Good morning! Here's what happened:
Prices: Bitcoin is recovering somewhat; most other cryptocurrencies are in the green.
Insights: KuCoin will use part of its $150 million capital raise to increase DeFi activity on its blockchain.
Technician's take: BTC appears oversold, though trading conditions have been choppy in recent days.
Prices
Bitcoin (BTC): $30,185 +4.4%
Ether (ETH): 2,011 +3.6%
Biggest price gainers
| Asset | Ticker | Earnings | DACS Sector |
|---|---|---|---|
| Internet Computer | ICP | +5.4% | Data Processing |
| Litecoin | LTC | +4.9% | Currency |
| Cosmos | ATOM | +4.2% | Smart contracts platform |
Biggest losers
| Asset | Ticker | Earnings | DACS Sector |
|---|---|---|---|
| Algorand | ALGO | -1.9% | Smart contracts platform |
| Stellar | XLM | -1.8% | Smart contracts platform |
Bitcoin records a small recovery
In terms of improvement, Bitcoin didn't have much to cheer about on Thursday. The largest cryptocurrency was still struggling to stay above $30,000 and was far from the value it was trading at just two weeks ago.
But the largest cryptocurrency by market cap fared slightly better than Ether and other major altcoins.
Bitcoin recently changed hands at around $30,200, rising more than 4.4% in the last 24 hours. The rise outpaced Ether, which gained just over 3.5% over the same period, and other cryptocurrencies, most of which also saw smaller gains as investors continued to favor the most well-known digital asset over smaller, riskier ones. XRP, SOL, ADA, and MATIC rose less than one percentage point. AVAX was among the losers, falling more than 3% recently.
Still, the flavor of the market remained sour as investors continue to chew on the triple whammy of inflationary pressures, central bank missteps and the looming prospect of recession. Altcoins have largely lagged Bitcoin in recent months amid rising economic uncertainty. Over the past 90 days, only 15% of the top 50 altcoins have outperformed bitcoin, according to the Blockchain Center, a crypto data provider. This trend reflects the current low-risk environment.
Gold, a traditional safe haven for risk-averse investors, rose more than one percentage point.
Equity markets? They performed slightly worse than cryptocurrencies, but improved from the previous day's bloodbath. The S&P 500 fell less than a percentage point after ending Wednesday with its biggest percentage drop since June 2020. Down 18% from its recent peak, the index remains dangerously close to the 20% mark that must be considered a bear market. The technology-heavy Nasdaq, which reached bear market status earlier this year, edged lower Thursday.
Wednesday's big drop in stocks reflected disappointing first-quarter sales from retail giants Target (TGT) and Walmart (WMT). On Thursday, Kohl's (KSS), the largest department store chain by number of locations, added to the retail sector's woes with its own poor report, providing the latest evidence of the growing impact of inflation on consumer spending. Meanwhile, home sales in the U.S. fell last month, a sign that higher mortgage rates triggered by the Federal Reserve's tighter monetary policy, along with record-high prices, are slowing the once-hot housing market.
"This week's results from Walmart and Target highlighted the plight of businesses and consumers as inflation begins to take hold," wrote Oanda Senior Market Analyst, U.K. & EMEA, Craig Erlam in an email. "Inflation is catching up, and profit margins are taking a hit. Soon, however, these higher costs will be passed on and consumers will start to be more careful with their spending. There is a sense that the economy is inevitable. The only question is whether we'll see a slowdown or a recession."
Still, Erlam was positive about Bitcoin remaining at the $30,000 mark. Bitcoin is holding up surprisingly well against a backdrop of pessimism in the markets," Erlam wrote. "Perhaps because it is being fueled by economic concerns and not just interest rates.
He added, "Whether it can continue to swim against the shift in sentiment, only time will tell."
Markets
S&P 500: 3.900 -0.5%
DJIA: 31.253 -0.7%
Nasdaq: 11,388 -0.2%
Gold: 1,842 +1.4%
Insights
KuKoin to increase DeFi activity
Seychelles-based crypto exchange KuCoin will use part of its recent $150 million capital raise to expand technical features and support developers building on the KuCoin Community Chain (KCC), a public blockchain, the company told CoinDesk.
"We understand the difficulties and obstacles that developer teams face in the early stages of their development," a KuCoin spokesperson said. "As a result, we will dedicate more resources to discovering and supporting high-quality developers and early innovative projects."
KuCoin did not specify the exact numbers it will use to support developer growth. However, KCC will move to a cross-chain model that supports applications from multiple blockchains and build a Layer 2 system that enables faster transactions at a lower fee. Layer 2 refers to a secondary protocol that is layered on top of an existing network.
Funding the development effort could help shore up declining demand for KCC. Data from explorers show that only 19,000 transactions were made on the network Thursday, down from more than 60,000 in early May.
The move is similar to developer funds raised by crypto projects such as Fantom, Near and Avalanche last year to boost activity on their blockchain and build new decentralized applications (dapps). Fantom has committed $315 million, Near has raised $350 million, while Avalanche has launched a $220 million "crypto growth fund."
KuCoin is the fifth largest crypto exchange by trading volume, according to CoinGecko data. The company saw a 1,503% year-over-year increase in new users from Asia, which account for a large portion of its daily trading volume.
The exchange received $150 million at a $10 billion valuation in a funding round led by Jump Crypto earlier this month.
Tech opinion
Bitcoin returns above $30K, resistance at $35K
Bitcoin (BTC) managed to hold above $27,500 in the short-term as buyers responded to oversold conditions on the charts. The cryptocurrency could face resistance at $35,000, where the current downtrend accelerated earlier this month.
BTC briefly traded above $30,000 during the New York trading session, rising as much as 3% over the past 24 hours.
The Relative Strength Index (RSI) on the daily chart is rising from oversold levels, which could keep short-term buyers active. In addition, short-term momentum is improving, similar to early March when a brief relief rally in price preceded.
DeMARK indicators signaled a trend reversal on BTC's daily chart on May 12, alongside major stock indices. This suggests that a relief rally in speculative assets could delay further price declines.
Still, BTC needs to close above $30,000 on a weekly basis (and above $4,000 for the S&P 500) to confirm short-term upside signals. Based on negative momentum signals on the weekly and monthly charts, the uptrend seems limited for now.
Important events
Veecon conference on web 3 and culture
G7 Finance Ministers Meeting
9:30 HKT/SGT (1:30 UTC): People's Bank of China decision on interest rate.
CoinDesk TV
In case you missed it, here's the latest episode of "First Mover" on CoinDesk TV:
MakerDAO founder on DAI vs. UST, 21Shares enters US market
MakerDAO founder Rune Christensen joined "First Mover" to share his thoughts on the terraUSD (UST) fallout and how DAI differs from other stablecoins. Ophelia Snyder, co-founder of 21Shares, explained how her company's two crypto index funds could benefit U.S. clients in a volatile market. In addition, Dan Gunsberg of Hxro offered insights on crypto markets.
Headlines
Do Kwon pushes on-chain proposal even as 92% vote "no" in online poll: The plan to get Terra back on track after last week's implosion involves a hard fork of the existing network.
Nomura's Digital Division to Focus on Cryptocurrencies First, DeFi Later: The first phase of Nomura's new digital assets division will cover the top 10 cryptocurrencies, with DeFi and NFTs to follow later.
A16z Leads $15M Round for P2E Studio Azra Games: The blockchain gaming company is preparing to launch a fantasy collectible and mass combat role-playing game.
Solana, Cardano tokens slip over 9% as cryptos see weakness amid poor US consumer data: Bitcoin lost support at $30,000 as Chinese tech stocks slipped Thursday amid earnings worries a day after hawkish comments from the Federal Reserve.
FTX US is launching stock trading to get a bigger piece of the U.S. retail pie: Brokerage accounts can be funded with the stablecoin USDC, the exchange said.
Read Longer
Let Terra Die: Do Kwon's proposal to spin off the failed stablecoin network is not what LUNA holders want, nor will it help them.
Today's crypto explainer: how do you tax an NFT?
Other Voices: The crypto crash feels amazing (The Atlantic)
Said and heard
"Certainly, the economic outlook around the world is difficult and uncertain. Higher food and energy prices have stagflationary effects, meaning they dampen output and spending and raise inflation around the world." (Janet Yellen before the G-7 Finance Ministers meeting) ... "Eight companies are responsible for nearly half of the stock market's decline this year - and the pain doesn't stop there." (The Wall Street Journal) ... "The Biden administration is developing plans to further curb Russia's oil revenues with the long-term goal of destroying the country's central role in the global energy economy, current and former U.S. officials say. ... Among the proposed measures is the imposition of a price cap on Russian oil, backed by so-called secondary sanctions that would punish foreign buyers who don't comply with U.S. restrictions by preventing them from doing business with American companies and those of partner nations." (The New York Times)