Chaos in Crypto: Trump-Musk Clash Sparks Market Turmoil
Market Expectancy Characterized by Cautious Optimism Amid Volatility Approaching Weekend's Trade: Information Revealed
In the past two days, a heated feud between US President Donald Trump and billionaire businessman Elon Musk has caused a massive stir in the cryptocurrency market, sending it into a bearish spiral. As the week comes to a close, the market remains in a state of flux.
Interestingly, despite the marketwide chaos, a weekly report from Binance reveals a cautious optimism amongst investors. With rising confidence in a soft landing and a moderating economy, they are still wary of inflation risks and lingering signs from the Federal Reserve.
Bitcoin Plummets, Ether Takes a Hit
bite-sized insights:- Bitcoin tumbled to a multi-week low, falling below $101,000 amid the Trump-Musk feud.- Ether also saw a drop, briefly falling below $2,400.
Ever since the start of the week, Bitcoin (BTC) had managed to consolidate between $104,000 and $106,000. However, it was not long before the escalating tension started to take its toll, prompting the cryptocurrency to plunge below $101,000. Ethereum (ETH) followed suit, dipping below $2,400.
Meanwhile, declines in the balances of Bitcoin and Ether on crypto exchanges have set new yearly lows. In May, the metric tracking these two digital assets has dropped by 4.3% for Bitcoin and 7.5% for Ether, respectively. Binance attributes this shift to investors moving their assets off trading platforms, a potential sign of accumulation.
Correlation with Equities and Gold
Fortunately, Bitcoin's correlation with equities and gold has continued to hold strong. With a two-month BTC-S&P 500 correlation of 0.49, the cryptocurrency's links with the stock market remain in place. As for gold, its correlation with Bitcoin rose to 0.09 during this period.
Crypto ETFs and Staking Rewards
On a positive note, the growing institutional acceptance of crypto exchange-traded funds (ETFs) is primarily due to recent regulatory reforms. Towards the end of May, the Securities and Exchange Commission (SEC) declared that staking activities on Proof-of-Stake networks do not constitute securities transfers. As a result, crypto ETF providers are now able to incorporate staking rewards into their offerings.
Similarly, financial giant JPMorgan announced it would allow clients to use crypto ETF shares as collateral for loans.
Exciting news came from Circle, the stablecoin issuer behind the USD Coin (USDC), as it launched its initial public offering (IPO) on the New York Stock Exchange (NYSE). Circle managed to raise $1.5 billion through the sale of 34 million shares at $31 each. However, with 220 million outstanding shares disclosed in its June 2 filing with the SEC, the firm’s valuation appeared to stand at $6.9 billion. But, following the successful listing, Circle’s market capitalization surged to at least $20 billion.
Recommendation: Keep a close eye on the cryptocurrency market amidst the ongoing political drama and volatility. Investors should bear inflation risks and Federal Reserve signals in mind while maintaining a cautious optimism for the future of the market.
Sources:1. Binance Research - Crypto Market Review (WEEK 21/2023)2. Market research platform3. Data from CryptoQuant
- Amidst the ongoing chaos in the cryptocurrency market due to the Trump-Musk clash, investors on Binance still exhibit a cautious optimism as they pay close attention to inflation risks and signals from the Federal Reserve.
- Bitcoin (BTC) plunged below $101,000 this week, while Ethereum (ETH) dipped below $2,400, with declines in the balances of these cryptocurrencies on exchanges reaching new yearly lows.
- Recent regulatory reforms have facilitated the growing institutional acceptance of crypto exchange-traded funds (ETFs), allowing crypto ETF providers to incorporate staking rewards into their offerings.
- Financial giants, such as JPMorgan, are now enabling clients to use crypto ETF shares as collateral for loans, and Circle, the stablecoin issuer behind USD Coin (USDC), successfully launched its initial public offering (IPO) on the New York Stock Exchange (NYSE).
