Article Summary
- Cryptocurrency market experienced a bearish trend in May 2023 due to expected government debt increase and liquidity withdrawal from the market.
- Bitcoin’s price declined by 26.92% in May, while the overall cryptocurrency market capitalization lost 4.24%.
- Five cryptocurrencies to watch in June 2023 are Bitcoin (BTC), Tron (TRX), Ethereum’s Ether, XRP, and Pepe’s PEPE.
In the month of May, the cryptocurrency space posted its second bearish performance. This is due to the expected shift once U.S. lawmakers approve raising the government’s ability to issue new debt, thereby exerting pressure on risky investments.
This is a concern because the U.S. Treasury will need to refill its depleted Treasury General Account by issuing debt, drawing liquidity out of the market and back into the government’s account. Concurrently, the Federal Reserve’s quantitative tightening campaign and the negative impact of the debt ceiling resolution bill on liquidity further compound the potential challenges for the market.
Flagship cryptocurrency asset, Bitcoin, posted a bearish performance, as the rest of the market followed in its trend. It began trading from $29,268.81 at the beginning of the month and ultimately ended the month at $27,245.00, representing a 26.92% decline.
The cryptocurrency market capitalization in the month of May lost 4.24% for the month, from $1.18 trillion at the start of the month to end the month at $1.13 trillion. The cryptocurrency market capitalization traded as high as $1.22 trillion during the month.
The Altcoin market experienced similar bearishness, losing 2.92% in May, from approximately $627.50 billion to currently stand at $609.20 billion at the end of the month. During the month, we saw the altcoin market capitalization traded as high as $648 billion.
Despite the current bearish trend seen in the market, here is a look at 5 cryptocurrencies investors should watch out for in June 2023:
Bitcoin’s BTC
For the month of June, Bitcoin has already begun sell offs, making it the second consecutive day, with fears over inflation and continued rate hikes resurfacing. While it was expected that the market would rally after the U.S. House of Representatives passed the debt ceiling deal in May, after many controversies, the bill now moves to the Senate for its approval. Bitcoin was down in the month of May due to these considerations.
It’s no news that the thawing liquidity conditions earlier this year helped lift the prices of risk assets, including equities and digital assets. The market-wide crypto rally propelled bitcoin (BTC), the largest cryptocurrency by market capitalization, to as high as $31,000 before turning into a meme coin speculative frenzy reminiscent of the sugar rush near bull market tops.
The trend, however, is set to turn once U.S. lawmakers approve raising the government’s ability to issue new debt, putting pressure on risky investments.
While there is a cause for concern, according to data from the on-chain analytics firm Santiment, Bitcoin sharks and whales have gone on a 93,000 BTC buying spree since the local top back in April. The report however explains that these holders have become a bit more cautious in the last few weeks. The relevant indicator here is the “Supply Distribution,” which measures the total amount of Bitcoin that each wallet group in the market is holding right now.
Bitcoin ended the month trading $27,245.00.
Tron’s TRX
Tron, along with the Ethereum blockchain, also had a record-breaking month in May 2023. During the month, Tether tokens issued on the Tron blockchain reached another all-time high of $46 billion, compared to $36.8 billion for Ethereum, accounting for over 60% of USDT’s circulating supply. The milestone comes on the fifth anniversary launch of the Tron mainnet.
Over the past five years, Tron developers claim that the blockchain has processed 5.6 billion transactions and currently has a total value locked of $5.7 billion. Tron’s creator, Justin Sun, said his 2023 goals include elevating the network’s on-chain stablecoin market cap to $100 billion and establishing Tron as a preferred choice for stablecoin users by positioning itself as “a more affordable and user-friendly version of Ethereum.” Tron developers also said they have “promised full support” for Web3 development in Hong Kong.
While there were good news, however, there are concerns. A research team at dWallet Labs has discovered a zero-day vulnerability in Tron multisig accounts, allowing an attacker to bypass the multisignature mechanism and sign transactions with a single signature. In a technical breakdown post, the research team said the vulnerability could have impacted $500 million in assets held in Tron multisig accounts. This is because it allows any signer to “completely overcome the multisig security offered by TRON.”
TRX ended the month trading $0.075334.
Ethereum’s Ether
The number of staked Ether in May reached a new all-time high of 2.96 million ETH, approximately 2.46% of the total supply. The amount of ETH staked in May does not include withdrawals and is more than twice as big as the second-highest amount registered in February 2022.
The significant surge in staked ETH comes within a month of the Shapella upgrade on April 12, allowing validators to withdraw their staked ETH after two years. Many then believed the heavy unstaking of ETH could be a bearish event for the Ethereum network. However, an estimated less than 1% of all staked ETH was sold after Shapella.
In the week after Shapella, nearly a million ETH were withdrawn by validators from the Beacon Chain. However, with the start of May, the number of staked ETH already surpassed the number of withdrawals. At present, almost 18% of all ETH staking was done in May.
The record surge in Ethereum staking in May was attributed to several factors, the most prominent being the United States debt ceiling saga, confidence in the U.S. dollar, bank collapses and the high annual percentage rate (APR) offered on ETH staking. According to research analyst Brian McColl, he stated, “The U.S. Debt ceiling saga and the earlier events with banks going bankrupt surely affected Ether’s popularity, and more and more users prefer to stake their money in ETH rather than keep them in the bank.”
Also, a new update brings more interoperability to the Ethereum blockchain. Bitcoin Ordinals are the latest layer-2 solution enabling decentralized storage of digital art on the Bitcoin blockchain. In a new update, Ordinals will now allow users to migrate their Ethereum ERC-721-based nonfungible tokens (NFTs) to the Bitcoin blockchain with the launch of the BRC-721E standard.
The BRC-721E standard was jointly launched by the Ordinals market, an Ordinals-based marketplace, and the Bitcoin Miladys NFT collection. The new BRC-721E standard enables the conversion of immutable, verifiable ERC-721 NFTs to Ordinals.
Ether ended the month trading $1,874.69.
XRP
In May 2023, Ripple got busy. The firm took a minority stake in crypto exchange Bitstamp in the first quarter of 2023. Digital investment firm Galaxy Digital advised on the deal, according to a transcript of the May 9 Galaxy shareholder conference call. Ripple acquired shares previously owned by Pantera Capital, a digital asset investment firm based in the United States.
Pantera was one of the largest shareholders in Bitstamp until 2018, when the exchange was acquired by Belgium-based investment firm NXMH in an “all-cash deal.” At the time, the company was valued at $60 million. Pantera, which made a $10-million investment in the company in 2014, also sold part of its stake in Bitstamp to NXMH.
Also, the XRP network witnessed a sudden increase in the daily active addresses (DAA), the number of unique addresses involved in XRP transactions daily in May. For instance, on May 27, around 490,000 addresses interacted with the XRP network. That amounted to the second-largest address activity on the XRP blockchain, just three months after establishing the record DAA count of 880,000, according to data resource Santiment.
Interestingly, the DAA surge to a record high in March preceded a 45% price rally. This fractal may have prompted traders to speculate on a similar upside move after the latest DAA count rise. This is primarily because of how the market interprets the DAA indicator.
It considers a rise in active addresses as bullish for the concerned token. Conversely, a drop in active addresses is considered bearish. Nonetheless, history presents the DAA indicator as a flawed one. For instance, the spikes in XRP’s DAA count between November 2021 and April 2022 coincides with the token’s price decline, as shown in the chart below.
XRP ended the month trading $0.519347.
Pepe’s PEPE
PEPE is a deflationary memecoin launched on Ethereum. The cryptocurrency was created as a tribute to the Pepe the Frog internet meme, created by Matt Furie, which gained popularity in the early 2000s.
The project aims to capitalize on the popularity of meme coins, like Shiba Inu and Dogecoin, and strives to establish itself as one of the top meme-based cryptocurrencies. PEPE appeals to the cryptocurrency community by instituting a no-tax policy, a redistributive system rewarding long-term stakers, and a burning mechanism to maintain scarcity of the PEPE coin.
Pepe coin entered the market on April 16, 2023, without any prior sale and with minimal fanfare. The project’s website reveals that the token has no designated team, and its creators have opted to remain anonymous. This approach might seem unconventional to some, but it is not unheard of in the cryptocurrency world, where numerous projects are initiated by anonymous entities.
Earlier in May, the market capitalization of Pepecoin (PEPE) had soared to $1.8 billion. Two weeks later, the PEPE market cap has come crashing down to roughly $665 million, a 65% decline. PEPE whales appear to have been primarily responsible for the price drop, according to data tracked by Wuligy, an on-chain analyst at Dune Analytics.
Notably, the top fifteen addresses with the highest earnings and returns, and those holding a significant amount of PEPE tokens around its market peak have dumped most of their holdings in recent weeks. Some whales have even sold 100% of their PEPE reserves during the crash.
On a brighter note, PEPE’s daily holder count has flatlined, if not fallen, since April’s sharp increase from around 100 to over 100,000. As of May 23, it was over 115,000, suggesting that new users are joining despite the price decline. However, some of these addresses may belong to existing PEPE holders or represent exchange wallets, given PEPE’s listing across multiple crypto exchanges since its launch, the latest being Bitfinex.
PEPE ended the month trading $0.00000126.
