Monthly Market Roundup: May 2024
Disclaimer: Author holds ETH, SOL, TIA & PYTH and may have intra-day/week positions and/or airdrop allocations in other coins mentioned in the article. Views and opinions are that of the author alone and do not represent the views or opinions of Etherscan. None of this is financial advice. Always do your own research before aping.
Note: We launched “The Spread”, our new trader-focused monthly newsletter! Read our announcement here.
Enter ETFereum
At the start of May, Crypto’s favourite ETF specialists James Seyffart and Eric Balchunas from Bloomberg had maintained odds of ETH Spot ETF approvals at 25%. Moreover, sentiment was in the pits — at least relative to other majors. This all changed with a single tweet from Eric on the 21st, stating the pair had increased odds of approval for the 19b-4 applications to 75%, to which the market responded with an 18.3% pump — adding >$80bn to ETH’s market cap in 4 hours.
As described here by David Zaslowsky of Baker McKenzie:
“Form 19b-4 is a form that is used to inform the SEC of a proposed rule change by a self-regulatory organization). Specifically, the SEC cleared (i) Cboe BZX to list the product from VanEck, Fidelity, Franklin Templeton, ARK 21 and Invesco Galaxy, (ii) NYSE Arca to list the product from Grayscale and Bitwise, and (iii) Nasdaq to list the product from BlackRock.”
The 19b-4’s would go on to be approved 2 days later, however this is only the first of 2 approvals needed to see live ETFs. The next step will be the approvals of S-1 filings which document product mechanics and fees. According to James, this could take weeks or even months, with the period for Bitcoin’s ETFs being at least 90 days . This second round of approvals along with the actual listing and inflows are the next directional catalysts to keep in view as ETH continues it’s post-markup consolidation.
Backfill Fractal Fears
Perhaps it’s nothing, but spooky similarities appear when comparing this year’s ETH price action against that of BTC in Q2-Q3 last year. As with any impulsive move there’s always a risk of backfilling the inefficiency as bottom buyers take profits and late longs unwind as post-pump consolidation range lows are lost. I don’t have conviction in such a move, but do think it wise to keep dry powder for such an opportunity — particularly as we consolidate into summer/Q3 much like BTC did last year before fully retracing to Q2 lows.
Bullish Birdseye View
Zooming out further to the monthly timeframe, we see a much rosier picture as ETH closed May up 24.8% as a bullish engulfing candle, bouncing strongly off the 2 year range equilibrium at $2,874 which remains the monthly support into June. To the upside we look to previous cycle highs around $4,850. Faster EMA’s lead the ribbon up, suggesting an uptrend intact.
Hopium for ETH/BTC
On the ratio, ETH closed May up 12.2% — its first double-digit month gain since October 2022. While reclaiming the 4 year range equilibrium at 0.05226 after 2 monthly closes below is encouraging, bulls would want to see a higher low print above it at June close. Accordingly, we take this equilibrium as support, while to the upside see 0.061 as the next confluence of resistance — a close above which would also signal a reclaim of the EMA ribbon uptrend.
Return of Net Inflows for BTC Spot ETFs
BTC Spot ETF inflows for May were $2.073 billion, a bullish development following April’s net outflows of $345 million - this despite the $564 outflows printed on May 1st. Price closed up 11% reflecting these positive flows. Current cycle highs just shy of $74k are immediate resistance while May’s open provides support. Lower highs and higher lows provide evidence of ranging conditions between these 2 levels.
Rebalancing the Smart Contract Ratio: Toly vs. Vitalik
SOL ended May up 4.7% on the ratio, rejected from previous cycle’s high resistance for the third consecutive month. As (marginally) lower highs and a higher low have printed, this is stronger evidence of consolidation than trend reversal — for this we would need to see a lower low close sub 0.0376, 2024’s close low. Accordingly, this level serves as support while previous cycle highs cap upside.
SOL closed May up 30.7% vs. USD, at the exact equilibrium ($164.5) of the range between this cycle’s monthly close high ($202.5) and Q2’s monthly close low ($126.8). This may be treated as a bull/bear pivot, with the range extremes providing resistance and support respectively.
The recent evolution of the Liquid Staking landscape is well covered in a thread by stealthy restaking project Fragmetric, with a significant focus on Sanctum — an innovative platform enabling the issuance of LST’s with varying benefits from various validators. Since launching their gamified points program “Wonderland” at the end of April, the protocol has amassed a TVL just shy of $1bn, making it the 4th largest on Solana.
This is especially interesting as Solana’s restaking narrative emerges in tandem, with Solayer’s Epoch 0 launch reaching a $20 million cap within hours and rumours of leading SOL LST provider Jito building a competing product. As Liquid Restaking protocols have been a key new primitive and major narrative driving interest and activity on Ethereum over the past 6 months, with multi-billion dollar airdrops from the likes of Eigenlayer and Etherfi, we could see a similar trend of fresh stimulus on Solana.
Meme Strength Continues
Both ETH and SOL beta memes closed the month significantly outperforming their L1’s. The former led by PEPE (+131%) and FLOKI (+63%), the latter by BONK (+52%) and WIF (32%). More amusing perhaps, was TRUMP closing May up 249%, fuelled by the Republican Presidential Candidate’s expression of a pro-crypto stance and pledge to commute the life sentence of Silk Road Founder Ross Ulbricht on his first day in office.
Closing thoughts
The surprise ETH Spot ETF approval and subsequent price expansion were undoubtedly the highlight of the month, leaving little space for other non-memecoins to catch mindshare or a bid in the aftermath. As we enter a period of seasonal apathy in the markets with majors ranging, the best approach for most will be to sit comfy in spot and come back refreshed in September. From that point in time, media coverage of the US presidential election — for which crypto is now a critical topic — will only intensify. Such tailwinds last cycle were but a distant dream.
Bid you good fortune and may your candles be evergreen.
