Kaiko Research Report: Bitcoin Miners in Crisis, Surging Cryptocurrency Trading Volume in Brazil

The latest data report from research firm Kaiko Research indicates that as the recent hype around the Bitcoin ecosystem diminishes, miners may be facing a crisis. Additionally, cryptocurrency trading volume in Brazil has shown significant growth compared to last year. At the same time, the correlation between Bitcoin prices and the U.S. stock market appears to be increasing.

This article is not investment advice.

Bitcoin Miners Facing Pressure

First, with the Rune protocol craze that followed Bitcoin's halving gradually cooling down, Bitcoin miners and mining companies are facing immense pressure.

Dune data shows that the daily average minting of new Runes in the past 6 days for Bitcoin has dropped to below 250, a 99% decrease from the peak at the end of April. Just yesterday, only 157 new Runes were minted on Bitcoin, with miners earning approximately $3,835 in transaction fees.

While the surge in transaction fees at the end of April did provide some relief to mining companies and miners, the recent slump in daily average network fees over the past two weeks has started to make them feel the pressure of halving mining rewards. Without any narrative hype in the near future, this may lead to potential selling pressure.

BTC at 65K! The Latest Bitcoin Halving Impact: Sharp Decline in Miner Profits, Coin Price Needs to Stay Above 80K

Additionally, Kaiko mentioned that trading activities typically slow down in the summer, affecting market liquidity and making it drier:

The 2% market depth is currently around $407 million, compared to $250 million in August last year.

Rapid Increase in Cryptocurrency Trading Volume in Brazil

Furthermore, Kaiko also noted the rapid growth of the Brazilian crypto market, with cryptocurrency trading volume in the local currency Real (BRL) increasing by 30% compared to the same period last year, a growth rate far higher than that in USD volume.

The report stated:

So far, in terms of fiat trading volume, the country has become the largest cryptocurrency market in Latin America and the seventh largest globally.

In addition, the cryptocurrency trading volumes in Mexico and Argentina since the beginning of this year are $3.7 billion and $300 million respectively.

Stablecoins are popular in the Brazilian market, accounting for about 50% of the trading volume, surpassing mainstream coins like Bitcoin and Ether at around 45%, not to mention other competitive coins.

In response to this situation, Brazilian authorities are considering imposing more taxes on it.

Effective as of New Year's Day, Brazil will tax overseas investment gains at 15%, and offshore crypto platforms will also be included

The report also pointed out that while Binance is still the largest exchange in the Brazilian market, its market share is declining, dropping from 95% two years ago to around 79%.

In contrast, the largest Bitcoin exchanges in Brazil, Mercado Bitcoin and Bitso, have seen their market share rise to 21% as of early May, reaching the highest point in over three years.

Rising Correlation Between Bitcoin and the US Stock Market

Lastly, Kaiko also found that the correlation between Bitcoin prices and the US stock market seems to be increasing. Since March this year, the trend of Bitcoin prices has continued to correlate with the S&P 500 stock market with a 90-day correlation of about 0.17; a correlation between 0.3 and 0.7 is considered moderate.

Previously, the correlation between Bitcoin prices and US stocks would usually significantly and gradually increase during bear markets.

At the same time, the correlation of Bitcoin prices with the European stock market STOXX 600 and the Chinese stock market CSI 300 remains stable or shows a negative correlation.