is putting pressure on the crypto market, leading to a slowdown in the pace of new funds entering the stablecoin market. Additionally, observing the net holdings data of stablecoins on exchanges over the past week, the overall trend fluctuated between net inflows and net outflows, indicating that the current cryptocurrency market is undergoing a consolidation phase with unclear market sentiment.
Stablecoins Market Cap (Data: Glassnode)
In the derivatives market, the open interest of Bitcoin and Ethereum perpetual contracts has slightly increased over the past seven days. With the continued volatile decline in Bitcoin and Ethereum prices last week, the open interest of perpetual contracts rebounded over the weekend following a brief rapid decline on last Friday. Observing the liquidation data from last week, which is consistent with the price trends of cryptocurrencies, the liquidated positions were predominantly long positions, reaching a peak last Friday. The data suggests that some investors still have a positive outlook on the current market trends, which are currently in a consolidation phase.
Left: BTC & ETH Open Interest, Right: BTC & ETH Total Futures Liquidations (Data: Glassnode)
In the decentralized finance (DeFi) market, the Total Value Locked (TVL) continued its decline last week, currently standing at $90.4 billion. Over the past seven days, the trading volume on decentralized exchanges (DEXs) continued to decrease, reaching $33 billion, which is an 11% decrease from last week. The gap between DEXs and centralized exchanges (CEXs) in market share has narrowed, with DEXs currently accounting for 22% of the total CEX trading volume. Most of the top ten blockchain projects ranked by TVL experienced a decline in TVL over the past week. Among them, Binance Smart Chain (BSC) and Solana performed well, with increases of 14% and 2% respectively. However, the Bitcoin layer-two network, Merlin, experienced a decrease of over 9% and is currently ranked ninth.
Left: TVL & Volume, Right: Top 10 chains (Data: DefiLlama)
Last week, the market capitalization of Ethereum non-fungible tokens (NFTs) continued to decline by 2%, reaching $7.3 billion. Meanwhile, the total trading volume plummeted by 34%, with the trading volume over the past seven days amounting to only $75 million. Among the leading blue-chip NFT collections on Ethereum, the floor price of CryptoPunks increased by 3%, with an average price increase of 22%. The second-ranked collection, Bored Ape Yacht Club, saw a decrease of 8% in its floor price but an average price increase of 9%. The floor price of Pudgy Penguins decreased by 1%, with an average price increase of 5%, currently ranking third.
Market Cap & Volume, 7D (Data: NFTGo)
LBank Labs Recap
BTC: price has been trading inside the $56k to $66k range for a while now. While it is currently in a downward trend, we see several patterns suggesting a reversal.
Selling volume decreased
Macro data suggesting CPI is heading lower
Wyckoff accumulation pattern emerging
Price making higher lows
ETH: May ETH ETF approving odds made a sudden jump during the weekend. We remain bullish of Ethereum for this cycle. However, the price is still too weak at this moment.
SOL: price is positively correlated to BTC and buying volume for SOL every time the market bounces back is high. With meme vertical still favored by the community, and Solana being THE choice for memecoin trading, SOL will see great potential once the market is making recovery.
ENA: strong price resistance near $0.8. Bybit’s announcement of using USDe as trading pair will bring more volume of Ethena.
TRB: following the same pattern again, spot price goes up -> retail opens short position on perp -> price pump and they get liquidated.
WIF: a pattern we noticed these two weeks that WIF seems to be front running the market. BTC price action is likely to follow WIF’s action.
TNSR: chart is drawing a perfect reversed dome at bottom, suggesting a big green candle soon.
3 Major Project News
[Ethereum] Ethereum All Core Developers Execution Call #187 Writeup. According to Christine Kim’s summary of the 187th Ethereum All Core Developers Meeting (ACDE), the main topics discussed were: updates on Pectra Devnet 0 progress, discussions on EIP-3074 (Vitalik recently proposed EIP-7702, a new transaction type that would enable EOAs to operate like smart contract wallets during a single transaction. There were discussions on whether to replace 3074 with this new proposal in the upcoming upgrade. Beiko confirmed to continue current work and discuss this matter after Devnet-1), urgent discussion on switching serialization method from MPT to SSZ, EOF update (EOF stands for Ethereum Object Format, which makes some changes to Ethereum’s code execution environment. It has been confirmed to be included in the Pectra upgrade, and the Meta EIP for EOF has been finalized), discussion on EIP-7623 (This EIP aims to increase the cost of CallData for large transactions to encourage the use of Blobs, reducing the difference in L1 block sizes. Some believe this change will drive the emergence of a secondary market for discounted gas, but most believe it will have little impact), and the new proposed EIP-7609 (which creates two new opcodes to protect smart contracts), among others.
(Source: Galaxy)
[Layer2] LayerZero has gone live on Merlin Chain. According to official sources, the cross-chain interoperability protocol LayerZero has gone live on Merlin Chain, enabling Merlin to connect with over 70 other networks. Developers can utilize Merlin’s core functionalities, such as BRC-20/420.
Furthermore, in a recent announcement by Merlin Chain, it was stated that all assets on Merlin’s Seal can be unstaked (BTC, Bitmap, BRC-20, BRC-420, ORDI-NFT, USDT, USDC, ETH). Additionally, the Merlin Chain update includes enabling asset transfers from Merlin (L2) to L1, covering BTC, Bitmap, BRC-20, BRC-420, ORDI-NFT, ERC-20. Only Runes are temporarily unsupported for cross-chain withdrawals. Gas fees have been reduced from 0.00008 BTC ($5.03) to 0.00005 BTC ($3.15).
(Source: LayerZero_Labs)
[Layer2] Starknet to bring on AI agents that can carry out on-chain activity. According to Cointelegraph, Starknet will introduce AI agents powered by Giza, capable of autonomously executing on-chain activities such as optimizing returns and reconfiguring investment portfolios. Giza completed a $3 million pre-seed round led by CoinFund in July 2023 and plans to deploy these AI agents on Starknet by the end of June, gradually expanding to other chains. These AI agents’ functionalities include yield aggregation and serving as robotic advisors to help users configure optimal investment portfolios based on risk preferences. The Giza team will review and approve agent strategies during the testing phase to ensure security. In the future, these agents will operate fully permissionlessly through the Giza protocol, minimizing trust exchanges between developers and users.
(Source: Twitter@Starknet)
[Layer2] Optimism announced its Superchain ecosystem now supports Layer 3. Last week, Optimism announced that its Superchain ecosystem now supports Layer 3. Layer 3 projects can join the Superchain ecosystem by building on top of the OP Stack and sharing sequencer revenue with the Optimism Collective.
Layer 3 projects joining Superchain will be eligible for incentives such as retroactive funding, airdrops, and growth plans, and will have access to Optimism’s extensive developer network. To support integration with Layer 3, Optimism has introduced two new features in the OP Stack: allowing chains to customize gas tokens and allowing chains to select their own data availability (DA) layer.
While Layer 3 chains joining Superchain will deviate from the standard OP Stack configuration, affecting the rollout of interoperability features, Optimism is prepared to incorporate Layer 3 into its ecosystem. In the future, several infrastructure teams including Syndicate, Caldera, and Gelato Network will support projects in developing Layer 3 within Superchain.
(Source: Mirror)
[Layer2] The next upgrade of zkSync will be launched on May 13th. Ramon, the product delivery lead at Matter Labs, announced on Twitter that the next upgrade of zkSync will be launched on May 13th, featuring new features and improvements. This upgrade introduces the P256Verify precompile to support secp256r1 elliptic curve signature verification and adds ecAdd, ecMul, and ecPairing precompiles. Additionally, the Bridgehub component will enable interoperability with ZK Stack chains. Furthermore, support for Validiums, custom data availability layers, and custom underlying tokens in ZK Stack has been completed and will be officially available with the upcoming server update. The new upgrade will also support .transfer/.send calls without gas fees, addressing deployment issues with some contracts.
(Source: Twitter@ramonIsTweeting)
[Cosmos] Cosmos community has voted to approve the “Gaia v16 Upgrade” proposal. According to official sources, the Cosmos community has voted to approve the “Gaia v16 Upgrade” proposal, with the Cosmos Hub scheduled to execute the v16 upgrade at block height 20440500.
The Gaia v16 upgrade will include four major new features: the ICA Controller submodule, the IBC Rate Limiting module (with initial rate limits outlined in proposal 890), the IBC Fee module, and ICS epochs (part of ICS v4.1.0). Additionally, following governance approval, relevant binary files for Gaia v16.0.0 need to be updated and submitted to the Cosmos Hub, with the update process expected to take approximately two weeks.
(Source: Mintscan)
[Onyx] JP Morgan to open up Onyx Digital Assets to third party applications. According to Ledger Insights, JPMorgan Chase plans to open its permissioned blockchain Onyx to allow third parties to deploy applications and enable others to tokenize assets on the JPMorgan Chase blockchain. The JPM Coin Systems team, responsible for blockchain-based account solutions, is focused on building Onyx Digital Assets and collaborating with third parties in this space.
(Source: JPMorgan)
4 Key Fundraising Data
Last week witnessed a total of 30 financing events, raising a substantial amount of over $142.5 million*. Compared to the recent weeks, financing activities remained active both in terms of transaction volume and total funding amount. The infrastructure and service sectors led with the highest number of financing events, totaling 14. The infrastructure sector recorded the highest total funding amount, raising a total of $42 million, accounting for 29% of the overall financing. The largest financing event was led by Arbelos, successfully raising $28 million. Arbelos Markets is a trading firm providing principal liquidity across crypto derivatives markets. More detailed information is provided below.
* 6 events of unknown amount are included, which have been excluded from the remaining data.
Top Left: Stats in Areas; Top Right: Stats in Rounds; Bottom: All Events
(Data: Cryptorank, Foresights, LBank Labs)
Below, we listed the most noteworthy fundraising deals for you:
Arbelos Markets, a crypto principal trading firm founded by digital asset derivatives veterans Joshua Lim and Shiliang Tang, said Wednesday that it raised $28 million in a “significantly oversubscribed” investment round.
The fundraising consisted of seed equity and debt financing led by crypto venture capital firm Dragonfly Capital. A wide range of investors also participated in the round: investment firms Room40 Ventures, Selini Capital and Breed VC, corporate partners FalconX, Circle Ventures, Paxos, P2 Ventures (previously Polygon Ventures), Deribit, Chorus One, StarkWare and Immutable, and angel investors at Aevo, Cega, Talos, Amberdata, and Framework, the press release listed.
- Official Link: https://arbelos.xyz/
Cryptocurrency startup Lagrange Labs has completed a $13.2 million financing round, led by Peter Thiel’s Founders Fund, with participation from Archetype Ventures, 1kx, Maven11, Fenbushi Capital, Volt Capital, CMT Digital, Mantle, and Ecosystem.
According to Web3 asset data platform RootData, Lagrange is a zero-knowledge co-processing protocol that supports verifiable computation at a large scale across various blockchains. Its unique ZK co-processing approach involves a decentralized node network that executes computations off-chain and generates ZK proofs of results in a massively parallel manner for submission on-chain, unlocking significant efficiency and cost benefits. By providing highly scalable proofs, Lagrange opens doors for innovation in cross-chain interoperability and applications requiring complex computations on big data.
- Official Link: https://www.lagrange.dev/
Before launching its mainnet and conducting token airdrops on its network, Lava Foundation has secured a $11 million financing round. Participants in this round include Animoca Brands, Gate.io Ventures, CoinGecko Ventures, Polygon co-founder Sandeep Nailwal, Ash Crypto, CryptoLark, as well as media outlets Crypto Times Japan, Le Journal Du Coin, and The Rollup.
The Lava Foundation, reportedly a newly established non-profit organization, is dedicated to developing a modular blockchain network called Lava. The Lava network focuses on providing data access services through Remote Procedure Calls (RPC) and is currently in the testnet phase. It plans to officially launch its mainnet and LAVA token in the first half of 2024. The total supply of LAVA tokens is set at 1 billion, with some being distributed to users through airdrops.
- Official Link: https://www.lavanet.xyz/
Seeds Labs, the developer of the Web3 game Bladerite, has announced today that it has raised $12 million in a seed funding round. Avalanche’s Blizzard Fund, Solana Foundation, Krust, Hashkey Capital, UOB Ventures, Signum Capital, IVC, and Emoote participated in the fundraise.
Founded in 2021, Seeds Labs is a developer focused on high-quality games and game infrastructure, with a core team boasting an average of over 15 years of experience in the gaming industry. Its flagship product, the globally multi-platform interconnected melee battle royale Web3 game Bladerite, was released this month and landed in the Apple and Google app stores, with support from the Solana Ecosystem.
- Official Link: https://www.theseeds.io/
See you next week! 🙌
🎙Forum: Feel free to leave your comments on our official LBank Labs Twitter account, and don’t hesitate to ask questions about the tokens or projects that interest you. We will diligently gather them and discuss them in the recap section of our weekly digest!
📢 Disclaimer: The weekly crypto market insights are provided for informational purposes only and should not be considered as financial advice. The cryptocurrency market is highly volatile and unpredictable. Prices and trends can change rapidly, and past performance is not indicative of future results. Always conduct thorough your own research and consult with a qualified financial professional before making any investment decisions.
