Bitcoin (BTC) broke through the $60,000 mark in the early hours of May 1st, reaching a peak of $59,191. The 7-day decline in Bitcoin’s price was nearly 10%. Despite various Bitcoin-related discussions, it did not bring about a significant increase in Bitcoin’s value. At the same time, Ethereum (ETH) also experienced a decline, dropping below $3,000. The negative evaluation of EigenLayer’s token issuance further added uncertainty to the already volatile derivative market created by the significant bubble in the cryptocurrency market.
The ETF market has cooled down, and the launch of Bitcoin and Ethereum spot ETFs in Hong Kong did not have the expected effect. The overall trading volume on the first day was only slightly over 12 million US dollars, far from the volume of ETFs in the United States. The first day of trading did not cause a significant increase in the price of Bitcoin.
The stock market experienced a decline due to concerns about inflation triggered by wage growth data, and the market felt uneasy about the Federal Reserve’s interest rate decision on Wednesday. The Dow Jones Industrial Average fell by 300 points, and MicroStrategy (MSTR) experienced a significant decline of 17%.
Since Bitcoin’s fall from its all-time high, the difference between the value of MicroStrategy’s Bitcoin holdings and its stock market value has been a topic of discussion. The founder, Michael Saylor, sold stocks for profit, and brokerage firms lowered their target price for MSTR, indicating the current instability of its stock price.
Although the Bitcoin ecosystem includes topics such as Layer 2, side chains, inscriptions, and runes, which have led to an increase in Bitcoin transaction fees and miners’ income, these funds are mainly circulated within the crypto community and do not have the same impact as new external funds flowing into the US stock ETFs. Therefore, they may not have a long-term influence on Bitcoin prices.
EigenLayer’s token issuance plan revealed the bubble in the LRT (Layered Renzo Token) market. The token EIGEN is currently not in circulation, and the LRT protocol’s airdrop is scheduled for the second phase, resulting in many liquidity-reliant protocols being left out. The LRT derivative protocol, Pendle, allowed users to speculate on airdrop expectations at a lower cost through yield tokens (YT). After the announcement of the EigenLayer project, the price of YT tokens plummeted, creating more uncertainty for speculators.
In addition, the launch of the LRT protocol token, Renzo (REZ), was a failure, with a continuous decline in its opening price, further undermining the value of tokens related to the collateralized lending protocol.
Although the future application prospects brought by EigenLayer are promising, whether the token price can meet market expectations is approaching reality as it undergoes significant adjustments in the pricing of collateralized tokens.
The previous bull market heavily relied on quantitative easing in the overall economy, which drove topics such as DeFi, NFTs, and Play-to-Earn (P2E). In this current bull market, the introduction of Bitcoin ETFs may be the only factor bringing in significant external funds. Overall economic factors are still unfavorable for speculative markets, and although various topics are brewing within the crypto community, at best, it can only be considered a Bitcoin bull market, with no favorable external funds for other competing cryptocurrencies.
After the positive expectations for Bitcoin have bottomed out, the speculative topics related to alternative cryptocurrencies have also run out of steam recently.
BTC: Bitcoin
EIGEN: EigenLayer token
ETF: Exchange-Traded Fund
ETH: Ethereum