Bitcoin retraced to mid $25k levels following a tumultuous week sparked by the SEC’s continued regulatory crackdown. Charging both Coinbase and the Binance exchanges with operating as an unregistered securities exchange, markets temporarily fell 5.5% before retail demand reflected an indifference to the SEC’s continued offensive. Prompting record high liquidations since November of last year ($233.9m of token-tracked futures), BTC was quick to regain its lost ground, with JPMorgan citing the network’s upcoming (2024) block halving as a strong buy signal for investors. Seemingly, the charges weren’t all that surprising given that both exchanges had already been subjected to varying SEC and CFTC actions, whose unwavering crypto stances has resulted in an exodus of U.S-based crypto firms to more favourable corporate domiciles. Currently trading at $26,700, Bitcoin adoption continues to increase in spite of the regulatory onslaught. Non-zero BTC balances hit a new all-time high, rising by 5.42m (1Y), whilst stablecoin issuer Tether’s $1bn Bitcoin mining investment in El Salvador reflects the continued long-term institutional interest in this decentralised asset class.

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Ethereum outflows reached a high of $778m on Binance in the wake of the SEC’s charges against the leading exchange. Replicating wider market activity, ETH quickly recovered to its mid $1,800 price level, as network metrics seemed to suggest continued long-term investor optimism. According to data from Santiment, whale addresses (holding more than 100,000 ETH) have since reached a new high of a cumulative 594.7m ETH. Meanwhile, fees across the leading smart-contracts blockchain have fallen by some 80%, previously driven by the surge in interest for ERC-20 memecoins, such as $PEPE. On the staking front, ETH continues to see rising inflows across both its native and derivative staking offerings. On-chain data by Nansen shows that liquid staking has continued to rise month-on-month, reaching record highs. Meanwhile, the queue for native staking on Ethereum’s Beacon chain has increased to more than 46 days, as more than 9,400 validators wait to have their stake activated. The recent increase has been attributed, in part, towards Celsius’ circa $1bn (400k ETH) on-chain movement, away from Lido liquid staking towards the Eth2 Beacon deposit contract.

Cardano developers IOG have responded to the SEC’s suit against the Binance and Coinbase exchanges rejecting its classification of ADA as a security. The latest enforcement cites 19 digital assets, including ADA and SOL, whose ‘centralised’ properties resulted in the SEC’s classification according to its Howey Test assessment. Offering to work with regulators on developing a more relevant framework, IOG highlighted how the SEC’s enforcement does more to stifle innovation than provide a regulatory outline which would enable change. ADA’s steep price drop comes days after Cardano’s TVL rose to a new yearly high, reaching a total $180m. This milestone followed the network reaching its highest weekly transaction volume during the last few weeks of May, rising 139% to $98.26m. On the network level, the recently opened discussion surrounding CIP-1694, reflects the network’s ambitions to further decentralise governance, forming the bodies who will oversee the eventual roll-out of full on-chain governance.

Enjin announced the transition to its new Enjin Blockchain mainnet. Following the release, Enjin’s Efinity (Polkadot) parachain was forked to the new Efinity Matrixchain. Aimed to further bolster Web3 adoption, the NFT-focussed blockchain differs from traditional smart contract platforms through its open-source Substrate framework, ensuring that critical functions are integrated directly into the foundational code, rather than relying on smart contracts. New features, including ‘Fuel Tanks’, enable developers to subsidise transaction fees, whilst ‘Discrete Accounts’ enable users to interact with Enjin-related projects, without the need for dedicated wallet software. As part of the migration, Enjin’s Ethereum-based $ENJ token will be replaced 1:1 on Enjin Blockchain’s mainnet, with the Efinity token ($EFI) merging with $ENJ, creating a unified community for future usage and governance.

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BNB led this week’s market decline, falling to a 6-month low in light of the SEC’s latest offensive against the Binance exchange. Reeling from a 14% (7D) decline, BNB reached lows of $256 as net outflows totalled $1.38bn in the 24h following the charges. Seemingly, Binance’s attempt to separate the BNB ecosystem from its trading-based activities have been unsurprisingly ineffective, not least given the role that BNB plays across Binance’s product suite, and perhaps more importantly, its balance sheet. Clearly central to the SEC’s targeted crypto smear campaign, the latest resulted in approximately a 2.0% and 2.5%  drawdown in the exchange’s BTC and ETH holdings. With the former now attempting to freeze Binance.US’ assets, the narrative surrounding the country’s CBDC agenda becomes increasingly apparent, threatening its status as a global innovation hub. At the week’s close, BNB was trading at $263.

Comment: Regulation has clearly dominated this week’s overview, with Messari, ranking Solana and Cardano (respectively) as the first and second most resilient crypto networks, determined by their computation of each network’s Nakamoto coefficient. Uniswap’s proposed attempt to pass a fee proposal charging its LPs failed, with 45% voting ‘no fee’ and 42% opting to charge LPs ‘1/5th’ of the fees generated. Meanwhile, Polkadot is gearing up for its flagship Decoded event later this month, partnering with cross-chain platform Moonbeam to facilitate cross-chain integration and increase liquidity across the network. All in all, an otherwise quiet week on the ecosystem front. 

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Macro & Markets 🏦💱

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The Week Behind: 🗓️⬅️

06/06: World Bank warns of slow global growth citing TradFi banking crisis

08/06: UK wage growth rises at record rate prompting inflation fears
08/06: U.S. jobless claims rise by highest rate since Oct 2021, increasing 261,000
08/06: The Eurozone slipped into a recession with Q1 GDP falling by 0.4% (annualised)

The Week Ahead: 🗓️➡️

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13/06: GER ZEW Economic Sentiment (Jun)
13/06: U.S. CPI (MoM & YoY) (May)
14/06: UK GDP (MoM & YoY) (May)

14/06: U.S Fed Interest Rate Decision (Jun)
14/06: CNY Industrial Production (YoY) (May)
15/06: ECB Interest Rate Decision (Jun)

15/06: U.S. Initial Jobless Claims
16/06: EUR CPI (YoY) (May)

Fear & Greed Index 😨🤑

The multifactorial index looks at investor sentiment across Bitcoin and other large cap crypto markets, covering volatility, volume, momentum, dominance, and social trends. A score closer to 0 represents ‘Extreme Fear’ whilst a score closer to 100 is linked to ‘Extreme Greed’. Despite the recent increase in volatility, this week's reading of 50 (neutral) reflects the predominantly unwavering landscape. Overall, investor sentiment has remained unchanged for the most part, equal to last week’s overview, and within last month’s reading of 52.

CBOE VIX Index 📉🦘

The CBOE VIX Index measures the implied volatility of S&P 500 Index options, traditionally following an inverse relationship. Falling to a low of 13.55 on Thursday, the VIX has entered volatility levels last seen before the onset of the Covid-19 pandemic. Reflecting an upturn in equity markets, the S&P 500 has reached its highest point since August of 2022, driven by the cooling of U.S. employment data and the recent boom in tech stocks. Rising by 20% since its previous low, investor sentiment continues to rise in line with the AI boom taking hold of corporate America, reflecting what some are considering the start of a bull run. At time of writing, the VIX was trading at 13.78 (pre-market).

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BTC/DXY Correlation 💵📈

The DXY provides an indication of the value of USD relative to a basket of U.S trade partner currencies. Fuelled by a rise in jobless claims, the DXY fell to a 2-month low of 103.3 before regaining some traction earlier on Friday. With a number of significant macro indicators to be published this week, all eyes are on the FOMC’s monetary policy decision, with most expecting no interest rate changes. Overall, the DXY is down 0.02% (7D), whilst Bitcoin was down 1.6% (7D), with a 1Y correlation of 0.73. 

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Market Dominance 📊👑

Bitcoin dominance: 46.7% (+0.4%)
Ethereum dominance: 20.1% (+0.7%)

Bitcoin EU Crypto ETP dominance: 53.2% 52.6% (+0.5%)
Ethereum EU Crypto ETP dominance: 29.0% (+1.4%) 

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Risers & Fallers 📈🚀

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⬆️Terra Classic ($LUNC) was up 15.5% (7D) following news of the passing of the network’s parity upgrade proposal. The change will enable developers to start building on the collapsed Terra Classic chain, as the software update will bring the previously defunct Terra Luna algorithmic stablecoin to parity with other Cosmos chains (including Terra 2.0).

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⬇️Conflux ($CFX) fell by over 20% this week, with the China-based high-throughput, Layer-1 blockchain dropping to $0.23. Previously rallying atop of Hong Kong’s policy reversal on banning retail crypto trading, investors seem to have taken profits, with $CFX correcting to previous market levels.

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Upcoming Conferences

07/06/23 - 11/06/23: Non Fungible Conference, Lisbon
10/06/23 - 12/06/23: Prague Blockchain Week, CR
12/06/23 - 13/06/23: Metaverse Summit, Paris
23/06/23 - 25/06/23: ETHGlobal Hackathon, Toronto,
25/06/23 - 29/06/23: Solana Hacker House, Tel Aviv

That’s all for this week! 

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