Crypto Scoop: Cryptocurrency Market Booms with Record Inflows and Bullish Forecasts

This week, the crypto space records significant milestones and inflows alongside notable initiatives and partnerships. In this edition of the Crypto Scoop, we review the following:

• Price moves and predictions for top cryptocurrencies
• Ethereum ETF applications and updates
• Paypal’s expansion into the Solana ecosystem
• Crypto initiatives and adoption across the globe and more. 

Cryptocurrency Market Surges with Record Investment Inflows and Optimistic Growth Projections

This week, Bitcoin and Ethereum traded at notable values of $68,000 and $3,900, respectively, with Ethereum nearing the $4,000 benchmark. Investment inflows into Bitcoin have reached an all-time high, totalling over $1 billion last week and pushing the year-to-date figures to approximately $14.6 billion, as reported by CoinShares. The substantial influx was primarily driven by institutions and long-term investors increasing their exposure to spot Bitcoin ETFs. 

Bitcoin exchange-traded products (ETPs) also saw $1.01 billion in inflows for the week ending May 24, contributing to a record total of $14.9 billion for all cryptocurrency investment products in 2024. Notably, U.S.-based spot Bitcoin ETFs, like GBTC and IBIT, now collectively hold over 1 million BTC, a significant milestone highlighted by MicroStrategy's executive chairman, Michael Saylor. Additionally,  the number of Bitcoin addresses with positive balances has also surged, surpassing 52.5 million, with Bitcoin’s user base growing by 11 million new addresses since 2020.  This achievement is seen as a reflection of growing institutional confidence in cryptocurrency as a viable investment.

Yat Siu, co-founder of Animoca Brands, further reinforced the optimism, predicting that the global cryptocurrency ecosystem, valued at around $2.7 trillion, could grow to $200 trillion within the next decade. Siu attributes this potential growth to increasing digital property owners within the Web3 ecosystem, especially in fast-growing markets like Asia.

Meanwhile, the safety of digital assets has seen improvements. According to a recent report by blockchain security firm Immunefi, crypto losses from fraud and hacks declined by 12% in May, with significant reductions in incidents compared to previous months. This trend suggests an improving security landscape within the Web3 space, although vulnerabilities remain, as evidenced by recent attacks on Gala Games and Sonne Finance.
On the regulatory front, the U.S. Securities and Exchange Commission’s (SEC) recent approval of eight spot Ethereum ETFs has sparked discussions about future approvals for other cryptocurrencies. Standard Chartered’s head of Digital Assets Research, Geoffrey Kendrick, indicated that markets might soon expect ETFs for cryptocurrencies beyond Bitcoin and Ethereum, potentially starting in 2025.

Spot Ethereum ETFs Gain Momentum as BlackRock Eyes June Launch

The prospect of Ethereum-based Exchange-Traded Funds (ETFs) in the United States has taken a significant step forward, with BlackRock updating its filing with the Securities and Exchange Commission (SEC). This development comes nearly a week after the SEC approved BlackRock's 19b-4 filing, a crucial step indicating that a June launch is a "legit possibility," according to Bloomberg ETF analyst Eric Balchunas. While further rounds of SEC reviews are expected, optimism is high with potential approval around July 4, though an earlier approval remains a "long shot."

Amidst these, Hashdex unexpectedly withdrew its application for a spot Ether ETF on May 24, just a day after the SEC approved eight similar products. While the reasons for this withdrawal remain unclear, industry sources suggest Hashdex might abandon its plans for a single asset, Ether ETF. 

Meanwhile, Bloomberg's ETF analysts, James Seyffart and Eric Balchunas, estimate that Ethereum ETFs could capture 15% to 25% of the demand seen by their Bitcoin counterparts. These projections consider Ethereum's market cap, which is about 30% of Bitcoin’s $1.4 trillion valuation. Seyffart noted the inherent differences between holding Ethereum directly versus through an ETF, citing limitations such as the inability of ETF investors to engage in staking or utilise Ethereum's on-chain utilities.

PayPal Expands PYUSD Stablecoin to Solana, Enhancing Speed and Confidentiality

PayPal is broadening the utility of its PYUSD stablecoin by integrating it into the Solana blockchain. This move, announced on May 28, aims to leverage Solana's superior processing capabilities—up to 65,000 transactions per second at a cost of just $0.0025 per transaction—to facilitate lower-cost and faster transactions. This capability starkly contrasts Ethereum's capacity of 15 transactions per second and higher transaction fees, ranging from $1 to $50.

The integration into Solana enhances transaction efficiency and introduces "confidential transfers" as a new feature designed to improve transaction privacy while keeping them transparent for regulatory needs. This feature, highlighted in a May 29 Solana blog post, allows merchants to provide transaction amount confidentiality to consumers, which could revolutionise how transactions are conducted in terms of privacy.

Jose Fernandez da Ponte, PayPal’s Senior Vice President of Blockchain, emphasised that bringing PYUSD to the Solana blockchain supports PayPal’s mission to foster a digital currency with stable value optimised for commerce and payments. Additionally, PayPal and Venmo users will benefit from a chain-agnostic experience, ensuring that PYUSD balances remain unified across different networks, simplifying the user experience significantly.

Crypto Initiatives, Growth and Regulation Across the Globe

Countries and regions are accelerating their integration of advanced payment systems in a significant push towards digital currency adoption. Israel has launched an ambitious project to develop a central bank digital currency (CBDC), dubbed the digital shekel. Inspired by Project Rosalind—a joint initiative by the Bank for International Settlements (BIS) and the Bank of England—Israel's Bank of Israel (BoI) announced the "Digital Shekel Challenge." This initiative invites participants to create real-time CBDC payment systems using a sandbox environment and a layer of application programming interfaces (APIs) to revolutionise its digital payments landscape.

Simultaneously, the New York State Department of Financial Services (DFS) is enhancing regulatory frameworks for virtual currency entities (VCEs). The DFS has established comprehensive customer service standards to ensure transparency, efficient communication, and swift resolution of complaints. These measures are designed to monitor and improve consumer interactions and regulated digital currency platforms, providing a reliable and user-friendly digital finance environment.

Moreover, Argentina seeks to deepen its involvement in the cryptocurrency sector by collaborating with El Salvador, a pioneer in national Bitcoin adoption. Argentine officials from the National Securities Commission (CNV) met with counterparts from El Salvador’s National Digital Assets Commission (CNAD) to discuss strategies and experiences adopting Bitcoin. This partnership reflects a growing trend of nations looking to integrate cryptocurrencies into their economic systems, leveraging the expertise of early adopters like El Salvador.

Grammy-Nominated Singer Davido Launches Meme Coin Amid Market Volatility

Grammy-nominated artist Davido has entered the cryptocurrency market by launching his own meme coin, $DAVIDO. Announced on May 29, 2024, the coin quickly made headlines, reaching a peak market value of over $10 and securing the top spot on the DEX screener. Davido's venture into the digital currency space is supported by partnerships with notable blockchain platforms Phantom and Solana, which have welcomed him with open arms and declared him the "King of SOL."

However, the coin's journey has been a rollercoaster. Despite its initial surge in popularity, $DAVIDO has experienced a sharp decline, losing over 80% of its value following a significant sell-off by investors, many of whom are Davido's social media followers. The market capitalisation plummeted to $2.1 million amidst this tumultuous trading period. Compounding the controversy, Dailycoin reports indicate that Davido extracted approximately $474,000 from the coin before severing ties with the project.

As $DAVIDO's future hangs in the balance, the crypto community and Davido's fans keenly watch how this venture evolves in the highly competitive and speculative cryptocurrency arena.