May 2022 was not for the faint of heart. Even the most difficult and experienced cryptocurrencies were tested in the first two weeks of the month with a drastic drop following the US Federal Reserve’s announcement that interest rates would rise by 0.5%.
Crypto was used to show less correlation with real events and was generally unchanged by capitalist successes and mistakes. On the other hand, a very stable estimated link between Bitcoin (BTC) and the S&P 500 index was seen throughout the first five months of 2022. Inflation and war have not been good in both markets either.
Stock market-like crypto could be due to a huge increase in market value in 2020 and 2021. At unprecedented rates, retail investors have flocked from stocks to cryptocurrencies, causing much more overlap in price movements.
Bitcoin plunged below $ 29,000 before returning to $ 31,800 on May 31, while Ether (ETH) fell to just over $ 1,700 before recovering above $ 1,900 before May 30. But many altcoins fared much worse, and the response from once-patient traders changed to about as much FUD as one could imagine.
Four stablecoins, two different directions
TerraUSD (UST) – now known as TerraUSD Classic (USTC) – was a stablecoin based on the Terra blockchain and ranked in the top six stablecoins in terms of market value. However, on May 9, the currency, designed to maintain $ 1 value all the time, gradually dropped to $ 0.29, leaving the world of cryptocurrencies in shock. Its prices have not recovered since.
As for how this affected the rest of the stablecoin landscape, there was a huge “shuffle on the deck” because the reputation of the trusted stablecoin collapsed overnight. Tether (USDT), the largest stablecoin by market value, fell by itself, albeit one much less drastically, to $ 0.95. Since then, it has recovered, but requirements for the currency’s solvency have been renewed.
Dai (DAI) and USD Coin (USDC) seemed to reap the rewards amid the dilemma as the graph above clearly indicates that the 10 largest whale houses from each stablecoin show increased confidence in these two assets and the currency moves in big waves in exchange from USDT and UST (now TerraUSD Classic). Nor can the Binance USD (BUSD) be ignored, as the third largest stablecoin grew to almost $ 19 billion in market value last month.
The tragic fall of LUNA from grace
The sister symbol of the UST LUNA Classic (LUNC) – an updated name of the original LUNA symbol – dropped from its historic high of $ 119 just seven weeks ago to $ 0.000125, which is equivalent to -99.9999% price reduction and market value. Disconnecting ICT from $ 1 seemed to be the last nail in the coffin as the algorithm was not fast enough to burn LUNC when ICT was in free fall due to extensive withdrawals on the Anchor Protocol.
But while the story of LUNC may seem like old news at this point, talks about LUNA 2 – the new version of LUNA – seem to be bringing new life and optimism. The GitHub project has really exploded with new features at a speed never seen before from the original LUNC.
Bitcoin trader’s attitude at historical pain level
Bitcoin could be bottoming out as the sentiment reached its most negative levels since March 2020. BTC’s social dominance is also diminishing. Usually, three waves of declining BTC dominance are a clear sign that traders are no longer interested in buying an annoying and unpredictable “dip”. And when traders lose interest, prices rise historically.
Among Telegram, Reddit and Twitter social volumes, the three platforms have seen very different discussion rates on cryptocurrencies last year, let alone the last two months. Reddit saw a long noticeable increase when prices bottomed out about two weeks ago, while Telegram discussions have completely died down.
The amount of whale-owned BTC is low, the number of addresses is rising
There is good and bad news about Bitcoin’s whaling activity in May. The good news is that the number of whale quotas with 100-1,000 BTC has risen for about four months in a row, a trend that reversed at the end of January. At the same time, the bad news is that the actual total amount held by this whale house still shows long-term landfill patterns back to the end of October, just before the historic high.
Dai speed remains low, a good sign for Ether
With the top altcoin Ether, there seems to be a correlation between its price and the amount of speed, which is the average number of times a currency exchanges a wallet every day, as seen on the Dai network.
A series of major peaks in Dai’s speed were seen weeks after the peak of Ether in mid-November, but have been rather dormant in recent months. As long as this measure remains at a low level, there is no risk of an isolated landfill for ETH compared to the rest of the cryptocurrency market.
Ethereum charges are also encouraging somewhat dormant
On top of the low speed of Dai, charges on the Ethereum network are approaching the lowest years. With so much stagnation among many networks, this has caused the cost of each transaction to decrease.
The chart above shows a huge increase in average fees (to $ 98) in mid-May. This was a clear sign that some further flaw was likely. It is only to be hoped that the charges will be kept down as the bulls like them.
The Market Insights newsletter Cointelegraph shares our knowledge of the fundamentals that move the digital asset market. This analysis was conducted by Santiment’s leading analytics provider, a market intelligence platform that provides chain, social media and development information on 2,000+ cryptocurrencies.
Santiment develops hundreds of tools, methods and indicators to help users better understand the market behavior of cryptocurrencies and identify data-driven investment opportunities.
Disclaimer: The views expressed in this post are for general information only and are not intended to provide special advice or a recommendation for each individual or for special security or investment were.
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