A monthly review of what is happening in the cryptocurrency markets enriched with institutional research on the most important topics in the industry in collaboration with the Swiss specialist for digital assets, 21Shares AG.
The market capitalization of the overall crypto market is down 31% since April, to $1.48 trillion. American dollar. bitcoin (BTC) and Ethereum (ETH) increased by 23% and 26.7%, respectively, since last month. April wasn’t easy for the stock market either. The S&P 500 had its worst April in 52 years, down 13.3% year-to-date. We will delve deeper into the macroeconomic factors that caused these declines. In addition, in this monthly review, we highlight the most important developments regarding the regulatory situation, DeFi and the Metaverse.
macros and regulations
US regulators have spent a busy month drafting new guidelines and revising existing ones to meet deadlines set by President Joe Biden’s executive order. On the fifth of April Brought Congress passed a new bill – Stablecoin TRUST Act. The law provides for regulation of stablecoins and provides issuers with the option of obtaining a government money transfer license, a traditional banking license, or the newly created OCC license for stablecoin issuers, which will also have access to the Federal Reserve’s main account system.
Cryptocurrency scams, often called “rug scams,” can become an outright crime. New York lawmakers are pushing for new legislation that would prevent founders from selling large percentages of their token holdings within a five-year period. This came shortly after the rug was pulled out by Frosties, a fraudulent NFT project whose creators were accused of stealing $1.3 million worth of ether last month. This could be a huge win, not only for US investors but for the entire DeFi space.
German giant Commerzbank has applied for a cryptocurrency custody license, becoming the first major bank to venture into cryptocurrency in Germany. in the United Arab Emirates Receive Kraken is licensed to become the first cryptocurrency exchange to offer direct financing and trading in AED against Bitcoin, Ether and a range of other virtual assets. Finally, the Central Bank of Portugal granted Bison Bank a Virtual Asset Service Provider (VASP) license, making it the first bank in the country to offer crypto services to high net worth individuals.
Arithmetic stablecoins are on the rise
Notable for the month of April is the resurgence of algorithmic stablecoins, this time around Underground tanks model from Luna want to take advantage of. This is expected to create a new incentive for capital rotation among investors. Other tier one blockchains could adopt a principle similar to Terra’s Anchor, exemplified by the launch of Near’s stablecoin USN. Tron’s announcement of the launch of its own variant called USDD was another example of this. The stablecoin is said to offer a 30% annual return, with the project’s reserves backed by $10 billion worth of crypto collateral, similar to Terra’s model.
Not only has the stablecoin sector been driven by the excitement surrounding news of new algorithmic currencies and their lucrative returns, the company behind USDC has also had its share of attention. First, it was announced that Circle was closing in on a $400 million funding round, which had previously been funded BlackRock, Fidelity Management and others. The new round of financing aims to help the issuer support its growth efforts and narrow the market gap with the leading USDT stablecoin.
Another part of the agreement sees BlackRock become the primary asset manager for USDC cash reserves and explore additional use cases for how USDC can be leveraged as a streamlined resource in the world of traditional finance. It was also revealed that Circle is considering launching a sterling-denominated stablecoin to complement its burgeoning ecosystem, shortly after the company announced its plans to expand into the UK.
NFTs, DAOs, and the Metaverse
The NFT market saw a 14.5% increase in total trading volume in April, with the number of addresses holding NFTs approaching 4 million. Plus, institutional acceptance continues to rise, with Hyundai Meta Kongs – NFT project with a turnover of more than $20 million – Collaboration to publish 30 NFTs on OpenSea. Additionally, American Idol has partnered with Theta Labs to launch their own NFT kits. In addition, the popular video game company Sega announced that it intends to integrate NFT technology into its new Supergame initiative.
Unsurprisingly, consecutive Meta ads dominated the emerging sector’s news cycle. The company is said to be considering in-app and social tokens for its own Metaverse. This announcement came shortly after Zuckerberg hinted at his plan to bring NFTs to Instagram. But that’s not all, as Meta has announced that it will be getting a 47.5% discount on NFT sales will prompt.
For companies increasing access to the expanding ecosystem, Coinbase has finally launched a new betaA copy of their NFT marketplace. Amazon’s new CEO Andy Jassy has also hinted that the company is considering selling NFTs to gain market share from Opensea and LooksRare. As for Opensea, in its beta mode, the company has finally got the long-awaited support Solana based NFT collections added.
Data infrastructure and encryption
One notable innovation at the infrastructure level is Polygon’s latest addition to its arsenal of scaling solutions, dubbed Supernetting. The latest network capability has been developed to complement the vision of the Internet of blockchains, and is similar to Avalanche scaling solution. Like the AVAX subnets, which help developers build application-specific blockchains, the Polygon supernetwork addresses the same problem. It allows the creation of four different types of customizable grids.
Also, the Lunas Foundation Guard (LFG) continued to buy in bulk and around April 11.8 km Bitcoin accumulated. In the future, the protocol’s reserves should amount to $10 billion in digital gold Be supportive. The fundraising of the organization was complemented by the purchase of Avalanche tokens worth another $200 million. Although not immediately apparent, diversifying Terra’s reserves with Bitcoin could be a catalyst, encouraging other stablecoins to follow suit.
On the other hand, Ethereum has suffered a setback like the one that is long overdue to merge on Proof of Stake has been postponed again and will take place in the third quarter instead of July – despite the successful implementation of the shadow fork last week. However, traders still withdraw large amounts of Ether from centralized exchanges and deposit them using DeFi protocols such as Lido Finance. Apparently, many investors are still betting on another upward move.
Jerome Powell’s restrictive policies could mean another turbulent month for cryptocurrency. So it is worth watching this development closely. However, due to the high level of adoption of cryptocurrencies at the government and corporate level, market cap cryptocurrencies will continue to exist. Given this vertical, it will also be interesting to see how the model will lead other Terra L1s to adopt similar mechanisms to attract new users and liquidity.
It will be interesting to see how sustainable some of these proposals are, starting with the latest Tron products. Ultimately, the rise of the stablecoin UST relied on a bullish cryptocurrency market and correspondingly high demand for credit. Given the low-risk sentiment the stock markets are headed for, it remains to be seen how stablecoin projects can maintain their claimed returns amid lower demand.
We also expect US Rep. Patrick Toomey to push through the proposed Stablecoin TRUST Bill before his term ends in 2023. After his term ends, Toomey said he will not seek re-election and will retire from politics altogether. The first deputy, who has held office for 11 years, now has seven months to push for the creation of a stablecoin and turn that proposal into law.