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What’s Happening with UST?
The overall cryptoassets market trickled down to 1.22T in market cap over the past week. On May 4, the Federal Reserve raised its benchmark interest rate by half a percentage point in response to inflation pressures. In response, Dow Jones Industrial Average and Nasdaq Composite fell by 3.12% and 5% respectively the day after. Bitcoin and Ethereum dropped by 54% and 50% since their all-time highs in November 2021.
Thanks to a Bitcoin-backed loan, MicroStrategy holds around 129,218 Bitcoins, acquired at an average price of around $30.7K per Bitcoin. If Bitcoin dips to below $21K, the software analytics company will either have to sell some of its holdings backing the loan or deposit more Bitcoin as collateral. Tesla on the other hand is at a greater loss, holding around 43,200 Bitcoins, acquired at an average price of $34K.
Figure1: Bitcoin’s buying and selling movement over the years
Source: TradingView
The bear case here is if these large institutional investors decide to dump their BTC holdings, we speculate that the price might dip to around $20K. However, this isn’t a new drill for Bitcoin’s price movement over the years. The first time Bitcoin’s price dropped by half was in February 2018, going down to $8K after crossing the $19K mark in December 2017. It took Bitcoin two calendar years to recover. However, in the following years, recovery time shrunk to just a few months. As the market stands, the leverage accelerating recovery could be spotted in the increasing institutional adoption of crypto, especially Bitcoin. We can safely reckon recovery to take place within the next quarter.
Regulations and Adoption
Argentina’s central bank made a decision to ban crypto trading on the back of the alleged pressure from the International Monetary Fund, which gave the country a $44B relief package back in 2017. This decision comes just a few days after Argentina’s biggest private bank, Banco Galicia, decided to add crypto trading. Uganda is also enforcing a countrywide crackdown this week on digital payment providers facilitating crypto transactions.
Nigeria is upgrading its central bank digital currency (CBDC) eNaira to be used on a wider range of goods and services. On the other hand, Nigeria’s central bank is also tightening its grip on cryptoassets, crippling the country’s fintech sector, according to a UN report.
On a higher note, the Japanese eCommerce website SBI Motor Japan announced it will start accepting Bitcoin and Ripple for its automotive sales. This will mark the first time Ripple would be deployed on a cross-border e-commerce website in Japan. On May 4, when Bitcoin was trading at $38K, Gucci announced it will accept crypto payments in some US stores at the end of this month and plans to extend the pilot to all stores in North America.
In a win for DeFi adoption, Jane Street took out a $25M loan in USDC from BlockTower Capital through Clearpool, a decentralized capital markets provider built on Ethereum. Clearpool enables institutions to borrow uncollateralized loans via a network of lenders and is backed by venture capital firms, including Arrington Capital and Sequoia Capital.
DeFi and NFTs
Algorithmic stablecoins are getting battle-tested as Terra (UST), the largest in the market, lost its peg last week, dropping to $0.66 on May 10 and to as low as $0.3 the following day. The Luna Foundation Guard plans to lend $750M worth of Bitcoin and 750M UST to market makers to bring UST back to its peg. Read our statement on UST and LUNA to learn more.
Figure 2: UST’s 7-day price performance
Source: CoinMarketCap
Despite the bloodbath in the market last week, developments in the realm of DeFi are still coming strong. Tron’s new algorithmic stablecoin USDD has officially gone live on the blockchain. Tron is collateralizing $10B in bitcoin and other cryptocurrencies to support USDD. The new stablecoin will be available on Ethereum and BNB Smart Chain.
Polkadot also launched XCM, a new cross-chain communications protocol aiming to eliminate the need for complex bridging procedures that have cost the crypto industry billions in cyber attacks. Being as secure as Polkadot’s core hub, the Relay Chain, XCM will allow communication between parachains and smart contracts.
Decentralized oracle network Chainlink is partnering with LaProp, a tokenized real estate platform serving the property market in Latin America. Leveraging Chainlink Keepers’ node operators’ track record in securing billions of dollars invested in DeFi markets, LaProp will allow investors to buy tokenized shares in various real-world properties, yielding a percentage of income from rental payments. Chainlink Keepers is a decentralized automation service that carries out tasks for smart contracts on the BNB Chain.
On the NFTs front, Instagram is testing out NFTs this week through select content creators in the US. The supported blockchains for showcasing NFTs on Instagram are Ethereum and Polygon. In other news, Dubai’s Virtual Asset Regulatory Authority (VARA) unveiled its headquarters in the metaverse, making it the first governmental entity in The Sandbox.
Weekly Returns
The returns of the top five cryptoassets over the last week of May 3 to 10 were as follows — BTC (-18.63%), ETH (-19.27%), BNB (-21.4%), SOL(-25.95%), XRP (-18.23%).
Net Inflows per 21Shares ETP
The net outflows of our ETPs amounted to $20M in the past week of May 3 to 10. Find the breakdown of the inflows and outflows per ETP below.
Media Coverage
We are thrilled to welcome Carl Hagerup from State Street Global Advisors (SSGA) to our ever-growing team as 21Shares’ new managing director for the Nordics and the Netherlands. “The Nordics is an exciting market for 21Shares and we can see that there is an increasing interest from Swedes to invest in crypto assets,” ETF Stream quoted Carl saying. “The natural step for us is to start an expansion in the Nordics and our goal is to continue being an educating thought leader for potential and current crypto investors in both Sweden and the Nordics.”
Our research team has been making headlines this past week. Our very own Research Associate Adrian Fritz was featured in Trend Report for a guest post about the metaverse. Exploring the different verticals and technologies, Adrian also drew a comparison between centralized and decentralized metaverses, namely dissecting Meta and The Sandbox.
Carlos Gonzales, also a fellow Research Associate at 21Shares, was featured in a Forbes explainer article about Litecoin. “While designed to have a faster TPS than Bitcoin, Carlos González Campo, research analyst at 21Shares, says, “Layer-2 solutions on top of Bitcoin like the Lightning Network” have both sped up Bitcoin transactions and potentially diminished the need for Litecoin’s use case as a faster payment network,” the article reads.
News
Binance Joins Elon Musk’s Twitter Acquisition with $500M
What happened?
According to documents filed to the SEC, crypto exchange giant Binance is backing Elon Musk’s $44B takeover of Twitter with a $500M commitment. Other investors include venture capital firm Sequoia pledging $800M, Fidelity $316M, and a16z $400M. ”We hope to be able to play a role in bringing social media and web3 together and broadening the use and adoption of crypto and blockchain technology,” said Binance CEO Changpeng Zhao.
Why does it matter?
Musk had previously said that he would enhance the platform with new features; making the algorithms open source to increase trust, defeating the spambots, and authenticating all humans. A priority on his roadmap would be eliminating the spam and scam bots and the bot armies that are on Twitter. Musk said that if he had a dogecoin for every crypto scam he saw, he would have a hundred billion dogecoin. In theory, this could be great news for Crypto Twitter. Having Binance on board could also encourage other crypto-native stakeholders to be involved in the revamp of the social network to become a safer and more innovative platform for the cryptoassets industry.
Varje vecka kommer 21Shares Research-teamet att publicera sina datadrivna insikter om kryptotillgångsvärlden. Vänligen rikta eventuella kommentarer, frågor och feedback till 21Shares.
- Michael Saylor’s bold Bitcoin bet and Strategy’s risk analysis
- Bitcoin price technical analysis: Where are the liquidation levels?
- What are real-world assets and why do we need tokenization?
Michael Saylor’s bold Bitcoin bet and Strategy’s risk analysis
Strategy (formerly MicroStrategy) has amassed a staggering $43 billion in Bitcoin, positioning itself at the forefront of the corporate “reserve race.” Under the leadership of Bitcoin maximalist Michael Saylor, the company now boasts an $84 billion market cap. But with such an aggressive strategy, how sustainable is its approach—and what risks lie ahead? We break it down in today’s analysis.
Bitcoin price technical analysis: Where are the liquidation levels?
A drop below $72,000 could flush longs, while a breakout above $90,000 may squeeze shorts. One key positive indicator is that Bitcoin continues to print higher lows since March 10, which preserves a bullish market structure in our view. Dive into our technical analysis.
What are real-world assets and why do we need tokenization?
Imagine owning a slice of a skyscraper or a piece of fine art with just a few clicks. Tokenization, the act of converting ownership rights to real-world assets (RWAs) into tradable tokens, has surpassed $10 billion in on-chain value, unlocking global 24/7 access to once-exclusive markets with liquidity, efficiency, and yield. Find out how it works.
Research Newsletter
Each week the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com
Disclaimer
The information provided does not constitute a prospectus or other offering material and does not contain or constitute an offer to sell or a solicitation of any offer to buy securities in any jurisdiction. Some of the information published herein may contain forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those in the forward-looking statements as a result of various factors. The information contained herein may not be considered as economic, legal, tax or other advice and users are cautioned to base investment decisions or other decisions solely on the content hereof.
Since President Trump appointed Mark Uyeda as acting SEC chair two months ago, many investigations into crypto businesses have been dropped, as the SEC moves away from regulation by enforcement and works to create a framework for digital assets. As regulations become clearer and news flow turns more positive, crypto prices—which dropped sharply this week—should begin to better reflect the new regulatory landscape in the US.
We believe this regulatory shift could ultimately help trigger the next leg of the current bull run, as investors better understand the significance of regulatory clarity and seek to acquire bitcoin and altcoins at what we believe are currently very favorable levels.
Market Highlights
SEC Dismisses Crypto Enforcement Actions
The SEC dropped its enforcement actions against crypto-related companies Kraken, Consensys, and Cumberland DRW.
This indicates a shift in SEC’s regulatory approach, favoring clearer guidelines over enforcement actions. Such a pivot could foster a more predictable environment, encouraging innovation within the sector.
Banks to Engage in Crypto Activities
The FDIC has rescinded previous guidelines which prevented financial institutions from engaging with crypto activities without prior sign-off.
By removing bureaucratic hurdles, banks may more readily offer crypto-related services, potentially leading to broader adoption and integration of digital assets.
Bitcoin ETFs Inflow Streak Surpassed $1 Billion
US spot Bitcoin ETFs have recorded a 10-day inflow streak exceeding $1 billion marking the longest such streak in 2025.
This underscores growing institutional and retail investor confidence in Bitcoin as an asset class that helps increase market stability and possibly paving the way for the approval of other crypto-based financial products.
Market Metrics
All NCITM constituents had negative performance last week, with XRP (-10.8%) and UNI (-10.7%) seeing the steepest declines. ETH also experienced a sharp drop (-9.1%), contributing to NCITM’s underperformance relative to BTC (-2.9%). The NCITM -4.2% decline reflects a broader risk-off sentiment in the crypto market, as investors reassess their positions amid ongoing macroeconomic uncertainties.
NCITM (-4.2%) extended its underperformance last week, deepening year-to-date losses. Traditional indices like the S&P 500 (-1.5%) and Nasdaq 100 (-2.4%) saw smaller declines. The gap between crypto and other risk assets continues to widen, while gold has emerged as the top performer in 2025, gaining nearly 20% amid ongoing macroeconomic uncertainties. This trend highlights a growing risk-off sentiment, with investors shifting toward defensive assets and away from high-volatility investments.
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