May Overview

Your Monthly Brief into the World of Digital Assets

JKL Group
17 min readJun 1, 2023

1. Market update

2. May in a Nutshell

3. Mining

  • Bitcoin Transaction Fees Surpass Mining Rewards for the First Time Since 2017

4. Crypto Projects

  • Memecoin Season: The Good, the Ugly and the Bad

5. Institutions

6. Regulators

7. June Preview

  • Bitcoin performance calendar
  • Macroeconomic events
  • Crypto events

1. Market update

Crypto markets were mostly sluggish throughout May with clouds of uncertainty over debt ceiling negotiations, interest rates, and the health of regional banks. While the U.S. dollar continued to strengthen under this backdrop, Bitcoin tested the $26k level before finding support.

On 28 May, U.S. President Joe Biden said that an agreement has been reached in principle between the Democrats and Republicans to avert a national default. Moreover, crypto traders were encouraged by a newly published whitepaper by the Chinese capital city of Beijing that outlined Web3 innovation and development. This sparked anticipation that the country could be softening its stance against cryptocurrencies.

Charts-wise, Bitcoin has been trading for weeks within a narrow range. Further upside towards $32–35k is on the cards, especially considering that this corresponds to a void left by the Terra (LUNA) collapse last year, but it is uncertain when the sideways price action would come to an end.

As with previous months, the future trajectory of interest rates could dictate market bias over the short term. However, the outlook remains unclear with mixed guidance given by Fed officials. Although a hotter-than-expected Core PCE Price Index was observed for May, Fed members including Chris Waller and Philip Jefferson suggested that the central bank may “skip” increasing interest rates in June. Meanwhile, Truflation data shows that price pressures have subsided rather quickly in the recent weeks with the inflation indicator at a year-to-date low. The sooner inflation can return to the target range of 2%, the more likely it is for the Fed to finally decide to pause.

Source: CME FedWatch Tool / Truflation

On-chain data may help to identify support levels for Bitcoin. The 1m-3m UTXO Age Bands of Realized Price served as significant resistance through the second half of 2022 and flipped into support at the turn of year. It was retested once in March and appears to provide good support recently as Bitcoin faced downward pressure.

Source: CryptoQuant / Dune Analytics

Blockchain activity has picked up considerably thanks to the “memecoin” frenzy and a surge in trading activity on decentralized exchanges. Ethereum (ETH) median gas price surged to a 12-month high and led to the increased burning activity of ETH tokens along with a significant decrease in the token inflation rate. Other major chains also benefitted. Ethereum Layer 2 solutions saw mainnet data publishing fees reaching a new high to above $16 million. The BNB chain, which also has a burning mechanism, experienced a sharp increase in the number of transactions representing the highest since May 2022. In the meantime, users on the Bitcoin network were busy minting ordinals, which could be seen as Bitcoin’s version of NFTs, and caused congestion on the network. In this issue, we will discuss the memecoins and ordinals phenomena in more detail.

2. May in a Nutshell

3. Mining

Bitcoin Transaction Fees Surpass Mining Rewards for the First Time Since 2017

Bitcoin miners, who earn income through mining rewards and transaction fees, are rubbing their hands as transaction fees have surpassed mining rewards for the first time since 2017.

Luxor Mining and AntPool have recently recorded transactions fees higher than the current mining reward per block of 6.25 BTC, equivalent to approximately $163,000 at the time of writing. [1][2]

Unlike users, miners are relishing these high network fees. They have endured significant losses during the bear market in 2022, where several mining companies including Core Scientific and Compute North faced bankruptcy as they suffered from the declining value of Bitcoin.

In the year 2140, when the final mining reward will be issued, the Bitcoin blockchain will rely solely on transaction fees as incentives for miners (validators) to participate in the network. This future scenario has long been a concern, as many fear that fee incentives alone might not be sufficient to safeguard the blockchain. However, events like the current spike in fees highlight the value of Bitcoin block space and its diverse range of use cases that could sustain its attractiveness in the future.

The surging network fees can be attributed to the rising popularity of Bitcoin ordinals. They consist bringing satoshis (sats, one satoshi is equivalent to one-hundred-millionth of a Bitcoin and is the smallest divisible unit of the cryptocurrency) to life, as inscriptions on the Bitcoin blockchain, in the form of text, images, video and audio. The genesis ordinal[3] was inscribed on 14 December 2022, which subsequently led its creator, Casey Rodarmor, to the launch a Bitcoin ordinal protocol in January.

Source: Glassnode / Dune Analytics

While an ordinal with a JPEG attached is similar to an NFT, ordinals go a step further from their counterparts on Ethereum, in the sense that Ethereum ERC-721 tokens merely store metadata pointing to an off-chain piece of art, while ordinals store the actual digital content on the blockchain itself.

These unique characteristics of ordinals could explain why they are highly sought after, contributing to high network usage. Since January, more than 9 million inscriptions [4] have been made, with users paying approximately 1,500 BTC in fees, equivalent to more than $40 million [5]. The allure of ordinals lies in the speculation that their value are not solely derived from the attached digital content, but also from the specific time of minting.

For example, the first satoshi of a new block holds more rarity compared to others within the same block, but it would be less rare than the first satoshi after an adjustment period, which occur every two weeks. If we go a step further, the first satoshi minted after the next halving in 2024 will be even more valuable, and the last satoshi ever minted in 2140 could be the most prized of all.

According to this valuation framework, the earliest sats inscribed in history, as witnessed today, may possess significant future value. This could explain the flocking of users towards inscription protocols and their willingness to pay high fees to inscribe their sats.

Bitcoin once again demonstrates its decentralized nature, as the value of ordinals stems from factors unaffiliated with any central entity. This contrasts Ethereum NFTs that often relies on teams and artists. However, unlike Ethereum-based NFTs, ordinals are still in their early days and consist mostly of text-based inscriptions.

Source: Dune Analytics / Twitter @Pepe_Times

The introduction of ordinals has ignited a spirited debate within the crypto community, with various perspectives raised. Bitcoin maximalists predominantly express their opposition. They highlight how ordinals, inscribed on the blockchain itself, contribute to the expansion of the blockchain size and high transaction fees as observed. The resulting increase in resource requirements poses limitations on the capacity and speed of the entire blockchain.

Furthermore, the numbering of sats raises questions about the fungibility of these units. For example, a “rare” satoshi would be more valuable than regular sats residing in one’s wallet. This diverges from Satoshi Nakamoto’s original vision and challenges the core principles of Bitcoin.

Lastly, ordinals might steer regulatory scrutiny towards Bitcoin. This is because BRC-20 tokens, the standard for creating fungible tokens on Bitcoin, could be considered as unregistered securities.

But the proponents of ordinals take a less purist stance and highlight some positives. The current hype surrounding ordinals could attract more developers and capital to build Bitcoin Layer 2 solutions, ultimately bolstering the Bitcoin ecosystem. Also, higher transaction fees associated with ordinals can incentivize more miners to join the network, thereby enhancing decentralization.

As the crypto community grapples with ordinals and their implications, the ongoing debate underscores the importance of striking a balance between innovation and preserving the core tenets of Bitcoin. While prominent figures like Michael Saylor are already calling them catalysts[6] for adoption, one should closely monitor their evolution and potential impact on Bitcoin’s scalability, regulatory compliance, and network decentralization.

Mining: Read More


- White House Pushes for Punitive Tax on Crypto Mining (Read More)

- Bhutan plans $500 million crypto mining fund with Jihan Wu’s Bitdeer (Read More)

- Kazakhstan collected $7M in crypto mining taxes in 2022 (Read More)

- Ordinals Upend Bitcoin Mining, Pushing Transaction Fees Above Mining Reward for First Time in Years (Read More)

- Hut 8’s Alberta Bitcoin Mine Running at 15% Installed Hashrate Due to Electrical Issues (Read More)

- Cipher Mining Buys 11,000 Crypto Mining Rigs From Canaan, Reaches 6 EH/s Hashrate (Read More)

- Marathon Teams Up With Abu Dhabi’s Zero Two for Middle East’s First Large-Scale Liquid Cooled Bitcoin Mining (Read More)

- Bitcoin Miner Marathon Receives Another Subpoena from SEC (Read More)


- Crypto Mining Data Center Soluna Stock Surges After $14M Investment Deal (Read More)

- Bitcoin Miner Cormint Raises $30M Series A to Build Texas Data Center (Read More)

- Bitcoin Mining Rig Maker MicroBT Unveils Most Powerful Machine Yet (Read More)

- Crypto Miners Pivoting to AI Cloud Services May Face an Uphill Battle (Read More)

- Memecoin Mania and NFTs Bring a ‘Seismic Shift’ for Bitcoin Mining (Read More)

- Core Scientific Hopes to Emerge from Bankruptcy by September, Lawyers Say (Read More)

- Dash Blockchain Halts, Binance Pool Suspends Mining Rewards (Read More)

- USBTC Aims to Become Bitcoin Mining Giant After Deal to Buy Celsius Assets (Read More)

4. Crypto Projects

Memecoin Season: The Good, the Ugly and the Bad

While large-cap cryptos remained dull for the past weeks, a new class of “Pepe the Frog” themed memecoins including Pepe (PEPE) and its derivatives emerged and created millions of wealth for crypto degens and traders who were quick enough to jump on the trend.

Memecoins are not a new fad. As its name suggests, they are cryptocurrencies derived from internet memes. In 2014, Dogecoin (DOGE) was created as a parody to Bitcoin and other “serious” cryptocurrencies. In early 2021, multi-millionaire Elon Musk embraced the doge meme and called himself the “Dogefather”. He tweeted often about Dogecoin and said that he would bring it “to the moon”, leading to price spikes and FOMO (fear-of-missing-out) behavior from retail. Dogecoin traded at $0.74 at its peak, compared to less than $0.01 at the start of that year. Until today, Dogecoin remains within the top ten cryptocurrencies by market capitalization.

While memecoins have negligible utility and intrinsic value, there are several positive aspects about them. They are a fun representation of internet culture and could bring together a community of similar-minded people. In turn, this could cultivate relationships and achieve positive things for society. For instance, the early Dogecoin community was known for accomplishing various charitable deeds like donating clean water to less-developed countries.[7] The sense of belonging with a community could also explain why people are willing to buy memecoins and hold them for an extended period, leading to price appreciation.

Moreover, memecoins could be a gateway towards increased crypto adoption. According to surveys, Dogecoin was ranked third[8] of most held cryptocurrencies in the U.S., and the second-most popular crypto in India just after Bitcoin.[9]

Compared to its predecessors, the rise of Pepe (PEPE) was unrivalled in terms of speed. On 30 March, the domain was registered using Wix, and the associated Twitter account was created on 4 April. The token went live on 14 April and a Telegram group was created on the same day. On 16 April, crypto influencers started to mention PEPE and the Twitter account rapidly gained around 35,000 followers. The token price enjoyed its first large increase.

By 30 April, Pepe had become a popular name on Crypto Twitter. Following a vote by its users, OKX announced that it will list PEPE for spot trading, which triggered another big pump. On 5 May, Binance followed suit and created more FOMO, causing PEPE’s market capitalization to briefly eclipse $1 billion. The decision was despite comments made by Binance CEO Changpeng Zhao (CZ) a couple days earlier, saying that he personally does not understand memecoins and would not recommend buying them.[10]

Clearly, the sheer size of trading volumes for PEPE was too attractive for any crypto exchange to resist. Listing and due diligence processes were completed within days, although many questioned whether it was appropriate to list PEPE in the first place. For instance, the Pepe meme is often associated with the alt-right movement and a symbol of hate. Also, it was discovered the PEPE token contract contains a blacklist function, and that a whopping $8 million worth of coins is locked up forever[11] in a blacklisted address for no apparent reason, maybe only because it was “too early” to the game.

Coincidentally, PEPE’s Binance listing marked an apex for this memecoin season, and the token price has since entered a downtrend, dropping more than 70% from its all-time high.

The memecoin craze created a favorable environment for influencers to take advantage of their social clout. Among them was again, Elon Musk, who commented on Beeple’s tweet about the Turbo (TURBO) token.[12] Later, he tweeted an image of a Milady NFT, causing the Milady Meme Coin (LADYS) to surge.[13] He also occasionally interacted with a Twitter comment bot called Bob is Here to Explain, causing its token to spike whenever he responded to one of its automated comments.

Another crypto influencer named ben.eth successfully capitalized on his fame, achieved by being an early promoter of PEPE. He created the Ben (BEN) memecoin and attracted thousands of followers before selling the entire project to Ben Armstrong, better known as BitBoy, who has 1.46 million subscribers to his crypto YouTube channel. Subsequently, ben.eth announced a new memecoin project called Psyop (PSYOP). Those who wish to buy the token are required to send funds directly to ben.eth, and there was no guarantee of receiving the tokens.

Meanwhile, fraudsters made sure to capitalize on the FOMO sentiment as the crypto community was enthusiastic to find the next PEPE. Some made use of phishing links and websites that promised to airdrop free tokens. Others created fake or scam crypto tokens and took the money from people who bought them. This is possible because it is very easy to create crypto tokens and list them on permissionless, decentralized exchanges. There are hundreds of new tokens launched[14] every day, and 99.99% of them will end up as “rug pulls”, meaning that at some point, the token’s owner will take all the funds and disappear. Another type of scam tokens is called the “honeypot”, which refers to tokens that can be bought but cannot be sold.

Source: Santiment

Controversies aside, the key question for most crypto players is whether they could identify memecoins like PEPE and LADYS before their price skyrocketed. The good news is that there are now widely available tools for hunting potential gems. Some traders make use of tools like DeBank to track large wallets on the blockchain, making sure to follow suit when these wallets deploy their capital. In addition, tools like Token Sniffer and Bubblemaps allow a deeper look into factors like contract code and token supply, reducing the likelihood of being scammed. Word of caution: 99.99% of memecoins are still scams, and these tools can only help avoid the most obvious ones.

It may also be helpful to look at successful examples in the past. Santiment data shows that short-term explosive growth of the memecoin’s community, measured by the number of Twitter followers, was a key factor leading to price pumps. For Dogecoin, this was significant in February 2021 and later in mid-April and May. This pattern is similar for Pepe, which gained followers in mid-April due to influencers, and afterwards at the turn of month due to listings on OKX and Binance.

But there is a reason to keep an eye on memecoins, even if you are not interested in trading them. This is because they have been a reliable signal for a market top, and May 2023 was no exception. A possible explanation is as follows: approaching the end of major crypto rallies, momentum weakens and there is a lack of material narrative that could drive further gains. Meanwhile, traders are sitting on hefty profits and do not mind gambling some of it. This increase of risk appetite causes rotation from Bitcoin and Ethereum into memecoins, causing downward pressure for crypto majors while memecoins thrive. Eventually traders take profit and exit altogether, and the entire market crashes.

Source: Dune Analytics

Many crypto traders love to buy and trade memecoins. They are fun and are representative of internet culture. Some could even create millionaires in a matter of days. The inconvenient truth, however, is that most memecoin buyers will be lucky to exit at a profit. Many will fall into scams or ultimately find themselves holding bags of worthless coins. This is why some choose to avoid memecoins entirely and for good reasons. That said, memecoin activity is still worth monitoring as it has served as a reliable indicator of local tops for Bitcoin and other major cryptos.

Crypto Projects: Read More


- NFT Marketplace Blur Launches Blend, a Peer-to-Peer Lending Platform (Read More)

- Bitcoin Ordinals Surge to 3M Inscriptions, but Most Are Just Text (Read More)

- ‘WallStreetBets’ Themed Tokens Plummets 90% as Insider Dumps Treasury Holdings (Read More)

- Ethereum Gas Fee Surges to 12-Month High as PEPE Frenzy Grips Market (Read More)

- Pepe memecoin tops $1 billion market cap even as Binance flags lack of utility (Read More)

- Aragon’s ANT Rallies After Cofounder Proposes Token Buybacks to End Activist Crisis (Read More)

- Counterculture NFT collection Milady Maker surged in volume after Elon Musk tweet (Read More)

- OpenAI’s Sam Altman nears $100mn funding for Worldcoin crypto project (Read More)


- One Million Individual Wallets Now Hold a Whole Bitcoin (Read More)

- Optimism, Scaling Solution for Ethereum, Sets June Date for Biggest Ever Upgrade, ‘Bedrock’ (Read More)

- Axie Infinity Game Launches on Apple App Store In Key Markets (Read More)

- Ripple Starts Platform for Central Banks to Issue Their CBDCs (Read More)

- Sanctioned Crypto Mixer Tornado Cash Hijacked By Hackers (Read More)

- Multichain pledges to compensate users after ‘force majeure’ incident (Read More)

- Milady NFTs Get Dogecoin Treatment as Prices Retrace Days After Elon Musk Tweet (Read More)

- Ethereum Layer 2s soar to new high in monthly mainnet data publishing fees, crossing $16 million (Read More)

5. Institutions


- a16z crypto urges the UK to consider ‘more nuanced’ regulatory framework (Read More)

- Coinbase Q1 2023 Revenue Beats Estimates As Markets Rebound (Read More)

- Bittrex files for bankruptcy protection less than a month after SEC charges (Read More)

- Binance’s NFT Marketplace Adds Support for Bitcoin NFTs (Read More)

- Jane Street, Jump Pull Back Crypto Trading Over US Regulatory Uncertainty (Read More)

- Franklin Templeton to List Blockchain Fund Targeting Institutional Investors (Read More)

- Twitter New CEO Linda Yaccarino Follows Dogecoin and Shiba Inu (Read More)

- Microsoft, Goldman Sachs, and Other Big Firms Back Launch of Financial Blockchain (Read More)


- Celsius moves $780 million in stETH as Lido Finance enables withdrawals (Read More)

- The New Crypto Cycle Will Be About Ether Yields: Bernstein (Read More)

- Ledger defends crypto wallet recovery tool against hostile reaction from security experts (Read More)

- DLT-Powered Financial Markets Could Save $100B Per Year, TradFi Study Says (Read More)

- Tether to Purchase Bitcoin as Part of Reserves Strategy Shift (Read More)

- China state-owned Greenland to apply for Hong Kong virtual asset trading license (Read More)

- FTX CEO’s Legal Billings Continue to Hint at ‘2.0 Reboot’ (Read More)

- Fantom Foundation, Justin Sun and HashKey take action amid Multichain ‘force majeure’ (Read More)

6. Regulators


- Ex-OpenSea Exec Convicted of Wire Fraud, Money Laundering in Insider Trading Case (Read More)

- Binance Faces US Probe of Possible Russian Sanctions Violations (Read More)

- Chinese Users of the Binance and FTX Exchanges Show Holes in Beijing’s Crypto Ban (Read More)

- Hong Kong Says Its Crypto Regulations Will Shun Any ‘Light Touch’ Approach (Read More)

- SEC Blasted on Custody Proposal by JPMorgan, Crypto Firms and a Fellow Agency (Read More)

- Coinbase’s SEC Complaint Draws Allies Depicting U.S. Regulator as Crypto Bully (Read More)

- MiCA Spurs Surge in VC Funding for EU-Based Crypto Startups (Read More)

- The Secret Service says blockchain is an ‘amazing opportunity’ to track money; it also has an NFT collection (Read More)


- SEC Urges Judge to Reject Coinbase Demand for Rules Explanation (Read More)

- Crypto Trading Should Be Regulated Like Gambling, UK Panel Says (Read More)

- Crypto Murder Case From Seoul’s Beverly Hills Spurs Tighter Digital-Asset Regulation (Read More)

- Filecoin Price Drops After SEC Asks Grayscale to Withdraw Application to Make Trust Reporting (Read More)

- Malaysia Says Crypto Exchange Huobi Global Isn’t Registered, Must Cease Operations (Read More)

- Hong Kong retail investors to start trading major cryptocurrency tokens from June 1 as new virtual-assets regime kicks off (Read More)

- Japan to Enforce Tougher Crypto Anti-Money Laundering Laws Next Month: Report (Read More)

- Beijing releases white paper for web3 innovation and development (Read More)

7. June Preview

Inflation statistics including CPI and Average Hourly Earnings continue to be a major focus, as Fed officials are reluctant to rule out additional rate hikes before the data returns to near the 2% target level.

Recently, continued strength is observed in the labor and consumer markets. This alleviates recession concerns, but also provides rationale for the Fed to keep rates higher for longer. We should keep a close eye on the relevant indicators, especially Nonfarm Payrolls due on 2 June, that could be a significant influence ahead of the FOMC meeting in two weeks’ time.

Bitcoin performance calendar

June tends to be a mixed month for Bitcoin. The record is split for the past ten years with a median return of -0.8%.

Source: Glassnode, JKL Group. Data as of 31 May 2023.

Macroeconomic events

Crypto events


This material is strictly confidential and is intended for use solely by professional investors (as defined in the Cayman Islands Monetary Authority from time to time). It should not be reproduced, redistributed, passed on to any other person or published, in whole or in part, for any purpose without the written consent of JKL Digital Capital Limited (‘JKL’) and must be returned on request to JKL. Although information contained in this material has been compiled from sources believed to be reliable, JKL does not represent or warrant the accuracy, completeness or reliability of the information contained in this material.

The contents of this material have not been reviewed by any regulatory authorities. You are advised to exercise caution in relation to the contents of this material. If you have any doubt about any of the contents of this material, you should obtain independent professional advice. Neither JKL nor any of its affiliates, nor any of its or their respective directors, officers, employees, and representatives will accept any responsibility or liability whatsoever for any direct, indirect, or consequential loss arising from the use of or the reliance upon any information contained in this material. This material does not constitute an offer or an invitation to subscribe for or purchase any financial product. It is not intended to provide the basis of any credit or other evaluation and should not be considered as a recommendation to purchase any financial product.

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JKL Group

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