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Summer daze

Trading ranges have been fairly tight and liquidity seems to be receding ahead of the long US holiday

May 26, 2023

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At a glance

Liquidity in crypto markets seems to have receded ahead of Memorial Day weekend, a date that typically signals the start of summer holidays for many market players

Key takeaways

  • Conditions have also likely been affected by the approaching X-date associated with the US debt ceiling (possibly arriving as soon as June 5)
  • In Hong Kong, the Securities and Futures Commission (SFC) will allow licensed crypto trading platforms to offer services to retail clients beginning June 1

Written by

  • David Duong, CFA, Head of Institutional Research

Market View

The liquidity in crypto markets has started to recede ahead of the long weekend in the US, as Memorial Day typically signals the beginning of the summer holidays for this cohort of market players. Conditions have likely been exacerbated by the uncertainty surrounding the upcoming X-date associated with the US debt ceiling (presumably June 5) as well as (to a lesser extent) lingering concerns surrounding the ongoing credit crunch. Keep in mind that we believe the latter issue is more worrying, but the approaching deadline surrounding the US debt ceiling likely makes the former seem more pressing for investors. Either way, we believe both factors are contributing to relatively low conviction views.

Bitcoin has fallen below its 100-day moving average, a key technical support level – inversely reflecting the rise in front end US rates with the 2Y climbing above 4.5%. Fed fund futures are pricing in a 100% chance of a 25bps rate hike within the next two months, per hawkish comments from Fed Governor Chris Waller. But the FOMC minutes from the May 2-3 meeting reflects a divided board, and the economic data, in our view, has been mixed. A number of soft indicators are expected next week. However, it should be noted that the negative correlation between BTC daily returns and changes in rates has not exhibited the same consistent direction or strength as the relationship between gold and rates. See charts 1 and 2.

Screenshot 2023-05-25 at 5.28.50 PM

Trading ranges have been fairly tight for both BTC and ETH, as evidenced by 30-day realized volatility for spot coming down for both tokens since late March to 28% and 31% respectively. See chart 3. Ether has been outperforming bitcoin over the last few weeks, but it’s curious that ETH price behavior hasn’t reflected its positive technical dynamics. Namely, we’ve seen a persistent decrease in ETH supply in recent weeks (down 1.5% over the last 30 days) while demand to stake ETH has remained high as yields have picked up due to stronger transaction activity. In fact, the number of pending validators (74,097 according to Beaconscan) continues to far outpace the number of exiting validators (1,399 according to Nansen) even after Lido enabled withdrawals on May 15.

Screenshot 2023-05-25 at 5.29.22 PM

Looking ahead, Hong Kong will allow licensed crypto trading platforms to offer services to retail clients beginning on June 1, following the publication of the Securities and Futures Commission’s consultation conclusions. This is a significant development considering that China had previously initiated a nationwide ban back in 2021. That said, investors should not expect large Asia inflows immediately, as according to the announcement, the SFC “has yet to approve any virtual asset trading platform to provide services to retail investors” and will only start accepting applications on June 1.

Crypto & Traditional Overview

(as of 4pm EDT, May 25)



Mkt Cap

24 hour change

7 day change

BTC correlation



















Gold (Spot)






S&P 500


















Coinbase Exchange & CES Insights

As mentioned above, BTC broke through the 100 day moving average this week ($26,640), a level which had previously been providing good support. The next significant support will be at the psychologically important $25,000 price level, an area which acted as resistance back in February of this year. ETH is still finding support at its 100 day moving average ($1793). Flows in both have been light as many traders are running low net exposures. Interest in altcoins is increasing. For much of this year their flows had been skewed to the sell side. Investors were happy to be underweight as the altcoin space was viewed as most vulnerable to shifts in the regulatory environment and/or a recessionary slowdown. After reaching more attractive levels, flows have now flipped net-to-buy across a range of tokens.

Screenshot 2023-05-25 at 6.14.54 PM
Screenshot 2023-05-25 at 6.15.08 PM

Financing Rates



CeFi Min

CeFi Max







USD - 1m




USD - 6m











Notable Crypto News


  • Gemini Says DCG Missed $630M Genesis Loan Payment (Decrypt)
  • Fred Wilson's USV to 'double down' on web3 investing amid regulatory pressure (The Block)
  • 'It Has Been a Humbling Experience', Says Ledger CEO as Key Recovery Rollout Is Paused (Decrypt)


  • Come in and Register? These Firms Say They Found an SEC-Friendly Crypto Path (Coindesk)
  • Coinbase hits back at SEC with new court filing in ongoing lawsuit (The Block)
  • Hong Kong Securities Regulator to Accept License Applications for Crypto Exchanges Starting June 1 (Coindesk)


  • Binance's CZ says China is 'buzzing' after bitcoin seen in TV segment (The Block)
  • Multichain token price drops 20% as claimed bridge upgrade delays transactions (The Block)


View From Around the World


Hong Kong’s Securities and Futures Commission has announced it would soon allow licensed crypto trading platforms to serve retail investors. Operators of virtual asset trading platforms that are willing to comply with the new proposed guidelines are welcome to apply for a license starting June 1. According to Coindesk, under the proposed rules, “crypto exchanges are to maintain at all times no less than HKD 5 million (USD 640,000) in capital” and submit statements to the SFC on liquidity, liabilities and a profit and loss analysis. Tokens to be listed on regulated exchanges must have a "track record” of at least 12 months and should be included in two acceptable indices. (Coindesk

Stablecoins are not allowed for retail trading until regulations are in place, while “earning, deposit-taking, lending and borrowing” are also not allowed. (CryptoSlate)

The Week Ahead

May 29

May 30

May 31

Jun 1

Jun 2

Notable Macro

US Consumer Confidence

US ISM Manufacturing

ADP Employment

US Nonfarm Payrolls

Notable Earnings

Salesforce, Inc



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