Good Morning. Here's what happened:
Prices: Bitcoin and most other cryptocurrencies are returning to the red.
Insights: metaverse ETFs are struggling to keep up with gaming ETFs.
Technician's take: BTC's uptrend appears limited despite short-term support.
PricesBitcoin
(BTC): $29,982 -3.4%
.Ether (ETH): $2,030 -4.7%
Biggest Winners
There are no winners today in CoinDesk 20.Biggest Losers
.| Asset | Ticker | Income | DACS Sector |
|---|---|---|---|
| Internet Computer | ICP | -9.4% | Data Processing |
| Filecoin | FIL | -8.3% | Data processing |
| Cosmos | ATOM | -7.7% | Smart contracts platform |
Bitcoin and other cryptocurrencies weakening.
That didn't last long.
A day after Bitcoin broke a week-long losing streak, the largest cryptocurrency by market cap and other major cryptocurrencies were back in the red on Monday.
Bitcoin was down more than 3% in the last 24 hours and has fallen for seven straight weeks. Still, it spent most of the day near or above the psychologically important $30,000 level. "In terms of the last 24 hours, we've seen a consolidation of six to eight weeks of sell-off," Mark Connors, head of research at 3iQ Digital Asset, told CoinDesk.
The performance of bitcoin and other cryptocurrencies paralleled equity markets, which fell slightly on Monday and have been on a downward slide since last fall as inflation and supply chain issues continued to mount and investors became more risk averse. The technology-heavy Nasdaq fell more than a percentage point Monday.
This growing caution, fueled last week by the collapse of stablecoin terraUSD (UST) and its supporting luna token, shook altcoins particularly hard last week. On Monday, AXS and AVAX were last down 12% and 8%, respectively. SOL dropped by more than 6%.
Ether, the second-largest cryptocurrency by market cap, fell more than 4.6%, though it held above $2,000.
"In equities, we've been out of returns for almost a year, so there was a quick pullback when the Fed raised rates in the first week of May," Connors said. "You've seen digital assets, bitcoin, ether and the rest of the altcoins fall. What has happened is that there has been a stabilization. What people are judging is whether the rate hike has been taken out of the sale. In our opinion, it has not.
Trading volumes have recovered from the low levels of the first few months of the year, which is a sign of a possible upturn, at least temporarily. But few analysts predict a permanent exit from the current bear market. The coming weeks could be especially tough for stablecoins, even as Terraform Labs CEO Do Kwon released a "revival plan" to save the Terra network. Kwon proposed turning Terra into a new chain without UST.
Connors said investors will likely see "choppy markets" for three to nine months and that prices are likely to fall, possibly with support in the $20,000 to $24,000 range. In this environment, he sees investors focusing more on Bitcoin and Ethereum. "Bitcoin dominance should and will occur as markets sell off," Connors said.
"People are focusing on quality, but it seems that Ethereium is now establishing itself as the second most important quality asset in the ecosystem. "
MarketsS&P500
: 4,008 -0.3%
DJIA: 32,223 +0.08%
Nasdaq: 11,662 -1.2%
Gold: $1,824 +0.
6%InsightsMetaverse ETFs struggle to keep pace with gaming ETFs
.Sometimes a fancy new investment vehicle, like the Metaverse most recently, doesn't perform as well in the market as last year's model.
The Metaverse exchange-traded fund (ETF) hit the market last year, shortly after the term entered our lexicon and became a favorite of venture capitalists. Because the metaverse is simply a blend of gaming and crypto, these metaverse ETFs look similar to gaming or eSports ETFs (the two terms are synonymous) that hit the market a few years ago.
They look that way because the metaverse is an ambiguous term; the shared online experience envisioned in Neil Stephenson's science fiction novel Snow Crash already exists on many multiplayer gaming platforms. There are no listed representatives for Metaverse tokens yet, so Metaverse ETFs make up for this by investing in listed crypto companies like Galaxy (GLX.TO) or Block (SQ), the former Square. And that's where the problem begins.
This association with crypto means that METV, a Metaverse ETF from Roundhill, is significantly underperforming ESPO, a gaming/eSports ETF from VanEck.
Gaming tech heavyweights like GPU developer Nvidia (NVDS) and game engine developer Unity are included in both baskets and haven't performed well over the year, but the inclusion of companies like Galaxy Digital - which is down over 60% year-to-date and planning a share buyback [link] - really sinks the Metaverse ETF.
Of course, this Metaverse ETF outperforms the Metaverse tokens themselves: The Sandbox's eponymous token (SAND) is down nearly 77% and Decentraland's MANA is down 68%, largely because both are struggling to attract a player base that matches their valuation.
There is an irony here. The Metaverse, which is a way to sell crypto-plus-gaming as a rebranded product, is doing better in the market than pure vanilla gaming itself.
Maybe crypto doesn't belong in everything?
ATechnician's OpinionBitcoin struggleswith $27K-$30K support zone; resistance at $35K
Bitcoin (BTC) is stabilizing around the $30,000 level after last week's sell-off. The cryptocurrency needs to stay above the $27,000-$30,000 support zone this week to generate a positive short-term momentum signal.
BTC has fallen as much as 3% in the last 24 hours.
The Relative Strength Index (RSI) on the daily chart is rising from oversold levels, which could keep buyers active at support. The RSI is also oversold on the weekly chart, although negative momentum could limit the price's upward movement.
Immediate resistance is seen at $33,000 and $35,000, where a dip occurred earlier this month. This suggests that a large number of sell orders could limit a recovery rally over the next two weeks.
In addition, the recent underperformance of alternative cryptocurrencies (altcoins) compared to Bitcoin suggests a lower risk appetite among crypto traders. Due to their higher risk profile, altcoins tend to fall more than bitcoin in down markets. The generally lower-risk environment could keep BTC's short-term downtrend intact.
Key EventsCosmosGateway
Conference
DeFi Conference without permission.
9:30 a.m. HKT/SGT(1:30 a.m. UTC): Reserve Bank of Australia minutes.
20:30 HKT/SGT(12:30 UTC): US Retail Sales (MoM/April)
CoinDeskTVIn
case you missed it, here is the latest episode of "First Mover" on CoinDesk TV
:OKX Exec on UST and Luna crash, Bitcoin outlook after 7 straight weeks of losses.
As investors continue to digest the catastrophic crash of Terra's Luna (LUNA) and stablecoin UST, OKX Director of Financial Markets Lennix Lai joined "First Mover" to explain how the company handled the crash and share his thoughts on what could happen next in the industry and markets. In addition, Charles Allen of BTCS Inc. provided market analysis and Chen Arad of Solidus Labs examined the crypto crash.
HeadlinesKwon Slams
Forking Terra, Nixing UST Stablecoin in "Revival Plan 2": "UST's failure is Terra's DAO hack moment," wrote the CEO of Terraform Labs, "a chance to rise anew from the ashes."
The collapse of UST and LUNA was devastating, but there is still hope for crypto: when a prominent stablecoin and the token backing it failed, the broader ecosystem was certainly dealt a blow, but ultimately it survives.
LFG Reserves Shrink to Just 313 Bitcoins from 80K After UST Crash: The announcement comes after criticism of the Luna Foundation Guard's "lack of transparency."
Indian central bank says cryptos could lead to 'dollarization' of economy: Report: RBI officials said cryptocurrencies could undermine the central bank's ability to regulate money flows.
Japan's Nomura Said to Launch Crypto Unit With DeFi and NFTs on Menu: Report:The Japanese investment bank traded its first cryptocurrency derivatives last week.
In a new set of rules, the Nigerian SEC confirms that all digital assets are securities: The rules aim to clarify the role of cryptocurrencies in the economy by creating a regulatory framework.
LongerReadSatoshi's
mission, LUNA, UST and where cryptocurrencies went wrong: In 2009, Satoshi Nakamoto codified a mission statement for the industry in the first Bitcoin blockchain. Essentially, crypto was initially meant to do no harm.
Today's crypto explainer: bitcoin mining difficulty: everything you need to know
Other Voices: A Crypto Emperor's Vision: No Pants, His RulesSaidand
heard
"China's economy fell deeper into a COVID-19-induced slump last month, raising questions about whether Beijing's planned stimulus can prevent a prolonged downturn." (The Wall Street Journal) ... "Terraform Labs, the organization that built the system, reportedly deployed about $3 billion worth of bitcoin, paused the blockchain, flooded the market with UST's sister token LUNA, and tried to pay off arbitrageurs who took advantage of the unstable situation to bail out their network. These costly attempts failed, and even Do Kwon, UST's chief architect, said that the network, as it once was, could not be saved. Terra is working on some sort of repayment plan for "small" token holders. All of this raises two very important questions for the industry: are all "algos," or algorithmic stablecoins, dead from the start? And should there be regulation to prevent a similar disaster?" (CoinDesk columnist Daniel Kuhn) ... Soaring valuations and booming [IPOs] made startups seem like a sure bet, inspiring hundreds of new venture funds. Now, suddenly, the party seems to have come to an end - and layoffs could point to even worse times ahead. According to data collected by Layoffs.fyi, nearly 50 startups have made significant layoffs since January. Among them are companies like Robinhood [HOOD] and Peloton [PTON], which after tremendous growth during the pandemic are now facing the reality of a less thriving economy and less cash in their coffers. Startups like Cameo have had to scale back the spending frenzy of the past two years." (Wired)