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May Monthly Market Update

2022-06-03

Welcome to our monthly wrap-up newsletter, where we scan the metaverse for the most important pieces of information that you need to know; from DeFi to stablecoin, markets to regulation, we’ve condensed it for your convenience. 

Markets

The Federal Reserve has increased interest rates by half a percent this month and announced plans to shrink the $8.9 trillion portfolios to lower consumer spending, increase lending costs and decrease inflation. The Fed plans to cut $95 billion a month from its holdings by September, splitting between $60 billion of Treasuries and $35 billion in mortgage-backed securities a month, starting initially with $30 billion per month. However, the Beige Book (the eight-time per year Fed summary of the current economic conditions) stated that economic growth is "slight or moderate growth", indicating that the economy may already be slowing down. Household saving rates in the United States decreased to 4.40% in April from 6.20% in March of 2022, hitting a ten-year low. US GDP retracts, whilst GDI has grown this month, indicating the market conditions are still evolving, and The Fed needs to tread carefully as they balance their 2% inflation target with market conditions and unemployment rates. 

BTC 

Since the Terra collapse, Bitcoin's market dominance as measured by market cap has increased, rising to its highest since October 2021. 

Source: CoinGecko

ETH

Ethereum developers foiled a "mischievous" miner's attempt to expedite Ethereum's transition to Proof-of-Stake on a public testnet by two weeks. Despite this slight hiccup, ETH developers expect Ethereum's Eth2 Beacon Chain to merge with Ethereum's mainnet on June 8. The transition, known as "The Merge", will change the chain to Proof-of-Stake consensus and abandon Proof-of-Work miners. 

Vitalik Buterin co-wrote a lengthy paper about finding Ethereum's "soul" earlier this month and an academic-paper-length blog post about automating stablecoins, saying that consistency and resiliency should be the number one goal, not growth.

DeFi 

DeFi TVL is growing year-over-year despite notable hacks and losses, showing the positive signs of the resilience of a decentralised system. Total Value Locked in DeFi is now ~$108b, up from ~$92b over the last twelve months and 100 times since May 2020. The recent sharp decline was caused primarily by Terra and the declines in ETH and other tokens. 

In response to UST de-pegging from the USD, Terra 2.0 relaunched on the blockchain network without the algorithmic stablecoin with new airdrops for existing holders. 

The DeFi platform UniSwap hits $1T in lifetime trading volumes. 

Institutions

JPMorgan Chase launched its first crypto collateral transaction on May 20, when two of its entities transferred the token representation of BlackRock Inc.'s money market fund shares as collateral on its private blockchain. This has allowed investors to pledge a broader range of assets as collateral and use them outside of market operating hours. JPMorgan also came out this month, stating they now see digital assets as its "preferred" alternative asset classes, with real estate being moved to the sidelines as mortgage rates increase.

Closer to home, ANZ executive Nigel Dobson told Australian media its initial use case for the A$DC stablecoin (which allows an institutional client to invest in crypto assets) was being extended to enable people to buy a broad range of digital assets with Australian dollars - specifically allowing the functionality to more corporate customers. A$DC, is fully collateralised with the Australian dollar. U.S. Chair Maxine Waters came out this month stating that there is a genuine concern that other countries are going to outcompete the U.S. as dozens of nations representing 90% of global GDP are either researching or actively developing CBDCs.

Mastercard's VP of new product development and innovation, Harold Bossé, came out this month stating that mass adoption of blockchain technology and digital assets will happen sooner rather than later.

A16z announced a new $4.5 billion crypto this month, doubling the size of its last crypto fund and raising less than a year after its $2.2 billion Crypto Fund III. The firm specifies that one-third of the new fund will be earmarked for seed deals exclusively.

From Binance, Binance Labs announced a $500m fund to invest in Web3 projects across all three stages of a startup's lifecycle. 

We continue to see the world of Web 2.0 coming to Web 3.0, with GameStop and RobinHood both releasing crypto wallets. eBay launched its first NFT collection.

Moving to fashion, French luxury Balenciaga has revealed that it will now be accepting payments in crypto and LVMH-owned Swiss luxury brand Tag Heuer announced earlier this week that it will accept a total of twelve major cryptocurrencies plus five stablecoins as payment options on its US website.

This month, 29 Shopping Malls and 13 hotels in UAE can now accept Bitcoin, Ethereum, and Dogecoin payments via Binance Pay. 

Regulation

In Australia, consultation papers to the Treasury were due from the industry, allowing digital asset exchanges and others to provide minimum standards of conduct by crypto-asset secondary service providers and consumer safeguards. Binance Australia's submission will soon be published publicly.

Lastly, Binance strengthened its European presence by obtaining registration and regulatory approval in Italy and France this month. 

All values in USD 

Disclaimer

This content is for general information purposes only, not investment advice. Cryptocurrencies including Bitcoin are volatile and fluctuate on a day to day basis, thus trading such requires proper diligence and sound judgement in order to evaluate the risks associated. Nothing in this newsletter constitutes investment or legal recommendation, nor should any data or content mentioned in the newsletter be relied upon for any investment activities. You should consider seeking independent legal, financial, taxation or other advice to check how the newsletter information relates to your unique circumstances. 

Binance Australia is not affiliated, associated, endorsed by, or in any way officially connected with any individual or organisations mentioned in the newsletter. Binance Australia is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by use of this newsletter and expressly disclaims any and all liability for any loss or damage you may suffer.