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Audius crypto, a Web 3 equivalent to music streaming platforms like SoundCloud and Spotify, saw its native token, $AUDIO, soar 27.4% last week with a 21x volume increase on Convert. Audius was named one of the top 14 music tech startups to watch by Business Insider, which boosted the token's value and drove up demand.
BounceBit ($BB), the first project launched in the Megadrop zone, had a tremendous gain of 92.4% last week, with the trading volume jumping 381.0% on Convert. BounceBit is a leading project in the CeDeFi infrastructure space, providing institutional-grade yield products, restaking use cases, and CeDeFi as a service to make high-yield opportunities available to all. The strong performance came after the project team announced a roadmap to democratise high-yield Bitcoin investing by combining centralised and decentralised finance.
Last Thursday afternoon, the SEC approved the 19b-4 form for Ethereum spot ETFs, clearing the way for ETH spot ETF approval. Uniswap ($UNI) saw a surge in trading volume on its decentralised platform, which accounts for 48.9% of total DEX volume. Moreover, the Uniswap V4 introduction by the project team fueled the demand for this governance token.
Meme coins continue to play an important role in the market, with ConstitutionDAO ($PEOPLE) and Pepe ($PEPE) outperforming and gaining market attention. Last week, $PEPE experienced double-digit trading volume growth on Convert, while $PEOPLE saw triple-digit trading volume growth.
Overall Market
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The above chart shows the ETH price movement in the last three months.
Last Thursday, the US SEC finally approved the 19b-4 forms for Ethereum spot ETF applicants, paving the way for the final approval of ETH spot ETFs. ETF issuers must wait for the SEC to approve the S1 forms before listing their ETFs on the stock market for investors to purchase. Typically, it takes another one to two weeks.
On Thursday, before the SEC website published the approval of 19b-4 forms, ETH price fluctuated, first rising to $3,950 before the US market opened, then rapidly falling below $3,500 at the US market close due to the lack of clarity of the SEC decision. The high volatility (over 10% change from top to bottom) was priced correctly in the options market, with near-tenor ETH options trading at more than 110% implied volatility. The implied volatility rapidly dropped to the normal range after the announcement was made.
Following the SEC announcement, we saw some ETH sales during the Asia hours, and demand increased after the price reached the green bar shown in the chart. Demand came in consistently, pushing the price into the red bar, which represents a strong resistance area at the $4,000 level. We expect the resistance level to be broken with the announcement that the S1 forms have been approved by the SEC, and we could see another 10% room to run before the ETFs are available in the stock market.
Options Market
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The above table shows the 25-delta skew of BTC and ETH options with different tenors.
Last week, before the SEC approved the 19b-4 forms on ETH ETF applications, we saw a heavily skewed market behaviour towards puts on ETH near-tenor options, indicating that options traders were purchasing downside protection against the "sell the news" behaviour.
This week, the 25-delta skew on ETH options of various tenors is all positive, indicating that options traders are optimistic about ETH's recent price movement, with longer-tenor options showing a stronger bullish sentiment.
Meanwhile, sentiment on BTC options is less bullish, with only 0.44 readings for 7-day expiry. However, sentiment indicates more bullishness for longer-term options.
According to the table above, the market is strongly bullish on both BTC and ETH over the next two months, with ETH outperforming. This observation supports our previous prediction that the market correction that began in March is coming to an end, and that BTC may reach a new all-time high this summer, paving the way for the start of the altcoin season.
Macro at a glance
Last Wednesday (24-05-22)
The Federal Open Market Committee (FOMC) meeting minutes revealed that it might take longer than previously thought to confidently achieve a sustainable inflation rate of 2%. Many participants expressed readiness to tighten policies further if the inflation risks developed to warrant such action. With the market wary of possible further delays in Federal interest rate cuts, U.S. equities closed in a slump, with the S&P and Nasdaq indexes down by 0.77% and 0.70%, respectively. Nonetheless, the crypto market performed better, largely due to robust demand for Ethereum before the potential approval by the SEC on ETH ETFs.
Last Thursday (24-05-23)
US initial jobless claims dropped to 215k last week from 223k the week before, better than the estimated 220k.
The S&P Global U.S. Manufacturing PMI for May was recorded at 50.9, surpassing the projected 50.0. Furthermore, the S&P Global U.S. Services PMI came in at 54.8, significantly exceeding the expected 51.2. This indicates that US business activities are expanding. Manufacturers reported an increase in prices across various inputs, suggesting potential growth in goods inflation in the coming months.
Last Friday (24-05-24)
The durable goods orders in the U.S. documented a growth rate of 0.7% month-on-month in April, surpassing the projected decrease of 0.9%.
On Tuesday (24-05-28)
U.S. consumer confidence climbed to 102.0 in May, marking a significant rebound from April's 97.5, and beating the expected 96.0. This robust consumer confidence implies potential increases in demand for goods and services, which could result in more persistent inflation.
Later this week, we have
US GDP in the first quarter of 2024
The Eurozone's CPI reading for May, which could provide additional insight into the ECB's potential rate cut in June.
The US PCE index in April, which will provide further insights into US inflation and the Federal Reserve's interest rate decision.
Convert Portal Volume Change
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The above table shows the volume change on our Convert Portal by zone.
This week, our trading volume on Convert increased significantly, with the Megadrop zone showing the greatest percentage increase.
Last week, BounceBit ($BB), the first project launched in the Megadrop zone, had a strong performance and attracted a lot of demand to trade this token. The trading volume surged 381.0% compared to its first-week trading volume.
The Fan Token zone saw a 72.0% increase in trading volume on Convert last week. Santos FC Fan Token ($SANTOs) is the primary driver of volume growth in this zone.
During the same time period, volume in the NFT zone increased by 36.3%. Audius ($AUDIO) and Origin Protocol ($OGN) are the two main contributors to the high trade demand.
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