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May Market Outlook

As the cryptoasset space powers well past the $2 trillion market value level many are wondering how much longer and higher prices can go?

We continue to maintain an overall positive medium-term outlook for a number of reasons, including:

  • Macro: crypto is arguably the best positioned asset class given the current fiscal and monetary environment
  • Wall St: many institutions are still in the early stages of making available cryptoasset products and services to their customers
  • Regulation: positive catalysts such as an SEC approved bitcoin ETF are still on the horizon, while continued progress is seen locally in jurisdictions like Wyoming on DAO legislation
  • Public sector: major investment players that we expect to eventually embrace crypto, including governments and sovereign wealth funds, have not entered crypto in a meaningful way to date
  • “Digital gold” undervalued: bitcoin remains less than 10% of total market value of actual gold
  • Technology maturity: development of various blockchain technologies and protocols, including DeFi, DAOs, smart contracts, etc. is still in the early days but rapidly advancing
  • Adoption penetration: we estimate a critical mass of approximately 100 million total cryptoasset owners and 1 million DeFi users at present, and believe billions of people will ultimately own and use cryptoassets

While the medium-term outlook is very constructive, issues remain and price volatility can continue to be expected. Indeed, as we discuss in more detail below, the incredible rise of Dogecoin (DOGE) is both simultaneously exciting and frightening!

Here are our latest thoughts on what’s driving crypto markets and analysis of bitcoin on-chain activity this month.


  1. Market Movements
  • Ethereum (ETH) set another new USD all-time and in early May crossed the $3500 level for the first time; ETH remains well below its all-time high in BTC terms at ~.05 vs. ~0.14 in July 2017
  • Bitcoin (BTC) had its first down month since Sept. 2020 and its market value dominance level (~45%) has declined to levels not seen since 2017
  • Broader financial markets were mixed: stocks were up again by ~5% for the month; long-dated US treasuries and gold bounced back(+2% and +3%, respectively) while the US dollar weakened (-2%)
  • The frenzied price action in Dogecoin (DOGE) and other cryptoassets with little traction or track record has pushed cryptoassets to a combined market value well in excess of $2 trillion while raising crypto price sustainability questions

2. How to Interpret the Rise of Dogecoin (DOGE)?

  • Dismissing Dogecoin as the joke it was when it was created may be a mistake
  • Institutions that move slowly might be unsettled and not move into crypto at all if there is too much newfound uncertainty atop the cryptoasset leaderboard

3. On-chain insights: highlights from the Blockchain.com data science team

  • Activity on the bitcoin network continued declining for the month
  • The average fee per transaction was $30 in April; April 21st saw a new all-time high of $63/transaction
  • Estimated hash rate dropped 1.5% in April, which led to a decrease in the number of confirmed blocks
  • Hash rate is an estimated figure; a more accurate view of hash rate levels can be seen over a longer period of time (i.e. 7 day average)

4. Analysis of post-Coinbase IPO Market Liquidations and Tether Losing its Dollar Peg — Guest Post by Kaiko

  • Billions in liquidations in the aftermath of Coinbase’s public debut
  • Tether appreciates to highest USD price since March 2020
  • USDC trails competitor stablecoins

5. What we’re reading, hearing, and watching

1. April Market Movements

While the broader crypto bull market continued in April, bitcoin (BTC) had its first monthly decline since September 2020. As of the end of April bitcoin was down 2% for the month.

Ethereum (ETH) set another new USD all-time and in early May crossed the $3500 level for the first time in early May. However, ETH remains well below its all-time high in BTC terms at ~.05 BTC vs. its record level ~0.14 BTC in July 2017.

Ethereum is approaching an almost 2000% gain over the last two years with Bitcoin at +906% during the same timeframe.

Stocks continued their defiance of gravity and were again up (S&P500 +5%). February and March’s big losers reversed course in April, with long-dated US treasuries up 2% and gold up 3% for the month. The US dollar reversed its strength since the start of 2021 and softened -2% in April.

Table 1: Price Comparison: Bitcoin, Ethereum, Gold, US Equities, Long-dated US Treasuries, US Dollar (% Change)

Sources: Blockchain.com, Google Finance

2. How to Interpret the Rise of Dogecoin (DOGE)?

There have been four major cryptoasset bull market cycles: 2011, 2013, 2017, and the present one.

As a company that has been operating in the crypto space since 2011, we’ve been around the block (har) long enough to note some familiar occurrences in each of these crypto cycles.

For example, during periods of heightened price volatility and media attention Blockchain.com team members will often receive calls from family and friends — some of whom we haven’t heard from in quite some time — about this or that coin that is making news for its price performance.

Like Dogecoin.

Dogecoin (DOGE) is up a stunning 12,000% this year.

What is perhaps even more remarkable than this percentage increase is that Dogecoin is now the fourth most valuable cryptoasset by market value, having recently surpassed longstanding #3 ranked Ripple (XRP).

Only Bitcoin (BTC), Ethereum (ETH), and the perhaps soon to be passed Binance Coin (BNB) have a greater total market value than Dogecoin.

A friend not in the crypto space, and not even a close follower of crypto prices, texted a Blockchain.com team member recently with the following question:

“What do you think of Dogecoin? Does it have any inherent value?”

While it might be tempting to dismiss Dogecoin as the joke it was when it was created, that could be a mistake. Dogecoin now has a:

  • global brand; it has been generating more search engine activity of late than bitcoin
  • fervent community of supporters and investors, including Elon Musk
  • some growing support from prominent merchants for payments
  • increasing support from exchanges (including Blockchain.com) and liquidity

While the energy and enthusiasm around the rise of Dogecoin is exciting, it is also potentially problematic for a number of reasons.

Of particular concern is how institutional investors, particularly those for the first time considering investing in crypto, might view any sudden market value “flippening” between Dogecoin and Ethereum (ETH), and especially Bitcoin (BTC).

One of the consistent hallmarks since the close of the 2017–18 crypto bull market cycle has been a clearly established #1 (Bitcoin) and #2 (Ethereum). The strength of Bitcoin and Etherum during that time have been underpinned by strong fundamentals, including:

While the prices of both Bitcoin and Ethereum have remained volatile, the stability of their ranking atop the digital asset leaderboard these past few years has provided a degree of stability in an otherwise incredibly fast moving crypto marketplace.

In short, institutions that move slowly might be unsettled to move at all if there is too much newfound uncertainty atop the leaderboard.

Indeed, one could argue that the instability and uncertainty created by any sudden dethroning of Ethereum, and especially Bitcoin, could pose a significant adoption setback for the cryptoasset space as a whole.

3. On-Chain Analysis

Each month we dive into on-chain data to explore interesting trends or movements on the Bitcoin network.

Table 2: April vs March bitcoin network activity

April brought a decrease in on-chain activity across the board. A few factors may have been at play in this trend, including a spike in the average fee per transaction — $30 / transaction. Beyond the March average drop from $21 to $18 per transaction, fees have been steadily increasing since October 2020 when bitcoin began its price climb. However, this month proved particularly high for fees. In fact, April 21st showed a transaction fee all time high of $63 per transaction.

The estimated hash rate dropped

But why do fees increase? Fees increase for a multitude of reasons, but perhaps one contributing factor this month was the drop in hash rate. The estimated hash rate dropped more than 20% from the 16th through the 22nd before bouncing back, which effectively led to a 1.5% decrease in the month overall. The drop in hash rate led to a 8% decrease in the number of daily confirmed blocks. When there are less blocks confirmed, fewer transactions get confirmed. Users then pay more to ensure their transactions are included in the blocks that are available, ultimately leading to the increase in fees.

It’s important to note here that the hash rate is an estimated number. While the 24 hour view can perhaps provide an early indication of something significant, the exact hash rate can never be known and a more accurate view of hash rate is seen over a longer period of time (i.e. 7 day period).

A good example of an early warning from the 24-hour view came in April we saw a sudden hash rate drop due a purported sudden decline in mining in China due to power blackouts. While such sudden changes pose difficulties to 24-hour hash rate change estimates, our analytics in this case did correctly detect that something significant had suddenly impacted the network.

4. Analysis of post-Coinbase IPO Market Liquidations and Tether Losing its Dollar Peg — Guest Post by Kaiko

Price Movements

Billions in liquidations in the aftermath of Coinbase’s public debut.

Last week, Coinbase’s successful direct listing on Nasdaq pushed crypto markets to new all time highs, with Bitcoin surpassing $64,600 for the first time ever. However, the frenzied momentum has since faltered, marked by a sharp weekend sell-off across cryptocurrency markets and billions in forced liquidations of over-leveraged long positions. At one point, Bitcoin crashed to as low as $53k, ultimately ending the week down more than 5%. The market correction does not take away from the historic nature of Coinbase’s debut, which closed the first day of trading at a valuation of $85 billion, far greater than what many Wall Street veterans predicted. On the same day, Congress finally approved Gary Gensler as SEC Chair, kicking off a new, more promising, era of crypto regulation.

Tether appreciates to highest USD price since March 2020.

In previous Factsheets, we have explored Tether’s tendency to exhibit positive drift from its 1-to-1 peg more so than negative drift, which could be linked to trading behavior during price crashes. This phenomenon was on clear display over the weekend as Bitcoin crashed from above $61k to below $54k in a matter of hours. During a crash, traders will race to sell their Bitcoin in exchange for Tether, which is similar to the U.S. Dollar in that it is recognized as a temporary safe haven amidst extreme price volatility. A sudden increase in buying pressure for Tether often has the effect of causing positive drift from the stablecoin’s 1-to-1 peg. Over the weekend, the sudden Bitcoin sell off caused Tether to spike above $1.004, its highest USD price since last March’s sell-off.

USDC trails competitor stablecoins

Stablecoins are all the rage in crypto right now as real-world use cases become increasingly tangible. However, the vast majority of all stablecoin activity still happens on centralized exchanges. Above, we charted the number of total spot trading pairs in Kaiko’s collection that include a stablecoin as the quote asset, Tether as the quote asset, and USDC as the quote asset.

Circle’s USDC stablecoin recently inked a landmark partnership with Visa, but its usage in crypto markets is but a fraction of Tether’s, which is currently the dominant quote asset in crypto comprising 25% of all pairs and 70% of all stablecoin pairs. Tether has first-movers advantage and began trading in 2014, while USDC was launched in 2018. Improving USDC’s market share is not so much about convincing consumers to trade with the stablecoin — rather, about convincing exchanges to list pairs denominated in USDC.

This is a good example of the power that exchanges hold over token projects — if an exchange is not willing to denominate pairs in USDC, then traders will be less likely to hold and use USDC. It is no surprise then that USDC has found a niche in decentralized financial markets like Uniswap, where anyone can list a trading pair. USDC is currently the third ranked crypto asset on Uniswap, while Tether ranks fourth.

Read the full article here.

5. What we’re reading, hearing, and watching.


Beyond Crypto

Important note

The research provided herein is for your general information and use and is not intended to address your particular requirements.

In particular, the information does not constitute any form of advice or recommendation by Blockchain.com and is not intended to be relied upon by users in making (or refraining from making) any investment decisions.

Appropriate independent advice should be obtained before making any such decision.


  1. Average daily number of confirmed transactions in the public blockchain
  2. Average daily number of estimated payments in the public blockchain
  3. Average daily number of unique addresses used as inputs and outputs in the confirmed transactions



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