This blog post recaps Runa’s TL;DRs in May and is meant to cover the most interesting token performers, crypto data, and news from the month.
FYI: Runa’s weekly TL;DRs are posted to our LinkedIn account at the end of every week. Follow us on LinkedIn here to get our weekly TL;DRs on your newsfeed.
Runa’s sector indices were negative for the month. May was largely defined by low liquidity and dramatic spikes in fees on the Bitcoin and Ethereum blockchains. This is a result of 1) memecoin craze as well as 2) the increased interest in the Ordinals Protocol, which allows people to inscribe different types of data (e.g., text, images) on satoshis (a small unit of bitcoin), effectively enabling NFTs on the Bitcoin blockchain.
Low liquidity: Market making firms Jump and Jane Street pulled back from digital asset trading in US markets. While it remains unclear how these decisions will affect digital asset liquidity this is further proof of how the current US regulatory regime is pushing crypto market participants offshore or out of the business entirely.
Fee spike: In April and into May, memecoin $PEPE received a lot of interest from speculators, pumping the coin’s value up more than 2,000% during its first month of trading. The fear of missing out on this upside has led $PEPE to reach over 100,000 holders faster than any other ERC-20 token per Messari. Turning to Bitcoin, Ordinals specifically led to debate within the community as to whether this type of speculative activity is beneficial or damaging to Bitcoin.
Finally, Gaming/Metaverse (-14%) was the sector that lagged the most. Secondary market prices for NFT land plots have dropped massively since their 2022 highs. This decline has coincided with a sharp reversal in metaverse sentiment, and it remains to be seen whether or not these metaverse projects can regain the public interest they enjoyed during the last bull market.
Notable token performers for the month:
- Within DeFi, Lido (+3%) led the way on the back of their v2 rollout which enabled staking withdrawals on Ethereum. While a large ETH withdrawal was submitted, likely reducing Lido’s market share, v2 enabled a more decentralized service for Lido with a new feature, the Staking Router. Similar to Rocket Pool, the Staking Router decentralizes node operators.
- In the Protocols sector, alternative layer one protocol Kava (+34%) was May’s top performing asset following their Kava 13 mainnet upgrade. Optimism (-36%) declined, despite an announcement of their upcoming Bedrock upgrade, largely due to a meaningful token unlock late in the month.
- In the Protocols sector, there was another high-profile alternative layer-1 blockchain launch: Sui, which uses the Move programming language, similar to the Aptos blockchain that came to market last year.
- On the regulatory front, Coinbase had a small win: A federal court mandated that the SEC respond within 10 days to Coinbase’s petition for the SEC to answer whether existing securities frameworks could be extended to the crypto industry.
- Blur made another splash in NFT markets by introducing Blend, a perpetual NFT lending platform. This update allows users to borrow ETH using NFTs as collateral. As of writing, the platform has facilitated over 230k ETH (or about $436M) in loans so far.
- Grayscale, the issuer of the publicly traded Filecoin Trust ($FILG), announced that they received a letter from the SEC saying the commission believes the $FIL token meets the definition of a security. If $FIL is ruled a security, Grayscale may have to liquidate the trust. Grayscale is expected to respond and challenge the statement the SEC made in its letter.
- Axie Infinity announced that their strategy card game, Origins, will be listed on Apple’s App Store for users in Latin America and Asia. In addition, Solana Web3 move-to-earn game, STEPN, announced the ability for users to pay for in-game items using Apple Pay. These announcements mark crypto projects attempting to make inroads into mobile with the help of Apple products.
- Formula 1 ticket issuer Platinum Group released tickets to the Monaco Grand Prix in the form of NFTs using Polygon Labs technology. Ticketing provides an exciting alternative use case for NFTs and is another example of the broad utility that NFTs can provide.
- Runa’s Head of Client and Portfolio Solutions, Alex Botte, CFA, CAIA, recently published another report on crypto-specific risk models. In this piece, Alex explains why a sector-based risk model in crypto can provide valuable insights to investors. Read her report here: https://caia.org/blog/2023/05/01/how-build-crypto-specific-sector-risk-model
- Runa’s CEO, Jennifer Murphy, and Alex joined CAIA CEO, Bill Kelly, on his Educational Alpha podcast to discuss Web 3 – from the role of digital asset regulation to NFTs to the stages of technological revolutions. Listen to the episode here:
- CoinDesk posted an opinion piece by Alex titled “Crypto Isn’t Ready for Jack Bogle” where she dives into how passive digital asset strategies struggle to outperform Bitcoin. You can read Alex’s piece here: https://www.coindesk.com/business/2023/05/10/crypto-isnt-ready-for-jack-bogle/
- The CFA Institute posted a research article by Alex in which she dives into five important themes in digital assets. You can read Alex’s piece by clicking here: https://blogs.cfainstitute.org/investor/2023/05/23/digital-asset-markets-five-important-themes/
- Jennifer spoke at AIMA’s Digital Assets Conference in New York.
- Alex and Runa’s analyst, Ned Menton, attended the Bitcoin 2023 conference in Miami. Ordinals and AI were two of the most widely discussed topics. An interesting point we heard mentioned a couple of times was the idea that Bitcoin may be able to serve as a hedge to AI and deep fakes. Bitcoin is the most secure network in the world at a time where people are craving security. Perhaps it has a role to play in authenticating and verifying human-made, non-AI generated content.
- Alex and Runa’s COO, Max Williams, joined FalconX’s inaugural roundtable webinar along with folks from Bitwise Asset Management to discuss the buy-side environment in a bear market, crypto and macro correlations, and themes for the future. The replay is available upon request.
Questions? Thoughts? Feedback? Shoot us an email! email@example.com