Weekly Crypto Recap: Notcoin’s Airdrop Fallout and Bitcoin ETF Recovery

The past week has been a whirlwind for the cryptocurrency market, marked by significant developments across various segments. Notcoin’s dramatic price drop following its airdrop, the resurgence of spot Bitcoin ETFs, and heightened regulatory actions globally are among the key highlights. This detailed recap delves into these events, offering insights into their implications for the crypto landscape.

Notcoin’s Airdrop and Subsequent Price Slump

Notcoin (NOT), a new play-to-earn blockchain project, faced a tumultuous debut. Prior to its listing on major exchanges such as Binance, ByBit, Gate.io, and OKX, the team halted direct exchange deposits on May 14, with plans to resume them post-listing on May 16. Following the airdrop of 80.2 billion NOT tokens to miners from The Open Network (TON) community, the price of NOT plummeted by 55% as recipients rushed to liquidate their tokens. This steep decline highlights the volatility and risks associated with airdrop-based token distributions.

Despite this setback, the airdrop managed to engage over 500,000 Notcoin miners and beneficiaries. In a notable gesture, these stakeholders sent 1 billion NOT tokens, valued at $6.8 million, to a public address belonging to Telegram founder Pavel Durov as a token of gratitude. This move underscores the community-driven nature of the project, even amidst its rocky market performance.

Spot Bitcoin ETFs: A Beacon of Recovery

In contrast to Notcoin’s struggles, the spot Bitcoin ETF market showcased a robust recovery. The market began the week on a positive note, recording $66 million in net inflows on May 13, with Fidelity’s Wise Origin Bitcoin Fund (FBTC) leading the pack with $38.6 million in capital inflows. The Wisconsin Investment Board’s substantial holdings in the Grayscale Bitcoin Trust (GBTC) and BlackRock iShares Bitcoin Trust (IBIT) further signaled strong institutional confidence in Bitcoin ETFs.

The momentum continued as the spot ETF market witnessed inflows totaling $100 million on the second day of the week. GBTC saw $50.9 million in outflows, while the ARK 21Shares Bitcoin ETF (ARKB) recorded the highest inflow, worth $133.1 million. By mid-week, spot ETFs saw another round of net inflows totaling $303 million, the largest since early May. This trend persisted throughout the week, culminating in a total of $948.3 million in net inflows, effectively erasing April’s losses. Bloomberg ETF analyst Eric Balchunas confirmed that the ETF market saw $1.3 billion in inflows over two weeks, projecting this positive trend to continue.

The Uncertain Fate of Ethereum ETFs

Despite the optimistic outlook for Bitcoin ETFs, the future of Ethereum ETFs remains uncertain. Balchunas projected that the U.S. Securities and Exchange Commission (SEC) might never approve a spot Ethereum ETF due to its stance on Ethereum’s classification as either a commodity or a security. This regulatory ambiguity continues to cast a shadow over potential Ethereum-based investment products.

However, interest in spot Bitcoin ETFs remains strong. A report revealed that up to 937 institutions had committed $11 billion in investments towards spot Bitcoin ETFs as of the end of March. This substantial institutional interest highlights the growing acceptance and demand for regulated Bitcoin investment vehicles.

Bitcoin’s Market Rebound

The broader cryptocurrency market experienced a rebound last week, although price action at the start of the week was largely unfavorable. Galaxy Digital CEO Mike Novogratz predicted that Bitcoin could still reach $75,000 during this consolidation phase. Following the release of U.S. CPI data on May 15, Bitcoin and the broader market staged a significant comeback. The global crypto market cap surged to $2.5 trillion by mid-week, with Bitcoin surpassing the $66,000 mark.

Despite this uptrend, the rally did not yield substantial gains for short-term holders. However, the rebound was further bolstered by reports of the CME Group planning to launch Bitcoin trades. Bitcoin eventually reclaimed the $67,000 psychological threshold on May 17 for the first time this month. Notably, Chainlink (LINK) emerged as the top gainer on that day, experiencing a 20% rally following news of a partnership with the Depository Trust & Clearing Corporation (DTCC).

Global Regulatory and Enforcement Actions

The past week also saw significant regulatory and enforcement actions impacting the crypto space. In China, authorities apprehended six individuals connected to an illegal crypto trading scheme valued at $300 million. In the United States, a court ordered the confiscation of 279 cryptocurrency accounts linked to North Korea, citing their involvement in crypto theft activities.

In the Netherlands, three judges sentenced Tornado Cash developer Alexey Pertsev to 64 months in prison after finding him guilty. Pertsev’s conviction sparked debate within the crypto community about the fairness of punishing individuals for developing code. Additionally, the U.S. Department of Justice apprehended two brothers, Anton and James Pepaire-Bueno, for stealing $25 million worth of crypto assets using MEV bots on Ethereum within a mere 12 seconds.

The U.S. Senate also remained active, with discussions surrounding potential new regulatory frameworks for digital assets, signaling ongoing scrutiny and the potential for more stringent regulations in the near future.

Conclusion

The past week in the cryptocurrency market has been marked by notable events and significant developments. Notcoin’s post-airdrop struggles highlight the inherent volatility in the crypto space, while the recovery of spot Bitcoin ETFs underscores the growing institutional interest and confidence in regulated crypto investment products. Regulatory and enforcement actions continue to shape the landscape, reminding market participants of the evolving nature of the regulatory environment.

As the market continues to navigate these dynamics, investors and stakeholders must remain vigilant and informed about the ongoing changes and trends. The coming weeks promise to be equally eventful, with potential regulatory developments and market movements likely to influence the trajectory of the crypto market.