Markets
The crypto market emerges in May with important regulatory approvals
Market momentum in May
The cryptocurrency market saw a significant upward trend in May, closing the month with an 8.6% increase in total market capitalization. This increase was largely driven by favorable regulatory actions, according to Binance Research. Key developments included the U.S. Securities and Exchange Commission’s (SEC) approval of eight Ethereum (ETH) exchange-traded funds (ETFs) and the passage of the Financial Innovation and Technology for the 21st Century Act (FIT21) by the House of Representatives from the USA. The price of ETH rose 21.2% in a single day before the ETF approvals, which spurred a broader market resurgence.
Impact on Ethereum and Bitcoin ETFs
Following the approval of spot ETH ETFs, Grayscale’s Ethereum Trust (ETHE) has seen a continued narrowing of its discount to net asset value, which now stands at 1.4%, the lowest in nearly three years. The market will closely monitor flows from ETHE and the newly approved ETH spot ETFs to assess their impact on the broader market.
Bitcoin (BTC) has also benefited from these regulatory developments, with spot BTC ETFs witnessing 14 consecutive days of net inflows in May, contributing to the market’s overall positive performance.
Solana Network Developments
In another significant development, Solana stakers approved a proposal to distribute 100% of priority fees to network validators, moving away from the previous model where 50% of fees were burned. Additionally, Solana’s daily network transaction fees came closer than ever to those generated by Ethereum, while the Phantom wallet rose to third place in the utilities category on Apple’s app store.
Growth in Tokenized Treasury Bonds
Tokenized US Treasury bonds reached a new high in May, recording around $1.5 billion in on-chain value, marking 80% year-to-date (YTD) growth. BlackRock’s USD Institutional Digital Liquidity Fund has been a key driver of this growth and is now the largest fund in the sector.
Resurgence of prediction markets
Prediction markets have also seen a resurgence this year, with total value locked (TVL) increasing 68.6% since January. In May, net deposits exceeded $60 million for the first time, driven in part by the upcoming US presidential elections. Platforms like Polymarket have benefited significantly from this heightened activity and are expected to see further growth as the elections approach.
For more details, the full report can be accessed on the website Binance Research website.
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