Weekly Overview

The overall crypto market showed a trend of falling first and then rising this week. The overall market continued the downward trend of last week in the first half of this week, and began to rebound near the weekend closing time, especially L2, cross-chain, modular and other anti-fall sectors recovered first.

The overall market capitalization of the crypto market fell slightly from the same period last week, from $2.38 trillion to around $2.21 trillion. The market capitalization share of Bitcoin fell from 53.4% ​​to 52.6% this week. The fear and greed index retreated due to the downward adjustment of the market, falling from 60 to around 47.

Specifically speaking of the fluctuations of each sector, BTC fell weakly this week, and value coins fell across the board, and the market experienced a stress test. The Meme sector, which was originally the strongest, was not immune, but when the market stabilized in the second half, some mainstream MEMEs with high market value also rebounded significantly. In addition, the sectors that have recorded net price increases in the past 7 days are cross-chain, Layer 0, NFTFi, etc., but whether these sectors can rebound further remains to be further observed.

Specifically speaking of market trading data, Bitcoin's quarterly basis fell from 1.36% to 1.1%, and the funding rate turned from positive to negative. On April 30 and May 1, long liquidations hit a three-week high for two consecutive days, while the Gas on the Ethereum chain continued to be at a low point, currently reported at 5 Gwei.

In short, as the hype about Bitcoin ETF and halving comes to an end, market sentiment has begun to turn cold, but it has also provided a lower chip position for some investors who are optimistic about the market space in the long term. In the second half of this week, the trading volume of derivatives began to rise slightly, and the conversion of the airdrop trend still needs some time to accumulate.

Overall, the overall cryptocurrency market has turned from a series of declines to a steady rebound this week. Facing the pressure of the high interest rate policy of the US dollar, the crypto market urgently needs a new narrative hype logic to boost the market. Although the current bull market is still off track, it may maintain a volatile pattern in the short term, and it may take some time for the general rise to occur.

Bitcoin & Ethereum Weekly Performance

Bitcoin (BTC)

This week, the price of BTC fell first and then rose. On a weekly basis, it has been five consecutive declines, highlighting the state of the market's profit-taking chips starting to clear after the suspension of ETF and halving speculation. At the same time, the decline of BTC naturally led to the overall decline of the crypto market, and the market's wealth-creating effect declined.

As of the time of writing, BTC's weekly high was $64,721, and its low was $56,573 in a short period of time. Currently, both bulls and bears are still competing for the $60,000 mark. Although the current price of the currency is supported by the 120-day moving average and the downward sentiment has temporarily stabilized, the high MACD dead cross has just appeared on the weekly chart, so we should not be overly optimistic about the market recovery in the short term.

Another reason that supports the current view is that because the Fed's expectations for rate cuts have been repeatedly postponed, market funds have become more cautious, and ETF funds have also seen large net outflows this week. In the current macro environment of tight liquidity, the withdrawal of funds will hit the market's bullish sentiment, which is also in line with the law that the market begins to pull back after the halving in the past.

In short, we believe that the long-term positive space for the bull market after halving is still to be effectively priced, but the short-term market outlook is not optimistic. At least in the current period of time, adjustments of long and short forces are needed to build momentum for the next market.

Ethereum (ETH)

From a fundamental perspective, ETH has performed poorly since the Cancun upgrade, lacking new innovations to drive it. On the other hand, BTC, Solana, and a number of new L1 ecosystems have developed rapidly, resulting in a slight decline in market share. This week, on-chain gas fees continued to fall below 6Gwei, and NFT sales in April were also surpassed by Bitcoin, highlighting the cold atmosphere after the strong market speculation. However, according to historical experience, whenever on-chain gas falls to the freezing point, the market outlook often sees a considerable rebound, so we still look forward to the recovery of the market.

It is worth mentioning that ETH/BTC has been in a weak downward trend for nearly a year and a half. In addition, the US SEC's review of its spot ETF has not been smooth, so the ETH price performance has not been too eye-catching.

In general, the gains of BTC and ETH in this bull market have exceeded past historical trends, and the subsequent upside will depend more on the ability of US economic policies to curb the strengthening of the US dollar.

In the coming period, we need to pay attention to the positive progress of new narratives such as modularization and Restaking, which will be an important driving force for ETH's recovery and strength.

Regulation & Macro Policy

🔥Federal Reserve Chairman Powell said that inflation is still too high and further progress is uncertain. Short-term inflation expectations have risen. He does believe that policy is tight and that it is putting pressure on demand. Decisions will be made on a case-by-case basis and depend on upcoming data.

🔥The Federal Reserve kept its benchmark interest rate unchanged at 5.25% - 5.50% for the sixth consecutive time, in line with market expectations.

🔥The Federal Reserve FOMC statement showed that the Fed will slow down the pace of balance sheet reduction starting in June; the pace of U.S. Treasury bond reduction will be reduced from US$60 billion per month to US$25 billion, and the pace of mortgage-backed securities reduction will remain unchanged at US$35 billion per month.

🔥The U.S. House of Representatives Financial Services Committee issued a statement saying that the U.S. Securities and Exchange Commission (SEC)'s statement on the security of Ethereum (ETH) contradicts the statement of the agency's chairman Gary Gensler. The U.S. Banking Committee stated in the statement that they will continue to hold the SEC accountable for excessive regulation in the digital asset market, and the issue of the agency's classification of Ethereum is crucial in the current application process for the issuance of the first U.S. spot Ethereum ETF.

🔥Canada's Prime Minister proposes capital gains tax on stocks and cryptocurrencies.

🔥Russia will implement cryptocurrency restrictions, exempting miners and central bank projects. From September 1, Russia will impose strict restrictions on the circulation of crypto assets such as Bitcoin. Only digital financial assets will be allowed to be issued within its jurisdiction.

Crypto Market Highlights

⭐️In the past week, the overall market of cryptocurrency continued to decline. After the fourth halving of BTC, the rune wealth creation effect was less than expected, the macro liquidity was still tight, and the overall market sentiment turned and triggered a decline. However, at present, this round of decline is no longer the passive plunge of the past altcoin sector. Some data show that the current price of Bitcoin is very limited from the start-up price of mainstream mining machines, and miners are reluctant to sell, but new narratives are still needed to promote the recovery of the market.

⭐️The overall market trend is down this week, but some sectors are relatively resistant to declines. The Layer 2 sector, which had previously fallen sharply, has remained relatively resistant to declines in this round of downward trends and has rebounded strongly, recording a return rate of -4.99% this week. Optimism (OP) and Starknet (STRK) have increased by 19.9% ​​and 7.2% respectively. In addition, cross-chain and NFT sectors are also relatively resistant to declines. Wormhole (W) has increased by 12.1% this week. The altcoin season seems to be brewing.

Against the backdrop of an overall correction, the total market value of 5 types of projects still showed an upward trend against the trend this week. Due to the lack of new hype narratives and the greatly reduced expectations for loose external liquidity, the overall market is currently dominated by a rotation recovery of oversold sectors.

Specifically, the market has not seen any out-of-circle projects like the previous Inscriptions, AI, DePIN, etc. in recent times, so whether the recent strong sector performance can continue is worth further observation.

The sectors with strong overall performance this week include cross-chain, NFTFi, Telegram Apps, and the cat-themed MEME sub-sector.

Project Category Weekly Rise and Fall Weekly Rise Top Three Tokens Overview Layer 0 6.4% DOT, GEEQ The Layer 0 sector led the gains, mainly because the number of sampled tokens in this sector was small. Cross-chain Communication 6.3% W, AXL, ZETA The cross-chain sector tokens rose the most, and in fact, they also maintained a resilient trend when the market fell this week; the most watched cross-chain project LayerZero recently completed the first snapshot, and the token airdrop may bring some attention to this sector. NFTFi 3.9% BLUR, JPEG, X2Y2 The NFTFi track has been relatively dull, and the sector has less selling pressure in this week's decline. Telegram Apps 1.1% BANANA, DATA, HGPTNFT The market rose sharply this week, and the top growth projects were mainly several popular projects in the market. Cat-Themed Coins0.9%POPCAT, MOCHI, WEN cat-themed meme coins belong to the sub-sector of MEME sector, which are sought after by many KOLs and communities. They are expected to change the situation of dog-themed meme communities in the industry. Currently, this track is still in the initial stage of consensus building, and the fluctuations are large.