Crypto Market Update: May 2023
May was crypto’s worst month so far for 2023. The peer group S&P Cryptocurrency BDM Ex-MegaCap Index (“SPCBXM”) and the Bloomberg Galaxy Crypto Index (“BGCI”) also saw declines.
There were a number of factors that contributed to the decline in the crypto market in May. These included:
- Rising interest rates: The Federal Reserve and other central banks raised interest rates in May in an effort to combat inflation. This led to concerns that the global economy was headed for a recession, which would have a negative impact on the crypto market.
- Regulatory uncertainty: There is still a great deal of regulatory uncertainty surrounding the crypto market. This has led to some investors staying on the sidelines, which has weighed on prices.
- Weaker momentum: The crypto market had been on a tear in the first few months of 2023, but momentum began to slow in May. This was likely due to a combination of the factors mentioned above.
Despite the challenges, there were some positive developments in the crypto market in May. These included:
- Growing institutional demand: There is growing institutional demand for digital assets. This is being driven by a number of factors, including the increasing acceptance of crypto by traditional financial institutions and the growing belief that digital assets have the potential to provide diversification benefits to portfolios.
- Launch of new crypto ETFs: In June, a number of major financial institutions, including BlackRock, WisdomTree, and Invesco, filed applications to launch spot Bitcoin ETFs. This is a significant development, as it could make it easier for investors to access the crypto market.
- Interdealer broker TP ICAP has gone live with its Fusion DigitalAssets wholesale crypto exchange. https://www.assetservicingtimes.com/assetservicesnews/digitalassetsarticle.php?article_id=14392&
- BlackRocks (9.5 trillion assets under management) filed an application to register a spot Bitcoin ETF. https://decrypt.co/144782/blackrock-filing-bitcoin-etf-application-soon-reports
- WisdomTree requested that the SEC allow it to list its “WisdomTree Bitcoin Trust” on the Cboe BZX Exchange under the ticker “BTCW.” ($93 billion assets under management). https://decrypt.co/145566/wisdomtree-invesco-follow-blackrock-with-spot-bitcoin-etf-applications
- Invesco ($1.49 Trillion assets under management) with Galaxy Digital filed for the Invesco Galaxy Bitcoin ETF. Fidelity, Schwab and Citadel launch EDX Markets, a crypto exchange. https://www.coindesk.com/business/2023/06/20/new-crypto-exchange-backed-by-fidelity-schwab-and-citadel-launches/
Overall, May was a challenging month for the crypto market. However, there were some positive developments that suggest positivity for the future.
For further insights into the cryptocurrency landscape in 2023, we recommend reading the following article: “Cryptocurrency in 2023: Forecasts and Analyst Opinions“