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Source: Kucoin; Compilation: Deng Tong, Bitchain Vision
In May 2024, cryptocurrency market activity was active and significant progress was made, especially in the regulatory sector and market dynamics.The approval of the spot Ethereum ETF significantly boosted market confidence and set a positive tone for the month, followed by the BTC ETF’s asset management scale rebounding to $60 billion.The stablecoin sector also performed in a mixed performance, with the issuance of traditional fiat-staked stablecoins such as USDC and FDUSD falling, while USDe’s issuance hitting a new high.This pattern reflects a broader evolution of the stablecoin market.In addition, although there have been a large inflow of capital for public chains and Layer2 solutions such as Base and Linea, overall investment in the crypto market has declined slightly from last month, but it has maintained a positive growth trajectory year-on-year, highlighting the lasting interest in the field andGrowth potential.
With Ethereum Spot ETF approved and market sentiment rebounded, and the asset management scale of BTC ETF rebounded to $60 billion
In mid-May 2024, global economic data and events rekindled optimism about potential U.S. monetary policy.This new confidence, coupled with NVIDIA’s strong earnings report, has strengthened interest in tech stocks and the AI sector.The wider cryptocurrency market also rebounded, driven in large part by the unexpected approval of a key Ethereum spot ETF document.Although there hasn’t been a capital inflow for ETFs, the news has had a positive impact on market sentiment and has strengthened confidence in Ethereum and its ecosystem.
The market, which has been sluggish, has experienced a clear shift in sentiment.The total asset management scale of Bitcoin spot ETFs (AUM) rebounded to the $60 billion mark, reflecting a rekindling of investor interest.Additionally, BTC contract open positions surged, returning to its highs earlier this year, while BTC options open positions rose cautiously.Looking ahead, June will be a turbulent time, with the Federal Reserve coming to a FAP meeting and may adjust its securities holding strategy to have an impact on market liquidity.
Cryptocurrency Trend: Attention Assets Rises
The cryptocurrency market is increasingly favoring attention assets such as character and celebrity meme tokens because of their unexplored growth potential.This trend reflects a shift in projects with an initial overvalued value that limits price discovery and wealth creation.Notcoin is a typical example of this transformation, resulting in a significant increase in its price and trading volume.
The issuance of fiat currency pledged stablecoins is not consistent
In May 2024, the overall issuance of fiat-staking stablecoins decreased by US$840 million, mainly affected by the declines of USDC and FDUSD.According to SosoValue and Glassnode data, USDT and PYUSD are showing an upward trend, while USDC, DAI and TUSD are reducing their holdings.PYUSD grew significantly 21.7% and announced its release on Solana, which could have an impact on the Solana ecosystem.USDe issuance surged to $2.978 billion, surpassing FDUSD to become the fourth largest stablecoin.FDUSD issuance fell from 4.25 billion on April 30 to 2.92 billion on May 31, 2024, a decrease of 31.29%.This significant reduction is in stark contrast to the stability of USDT and USDC, which are more commonly used for transactions and payments.
Despite market recovery, ETH Layer2 activity declines
Although ETH price has risen 21% per month, the ETH-denominated Layer2 TVL has fallen 4.4%, indicating that activity levels within the Layer2 ecosystem are stagnant.However, with the overall market recovery, the US dollar-denominated TVL has risen by more than 20%.The soaring ETH price has not translated into an increase in funding in the ETH Layer2 ecosystem, which has slightly dropped to 12.38 million ETH.Instead, TVL in USD was about $47.81 billion due to market recovery.
Growth of Base and Linea amid pessimism in Layer2 industry
Amid the pessimistic outlook for the ETH Layer2 industry, Base and Linea went against the trend and achieved significant growth.While the narrative of high-performance blockchain and low-on-chain fees has lost its appeal, meme coins and Restaking have gained attention.Base’s ecosystem shows increased activity, with native tokens attracting widespread attention.Linea sees a massive inflow of capital driven by meme coins and Restaking narratives, with the FOXY and Renzo protocols leading the ecosystem.
Merlin, based on ETH-based blockchain and BTC ecosystem, performed strongly
As Ethereum prices rebound, ETH-based blockchains such as Arbitrum and Base show strong U.S. dollar-denominated TVL performance.The rebound in ETH prices has led to an increase in meme asset activity on Ethereum related to the U.S. presidential election.Meanwhile, in the BTC ecosystem, Merlin’s TVL has grown by more than 100% in the past month, thanks to Solv Funds’ Bitcoin-wide underlying earnings dividend protocol.However, due to limited practical applications and positive stimulus, Merlin’s native token lacks significant trading volume and price increases.
LayerZero’s powerful Sybil screening measures inspired crypto community
In early May 2024, LayerZero Labs launched a 14-day self-report Sybil activity program that encourages users to self-report or report Sybil activities to each other in exchange for rewards.The program provided self-reporters with 15% of the expected allocation, strengthening anti-Sybil efforts, resulting in widespread mutual reporting driven by economic incentives.
Notcoin’s popularity drives the TON ecosystem
The mini-game Notcoin on the TON blockchain has quickly gained popularity with impressive transaction volume and a growing user base, reaching 6 million daily active users and a market capitalization of $2.2 billion in three months.Its success highlights the potential of the “Tap to Earn” model, leveraging the openness of Web3 and integrating with Telegram to reduce customer acquisition costs and expand its user community.In addition, another TON ecosystem game, Catizen, has also achieved explosive growth, with more than 6 million users and 8.1 million transactions, further enhancing the activity and liquidity of the TON ecosystem.
Runes leads BTC trading amid weak performance of BRC20
May 2024,The Bitcoin derivative asset market will focus on RUNES and BTC Layer2, BTC staking/re-staking and shared security areas, while BRC20 Ordinals will struggle to maintain significant traffic and growth.The rise of new technologies and narratives for developers is challenging Ordinals/BRC20’s dominance in the BTC native asset space, and more innovation is needed to regain market recognition.
DOG (Runes) rises strongly, challenging ORDI’s market position
Driven by positive market trends,The market capitalization of DOG assets in the Runes ecosystem surged, reaching nearly $800 million by the end of the month.Meanwhile, ORDI experienced volatility but successfully rebounded to a $1 billion market cap on May 31, 2024, maintaining its leading position in DOG.Despite the recovery of ORDI, overall user, developer and traffic momentum continues to shift from Ordinals/BRC20 to the rapidly growing RUNES ecosystem.
Cryptocurrency investment trends
In the past month, the cryptocurrency market has disclosed 156 investment and financing projects, totaling $1.02 billion.While this is a slight decline from April 2024, it is an increase compared to the same period last year, with more than 50% of projects receiving $1 million to $10 million in financing.
Investment focus shifts, strategic round of financing increases
In May 2024, the proportion of A-round investment in the cryptocurrency market fell from 10% to 7.77%, while the proportion of strategic round financing projects increased from 15.73% to 18.45%, indicating thatThe tendency for projects to exit through public listing is increasing.The proportion of seed round investment remains basically unchanged.
EVM-based blockchain leads the financing hot
Ethereum, EVM-compatible chains and Layer 2 solutions dominate the public chain ecosystem with the largest number of projects.Among the non-EVM chains, Solana maintains the top five, Fantom enters the top ten, and TON’s rankings have improved, highlighting their growing position in the market.
Türkiye plans to enact new cryptocurrency regulation law
Türkiye is preparing to submit a new law to regulate cryptocurrency assets, in line with international regulatory standards, while taxing cryptocurrency transactions.The move is designed to reduce the risks associated with cryptocurrency trading.The Capital Markets Commission will impose strict supervision on the licensing and operation of cryptocurrency trading platforms.This move was strongly supported by Turkish Finance Minister Mehmet Şimşek.
