Monthly update May | New all-time high was reached
This month's update takes you through the key events of May, including Bitcoin's new all-time high and a significant new development concerning Ethereum ETFs.
This surge in Bitcoin's price was a direct result of a strong inflow of institutional capital. Major companies such as MicroStrategy and GameStop are investing hundreds of millions in the coin, clearly demonstrating considerable confidence in Bitcoin and its perceived value as a financial reserve.
Bitcoin further benefited from two key developments recently. Firstly, abundant liquidity in the stock market provided a boost to all 'risk-on' assets. Secondly, recent 'risk-off' scenarios also played a role, such as concerns regarding trade tariffs and deficits in the US. These situations often lead investors to seek safer havens or alternatives, which propelled both gold and digital assets like Bitcoin upwards. After achieving its all-time high, a correction followed, with the price falling back to approximately $105,000. This decline was partly attributable to profit-taking after the rapid ascent. People became more risk-averse following the uncertainty surrounding the announced trade tariffs.
Network Overload
Last month, the Bitcoin network experienced a significantly higher volume of transactions than it could process. This led to miners prioritising only the most profitable transactions, causing transaction fees to rise. Consequently, other transactions faced delays. This created a 'mempool' – essentially a backlog of pending transactions. As the Bitcoin blockchain became less usable in the short term due to this congestion, the price experienced a slight dip.
One of the attendees was 25-year-old Nicholas Pinto, who shared his experience with several journalists. His conclusion was rather lukewarm. Trump himself arrived by helicopter, delivered a lengthy speech about his belief in crypto, and then left before dinner. So, a dinner 'with' the President wasn't on the cards. All attendees were men in suits. Those with the largest TRUMP holdings were seated at special VIP tables. Their average investment in the coin was around $4.8 million; Pinto had 'only' invested $350,000. Top holder Justin Sun even had a staggering $22 million in TRUMP coins.
Outside, demonstrations were taking place. Critics labelled Trump's involvement in crypto as corrupt, arguing that someone with such power should not be influencing the market and profiting from it directly. A hundred protestors stood outside with banners proclaiming "Stop Crypto Corruption."
Following the dinner, the TRUMP coin saw a significant drop, likely due to many attendees selling their holdings after the disappointing event. When asked if the dinner was worth the investment, Pinto unequivocally replied, "No."
The reason this was previously an obstacle is that the SEC viewed staking, especially when offered via a service, as an 'investment contract'. This meant it would then fall under the same rigorous rules as stocks or bonds, making the creation of ETFs very complicated. In doing so, they referred to the 'Howey Test', an old legal standard that determines whether something qualifies as a security. This Howey Test examines four key criteria: whether there's an investment of money; if this takes place in a common enterprise; if there's a reasonable expectation of profit; and crucially, if these profits are generated solely through the managerial or entrepreneurial efforts of others (and not by the investor themselves).
Now, the SEC states that this is not the case for 'protocol staking'. Here, the rewards are determined directly by the network itself, and you're not reliant on the management of a staking service. This provides much-needed clarity and removes a significant barrier for funds looking to offer Ethereum or other similar cryptocurrencies (which also use Proof-of-Stake) via an ETF. This could open the doors for more large-scale investments and a new way for investors to benefit from staking.
New record highs in May
In May, all eyes were on the US: President Trump and his trade tariffs sent significant ripples through the market. This led to new lows but also fresh highs. On 22 May, famously known as Bitcoin Pizza Day, Bitcoin reached a new all-time high of $111,000.This surge in Bitcoin's price was a direct result of a strong inflow of institutional capital. Major companies such as MicroStrategy and GameStop are investing hundreds of millions in the coin, clearly demonstrating considerable confidence in Bitcoin and its perceived value as a financial reserve.
Bitcoin further benefited from two key developments recently. Firstly, abundant liquidity in the stock market provided a boost to all 'risk-on' assets. Secondly, recent 'risk-off' scenarios also played a role, such as concerns regarding trade tariffs and deficits in the US. These situations often lead investors to seek safer havens or alternatives, which propelled both gold and digital assets like Bitcoin upwards. After achieving its all-time high, a correction followed, with the price falling back to approximately $105,000. This decline was partly attributable to profit-taking after the rapid ascent. People became more risk-averse following the uncertainty surrounding the announced trade tariffs.
Network Overload
Last month, the Bitcoin network experienced a significantly higher volume of transactions than it could process. This led to miners prioritising only the most profitable transactions, causing transaction fees to rise. Consequently, other transactions faced delays. This created a 'mempool' – essentially a backlog of pending transactions. As the Bitcoin blockchain became less usable in the short term due to this congestion, the price experienced a slight dip.
Trumps exclusive dinner not that exciting
On 23 May, an exclusive dinner was held for the largest holders of the Official Trump (TRUMP) memecoin. President Trump had organised a competition, inviting the top 220 TRUMP holders to the White House for a special dinner with him.One of the attendees was 25-year-old Nicholas Pinto, who shared his experience with several journalists. His conclusion was rather lukewarm. Trump himself arrived by helicopter, delivered a lengthy speech about his belief in crypto, and then left before dinner. So, a dinner 'with' the President wasn't on the cards. All attendees were men in suits. Those with the largest TRUMP holdings were seated at special VIP tables. Their average investment in the coin was around $4.8 million; Pinto had 'only' invested $350,000. Top holder Justin Sun even had a staggering $22 million in TRUMP coins.
Outside, demonstrations were taking place. Critics labelled Trump's involvement in crypto as corrupt, arguing that someone with such power should not be influencing the market and profiting from it directly. A hundred protestors stood outside with banners proclaiming "Stop Crypto Corruption."
Following the dinner, the TRUMP coin saw a significant drop, likely due to many attendees selling their holdings after the disappointing event. When asked if the dinner was worth the investment, Pinto unequivocally replied, "No."
SEC Clears Path for Ethereum ETFs
The American regulator, the SEC, has taken a significant step that clears the way for the approval of Ethereum ETFs. They've issued new rules stating that the most common methods of 'staking' – where you lock up your crypto to support the network and earn rewards – do not fall under the strict regulations for investment products (securities). This applies whether you're staking your own crypto or using services that do it for you.The reason this was previously an obstacle is that the SEC viewed staking, especially when offered via a service, as an 'investment contract'. This meant it would then fall under the same rigorous rules as stocks or bonds, making the creation of ETFs very complicated. In doing so, they referred to the 'Howey Test', an old legal standard that determines whether something qualifies as a security. This Howey Test examines four key criteria: whether there's an investment of money; if this takes place in a common enterprise; if there's a reasonable expectation of profit; and crucially, if these profits are generated solely through the managerial or entrepreneurial efforts of others (and not by the investor themselves).
Now, the SEC states that this is not the case for 'protocol staking'. Here, the rewards are determined directly by the network itself, and you're not reliant on the management of a staking service. This provides much-needed clarity and removes a significant barrier for funds looking to offer Ethereum or other similar cryptocurrencies (which also use Proof-of-Stake) via an ETF. This could open the doors for more large-scale investments and a new way for investors to benefit from staking.