Crypto markets remain volatile as prices rebound on a cooling US economy

Hey folks!

Welcome to yet another week. The past 7 days have been volatile for the crypto market. The weaker-than-expected US jobs data managed to spur the market, but uncertainty crept into the crypto market over the last week. 

While the broader crypto markets are trading on a weak footing, certain sectors outperformed the market. Read on to learn about the sectors outperforming the broader market and what is triggering the rally.  

Crypto markets remained under selling pressure for most of last week, with a sharp recovery in prices post the US jobs data update, which came in weaker than expected. The slowing economy is being taken as a sign that the high-interest regime is finally paying off and will soon result in inflation coming under check. 

The optimism has resulted in a stronger belief that interest rate cuts are "closer" than expected, which resulted in a rally across risky assets, sending the overall crypto market cap back above $2.35trn levels. However, this rally will need further triggers to sustain as the interest rate cut is still months, if not quarters, out! Overall prices remained rangebound, with a downward bias last week.

Market leader Bitcoin has been trading in a consolidation phase with strong selling pressure on prices, as prominent events of "Halving" and the initial euphoria around demand inflow for Spot ETFs, are now behind us. Price remains in a tight range and is currently trading just below the $63k level. However, innovation on top of the Bitcoin network continued to gain steam as VC funding for the "BTCFi" narrative saw a couple of interesting projects like Botanix and ZKM raise initial funding rounds.

There was a major development in the Ethereum ecosystem, as Vitalik proposed EIP-7702 to refine account abstraction. However, it had minimal impact on ETH prices, which were >5% negative for the week and are trading just below the $3k level.

Another couple of interesting developments came from the US regulators and courts. The Biden administration's veto of allowing TradFi banks to custody crypto was shot down in the House, with several Democrats voting against their party. Trump's NFT gathering further establishes that crypto will become an important election issue this year. 

In a major sigh of relief for FTX users and creditors, the bankruptcy court estimates that it will be able to return all funds.

The broader markets bounced back strongly after the US jobs data miss, but it was still mostly a sea of red on the weekly return charts. Two themes that stood out were meme coins and AI-related tokens, both of which were more volatile than the rest of the markets.

The institutionalization of meme coins is underway as TradFi giant VanEck launched a Meme Coin index, tracking the growth of the 6 biggest meme coins. Trump-related meme coins (BODEN and MAGA) surged after the former president lent his support to the crypto industry. However, profit booking and subsequent selling pressure pushed meme coin prices in negative territory, for the week. 

The other growth outliers were AI-related tokens after chip maker Nvidia posted another strong earning quarter. The pack was led by Render network's RNDR, which surged in price after Apple lauded its Octane product for its high performance. FET, NEAR, AKT, and WLD also pumped in prices. 

Telegram's TON surged in price, helped by the popularity of the Telegram game community token Notcoin (NOT), which will soon be listed on Binance and OKX. Legendary crypto fund Pantera also announced investing in TON.

Other tokens with outlier returns include Thorchain's RUNE as its CEO laid the path for increasing TVL safely and Arweave's AR on the back of futures listing on Coinbase

On the flipside, Optimism's OP token fell in price even after the announcement of Superchain supporting Layer 3 chains, and Bittensor's TAO token came under selling pressure due to profit booking, after its recent runup in prices.

• RUNE $6.11 ⏫ 9.82%

• TON $7.30 ⏫ 19.83%

• BTC $62,912 ⏬ 3.51%

• FET $2.16 ⏬ 11.79%

(All data here is as of 2.45 p.m., 13 May 2024)

Before we conclude, here’s a quick look at some important news from around the crypto world.

• AI tokens lead crypto market recovery as Nvidia hits a one-month high. RNDR, the utility token of decentralized GPU-based rendering solutions, The Render Network, has surged almost 40% to $10.432 in seven days, the biggest gain among the top 100 cryptocurrencies by market value, according to data source CoinGecko. Read more here. 

• VanEck’s MarketVector has jumped on the meme coin bandwagon, starting a new index based on the highly popular token category. MarketVector’s Meme Coin Index, which trades under the symbol MEMECOIN, tracks the top six meme tokens. Read more here.

That’s it for now. Thanks for sticking around.

See you later, folks! 👋

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