Stay up to date with our monthly crypto overview:
- The crypto markets dropped further in May, fueled by the collapse of Terra’s algorithmic stablecoin, UST, and its sister token, LUNA.
- Bitcoin and Ether are down -16.95% and -29.02%, respectively.
- The top outperformer among the leading crypto assets was Tron (TRX).
Crypto Market Overview May
After a bearish April, the crypto markets moved another leg lower, following the de-pegging and subsequent collapse of the algorithmic stablecoin, TerraUSD (UST).
The downfall of UST also resulted in a 99%+ loss for holders of the stablecoin’s sister token, Luna (LUNA), which was utilized in the algorithmic stablecoin’s price stabilization mechanism. $60 billion in market value was wiped out, resulting in a substantial market sell-off across the crypto markets.
Bitcoin (BTC) dropped by 16.95%, while Ether (ETH) lost 29.02% in value versus last month’s close. The remaining top crypto assets by market capitalization followed their lead, dropping between 15% to 35%, with Solana (SOL) almost losing half of its value (-48.21%) month-on-month.
The collapse of TerraUSD also prompted lawmakers to take a closer look at stablecoins and what role they could play in the global financial system moving forward. US Treasury Secretary Janet Yellen urged Congress to create a regulatory framework for stablecoins, while the UK Treasury has proposed stablecoin regulations that would give the Bank of England more oversight of failed stablecoin issuers.
Crypto Performance Overview May
Spurred on by the Terra saga, Bitcoin lost 16.95% and Ether lost 29.02% in value, respectively, as the market continued its downward trend across the board.
Leading layer-1 blockchain tokens booked losses ranging from 15% to 55%, with Avalance (AVAX) losing over half its value (54%) in the past 30 days.
This month’s outperformer, and the only leading cryptocurrency that gained in value, was Tron (TRX). TRX rallied by 20.46% in May, after receiving a boost following the announcement of a new Tron-powered algorithmic stablecoin, called USDD, that will incorporate TRX into its price stabilization mechanism.
While USDD looks a lot like the now de facto defunct UST stablecoin, the team behind USDD plans to take the lessons learned from TerraUSD’s collapse to ensure the same will not happen to its stablecoin.
The stock market is currently not looking much better than the crypto markets, with numerous tech companies losing 70% in value versus their IPO listing prices. However, after dropping several percentage points in the first three weeks of May, US stocks recovered towards the end of the month, closing essentially unchanged versus April.
U.S. Treasuries, measured by the S&P U.S. Government Bond Index, strengthened by 0.76%w, while the price of gold dropped by 2.47% in the last 30 days.
Institutional Interest in Crypto
Swiss asset management firm Julius Bär announced that it will start offering crypto and DeFi exposure to its wealthy private clients. CEO Philipp Rickenbacher stated in the company’s recent strategy and financial update that: “[Crypto assets] will transform the financial sector over the next ten years and it is important for us to gain a strong foothold in this area. That’s why it’s exactly the right moment to invest in the long-term potential of digital asset technology.”
Fidelity Digital Assets plans to double its headcount in a clear sign of the asset management company’s commitment to crypto assets. The firm reportedly plans to add 110 technical blockchain experts and 100 customer service specialists. Since its launch, Fidelity’s digital asset division has been able to onboard over 400 customers, including hedge funds and asset managers.
Bitcoin on Balance Sheets
The “Bitcoin nation” El Salvador added another $15.5 million worth of Bitcoin to its treasury by purchasing 500 BTC. According to a tweet by President Nayib Bukele, the Central American nation acquired the coins at an average price of $30,744.
New York-based digital media company, Townsquare Media, stated in an SEC filing it has purchased $5 million worth of Bitcoin for its balance sheet in Q1/2022. The publicly-traded company said that it “believes in the long-term potential of digital assets as an investment.”
According to a recent SEC filing, up-and-coming streaming platform Angel Studios has bought $10.6 million worth of Bitcoin. The company bought Bitcoin “to further diversify returns on cash and cash equivalents balances that are not required to maintain adequate operating liquidity.”
About Iconic Funds
Iconic Funds is the bridge to passive and actively-managed exposure to crypto. Iconic Funds, via its subsidiaries, offers crypto asset ETP’s, diversified index funds, and alpha-seeking strategies for investors.
Our mission is driving the adoption of crypto assets. As the bridge for investors to gain exposure to Crypto Assets, Iconic’s licensed and regulated vehicles offer investors a menu of investment choices ranging from passive index exposure to actively-managed strategies. Iconic Funds removes the technical risks of crypto investing by offering investors trusted and familiar means to invest in crypto at industry-leading low costs.
The marriage of state-of-the-art technology, innovative investment products, and uncompromising professionalism places Iconic at the vanguard of crypto asset management.
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