Global Capital Market Daily Recap & Outlook-20230524

Duet Protocol
9 min readMay 24, 2023


Market Overview:

Stocks are falling, digital currencies are rising, gold is rising, bond yields are falling, oil is rising, and the US dollar is rising.

Key Drivers:

Debt limit negotiations between the two parties are showing significant differences, with 9 days remaining until the earliest X day. The Republican Party seems inclined to delay beyond this date. The market sentiment is also restrained by threats from US lawmakers to retaliate against China’s ban on Micron Technology (MU). After experiencing several days of significant gains, European and American stock markets showed a notable downward trend today, with almost no rebound during the day, accompanied by a sharp decline in European sovereign bond yields. The data released by the United States on the preliminary Purchasing Managers’ Index (PMI) for April was mixed, with the services sector showing continued growth momentum (55.1, a 13-month high), while the manufacturing sector struggled (48.5, a 3-month low). The Richmond Fed Manufacturing Index for May unexpectedly dropped to a three-month low.

Stock market, overall correction:

Luxury stocks, which had been leading European stock markets, collectively fell yesterday, with Hermès stock down 6.5%, LVMH down over 4.5%, and the parent company of Gucci, Kering Group, experiencing a nearly 3% decline.

Bond yields spike and then retreat:

Cryptocurrency market, generally rising:

BTC +1.29% to $27,201.65
ETH +1.92% to $1,853.63

One of the most exciting news in the past 24 hours in the cryptocurrency field is that retail investors in Hong Kong will be able to trade digital assets starting from June 1.

24-hour gainers and losers among the top 100 cryptocurrencies by market capitalization:

On May 23, Upbit, the largest cryptocurrency exchange in South Korea, announced the collective lifting of investment warnings on KAVA and WAVES and resumed the deposit services for KAVA and WAVES, resulting in a significant surge in the prices of both tokens.

WOO X, a cryptocurrency exchange platform, faced concerns raised by an independent media person on May 23 regarding its asset-to-liability ratio being around 80%, over-reliance on its native token $WOO, and lack of transparency in asset circulation. The media person advised investors to move their assets out of the exchange as soon as possible. However, the WOO X project team denied this analysis, stating that user assets are diversified across five different third-party platforms, and users’ primary asset on WOO X is WOO, which explains the higher proportion of WOO tokens. Kronos Research is only a multi-strategy hedge fund that provides liquidity on WOO X and is not engaged in speculation.

Debt limit negotiations, lack of progress or even setbacks:

House Speaker McCarthy and Republican negotiator Graves have both indicated significant differences between the two parties, and the debt limit negotiations have made little to no progress.

Republican Congressman McHenry (R) stated that the most significant disagreement still lies in spending and couldn’t specify when the negotiations would resume after today.

McCarthy mentioned that he hasn’t spoken with President Biden today and they will keep working until everything is done, but he didn’t have any plans to go to the White House today. According to Punchbowl, there are reports that White House negotiators left the Capitol after about two hours of debt limit negotiations.

McCarthy told the Associated Press that Biden and the White House are attempting to “reinsert Medicare and Social Security into the conversation” as a way of “trying to blow up the entire negotiation.” Meanwhile, Graves expressed that he thinks the negotiations are not progressing well but they will meet again soon. He noted that they won’t be able to move forward until the White House understands the spending crisis.

McCarthy told Fox News that he doesn’t believe an agreement will be reached on Tuesday, so any hopes of an imminent deal appear unlikely.

Bloomberg reported that House Republicans are not accepting Treasury Secretary Yellen’s warnings about the U.S. government running out of funds as early as June 1 or her dire predictions of default, weakening the urgency to raise the debt limit. (This seems to suggest that Republicans are not in a rush to reach an agreement before June 1, which caused a market dip when this news emerged).

Speech by Federal Reserve officials, Logan’s comments on bond market liquidity risk surprise the market:

Kashkari (Voter): More data on the economy is needed, and a mild recession could dampen inflation. He added that if inflation remains stubbornly high, they may need to maintain higher interest rates. (Yesterday, he stated that the reasons for pausing or continuing rate hikes in June were “evenly balanced,” and if there is no sign of inflation easing, they may need to raise rates to a benchmark rate above 6%.)

Logan (Voter) stated that every bank should be prepared to borrow from the Federal Reserve, and if all banks regularly test access to the discount window, it would eliminate the stigma. The Federal Reserve should provide support to banks when needed, including during evenings, weekends, and holidays.

In addition, Federal Reserve Chair Powell held a closed-door meeting with House Democrats, avoiding discussions on debt limit negotiations and monetary policy. Some lawmakers revealed that Powell believes the overall economy is beginning to improve, but he is concerned about inflation remaining in the high range of 4% to 5%.

The Fed has released a new working paper ( that explores the creation of the Twitter Financial Sentiment Index (TFSI) to assess the feasibility of predicting market sentiment using social media.

Economic data: Services PMI remains strong, while Manufacturing PMI hits a freezing point:

Cryptocurrency hot topics:

【Vitalik Supports ZK as Ethereum’s Ultimate Scaling Solution】

Vitalik recently mentioned at the Ethereum DevCon in Montenegro that “over the next 10 years, zk-SNARKs will be as important as blockchains,” once again sparking discussions and market attention on ZK technology and its ecosystem. Here are some key points:

zk-Rollup is a practical application of zk-SNARK technology in the blockchain field. Vitalik has been promoting ZK technology since at least 2018 when he wrote about it. He shifted his support from Plasma to Rollup, and although initially remaining neutral towards OP and ZK, he has publicly sided with ZK as the ultimate solution since last year.

So, Vitalik’s support for ZK is not surprising news. ZK has the potential to make Ethereum a true world computer in terms of scalability and decentralization.

zk-SNARK is a cryptographic tool that allows a prover to convince a verifier that they know a solution that satisfies a certain statement without revealing the solution itself. This process is “zero-knowledge” as it doesn’t disclose any information about the solution.

In the zk-Rollup scaling solution, many transactions are “rolled up” and submitted to the blockchain as a single transaction. Then, zk-SNARK is used to prove the validity of these transactions, compressing a large amount of information into “succinct proofs” that have a fixed size regardless of the input.

The main advantage of using zk-SNARK is that validators (such as full nodes or miners) can quickly verify the validity of zk-SNARK proofs without having to re-execute all the “rolled up” transactions. This greatly enhances the processing capacity of the blockchain compared to OP, which requires publishing complete transaction data.

Due to the relatively fixed and diluted cost of computational resources, as more people use the zk layer, gas fees are likely to decrease. The current high gas fees are not caused by excessive interactions but rather due to insufficient adoption.

Therefore, zk-Rollup offers better finality because each transaction block comes with a zk-SNARK proof, demonstrating the validity of all transactions in that block. In contrast, OP transactions require waiting for others to “challenge” them, leading to longer confirmation times.

Improved versions of zk-STARKs by Starkware and zk-SNARKs by zkSync have been implemented. Vitalik’s support shouldn’t be misconstrued as “endorsing” zkSync exclusively, but rather he didn’t provide an in-depth explanation of zk-STARKs, leading to some wishful market interpretations. The outcome will depend on which technology proves successful. Overall, despite zk’s TVL currently being only one-eighth to one-tenth of OP’s, as zkEVM compatibility and usability increase, along with positive developments like main chain token issuance, once the TVL and user threshold are surpassed, the OP ecosystem may face challenges. This could also be a reason why OP-based public chains struggle to break through the billion-dollar market capitalization level. Some argue that OP’s development and user experience advantages will persist during the maturity of ZK technology, which may enable OP to maintain its advantageous position.

【Investors HODL Bitcoin for Record Length of Time】

Glassnode data shows that the proportion of BTC held for at least one year has reached a record high of 68%, with 55% of Bitcoin held for at least two years and 40% held for three years. The number of BTC held for over 155 days has also reached a historical high of 14.46 million. Many analysts believe that when BTC is held by investors instead of being sold, it can lead to a minor supply squeeze, which indicates a bullish sentiment in the market.

【Multicoin Capital Leads $2.3 Million Seed Funding Round for MEV Project FastLane Labs】

FastLane Labs is the largest miner-extractable value (MEV) protocol on Polygon. Multicoin Capital believes that MEV protocols not only generate additional revenue streams for validators but also serve as critical infrastructure for maintaining network stability and usability. MEV refers to the way miners or validators profit from ordering or arranging pending blockchain transactions before they become part of a block. The methods to earn MEV may vary depending on the blockchain. The funding round received participation from other investors, including Polygon Ventures, Shima Capital, Delphi Ventures, and Everstake Ventures.

【Retail Investors in Hong Kong Can Trade Digital Assets Starting from June 1】

The Securities and Futures Commission (SFC) of Hong Kong announced that from June 1, they will accept applications from exchanges to provide cryptocurrency trading services to retail investors. The approved tokens will need to have a 12-month track record and significant market capitalization. The SFC stated that registered exchanges will be prohibited from offering stablecoins and interest-bearing tools. It is believed that this announcement aligns with the long-standing expectation that Asian development will drive the next cryptocurrency bull market, contrasting with the lack of regulatory clarity, particularly in the United States. Some argue that the decision to open the door for retail investors in Hong Kong to cryptocurrency trading does not necessarily mean a surge in demand for cryptocurrencies, as local traders may have already accessed the market through offshore platforms.

Macro Market Research:

Societe Generale macro team: “Credit tightening is pushing up default rates, credit spreads, and unemployment. Caution is needed for future credit shocks.”

The end.

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