5.12 AI Daily Crypto Assets market is surging, with opportunities and challenges coexisting.

1. Headlines

1. The China-U.S. trade negotiations have made significant breakthroughs, and both sides have agreed to establish an economic and trade consultation mechanism.

The high-level economic and trade talks between China and the United States have made significant progress in Geneva, Switzerland. Both sides have reached important consensus, agreeing to establish a China-U.S. economic and trade consultation mechanism, clarifying the leaders of both sides, and conducting further consultations on each other's economic and trade concerns.

The talks were candid, in-depth, and constructive, marking an important step forward in China-U.S. economic and trade relations. The results of the talks will help improve expectations for the global supply chain, stabilize the international trade environment, reduce risk aversion in the global asset markets, and have a positive significance for the international economic outlook.

WTO Director-General Ngozi Okonjo-Iweala welcomed the positive outcomes of the talks. She stated that in the current global tension, this progress is not only important for the United States and China, but also for other regions of the world, including the most vulnerable economies. She looks forward to both countries finding feasible solutions based on this to ease tensions, restore predictability, and enhance confidence in the multilateral trading system.

2. Bitcoin miner sell-off pressure has dropped to a historic low, and BTC is expected to break the $100,000 barrier.

Data shows that the selling pressure from Bitcoin miners has dropped to its lowest level since 2024, creating favorable conditions for Bitcoin to break through the $100,000 mark.

Miners are the main suppliers of Bitcoin, and their selling behavior has a significant impact on price trends. Analysts point out that the current miner holdings are at a historical low, indicating that their profit interest is not high, and selling pressure has greatly decreased. At the same time, institutional investors' demand for Bitcoin continues to rise, coupled with optimistic expectations for 2025, these factors together drive Bitcoin to potentially break the $100,000 mark and set a new historical high.

However, some analysts also remind that Bitcoin's Relative Strength Index shows it is in the "overbought" zone, and there may be a pullback or consolidation in the short term. It would be a healthy development trend to retest and consolidate above the key psychological level of $100,000, laying a foundation for further increases.

3. A new wave of excitement is surging in the AI sector, with Virtuals Protocol leading the AI Agent ecosystem.

About 7 months have passed since the AI Agent craze began, and this sector is experiencing rapid development. Among them, Virtuals Protocol stands out with its excellent execution and community marketing, showing the strongest performance in maintaining speed and heat.

Virtuals Protocol is a decentralized AI agent ecosystem that allows anyone to train, deploy, and monetize AI agents. Since its launch in November last year, the project has completed key milestones such as token distribution, mainnet launch, and more, with the token price continuing to rise.

In contrast, CreatorBid, although its execution is relatively slow, has a clear vision and focuses on the tensor intelligent agent ecosystem, making its long-term potential worth looking forward to.

Overall, the AI Agent sector is still in its early stages, and future focus may shift towards infrastructure construction and real consumer application scenarios. Industry analysts believe that the combination of AI and blockchain will undoubtedly bring about disruptive innovation, making this sector worthy of close attention.

4. Bank for International Settlements Report: Capital Flow Management Measures are Largely Ineffective on Cryptocurrency Transactions

The Bank for International Settlements recently released a research report that analyzes the cross-border cryptocurrency flows of 184 countries from 2017 to mid-2024. The study found that the impact of geographical distance and language barriers on cryptocurrency transactions is much smaller than their effect on traditional financial flows.

The report points out that global factors such as increased market volatility and the widening of credit spreads have become important driving forces determining the flow of native crypto assets. At the same time, the correlation between stablecoins and remittance costs and transaction demand is stronger, especially in emerging markets and developing economies where traditional financial channel costs are high.

It is worth noting that research findings indicate that capital flow management measures seem to be largely ineffective in suppressing these digital transactions, with evidence suggesting that the trading volume of certain crypto assets has even increased due to the implementation of these measures.

Analysts say this highlights the dual role of crypto assets as speculative investments and trading tools, emphasizing the need for further research to assess their impact on financial inclusion and economic stability.

5. The Ethereum ecosystem is once again facing the risk of fragmentation, as Vitalik's proposed vision has triggered a trust crisis.

Ethereum is undergoing an unprecedented wave of skepticism. Since the launch of the ETF, it has been in net sell-off, with outflows exceeding $1.2 billion. A massive trust crisis is emerging, involving Ethereum's core researchers, foundations, developer community organizations, as well as ConsenSys-related commercial companies and external investors.

Analysts believe that Vitalik needs to better guide the various participants regarding direction and goals, as Ethereum has become a very large decentralized business entity in both the entire cryptocurrency market and the traditional market. Such a business entity has never existed in history, and the challenges facing the entire Ethereum community and Vitalik will continue to become increasingly severe, to the point of a breaking down to build up situation.

At the same time, the Ton ecosystem has attracted significant attention at this TOKEN2049 conference. However, Western funds are generally not optimistic about Ton and Web2 platforms, and they have not made a clear statement about whether they will invest.

Overall, the Ethereum ecosystem is facing unprecedented challenges. Vitalik needs to present a more convincing vision and roadmap to restore community confidence and prevent further fragmentation of the ecosystem.

2. Industry News

1. Bitcoin reaches the $105K milestone, institutional investors continue to flock in

The price of Bitcoin broke through the $104,000 mark on May 12, reaching a high of $105,000. This surge was mainly driven by continuous buying from institutional investors. Data shows that last week, net inflows into Bitcoin-supported funds reached $600 million, although lower than the previous week's $1.81 billion, it still indicates sustained institutional demand for Bitcoin.

Analysts believe that the surge of Bitcoin is attributed to the recovery of the global economy and the boost in inflation expectations. In this context, Bitcoin is favored as an alternative investment and a means of value storage. Meanwhile, the launch of Bitcoin ETFs has also provided institutional investors with more convenient investment channels.

However, some analysts also warn that the rapid rise in Bitcoin prices could trigger speculative trading, thereby increasing market volatility. If there is a large-scale profit-taking, Bitcoin may face downward pressure. Therefore, investors need to closely monitor subsequent price trends and changes in trading volume.

2. Ethereum breaks $2600, Pectra upgrade drives ecosystem development

The price of Ethereum broke through the $2600 barrier on May 12, mainly driven by the positive impact of the Pectra upgrade. The Pectra upgrade aims to help Ethereum capture value from L2 activities by introducing a revenue-sharing mechanism with Layer 2; at the same time, it expands block capacity, reduces L2 transaction fees, and enhances operational efficiency.

Analysts believe that the Pectra upgrade not only improves Ethereum's scalability but also helps attract more on-chain transactions back to the mainnet, thereby enhancing the ecological vitality of Ethereum. At the same time, Ethereum's leading position in decentralized finance ( DeFi ) and non-fungible tokens ( NFT ) also supports its price increase.

However, some analysts have pointed out that Ethereum's high transaction fee issue still needs to be resolved. If user experience does not improve significantly, it may limit Ethereum's growth potential. In addition, Ethereum also faces competitive pressure from other public chains, and its future trends need further observation.

3. The AI sector continues to strengthen, with Virtuals Protocol leading the way.

On May 12, the AI sector of the cryptocurrency market continued to strengthen, with Virtuals Protocol(VIRTUAL) recording the largest increase, rising 8.76% within 24 hours. AI16Z and AIXBT rose by 10.48% and 8.32% respectively, while the overall AI sector index ssiAI increased by 0.11%.

Analysts believe that the sustained strength of the AI sector is mainly driven by the boom in artificial intelligence. With the rise of AI applications like ChatGPT, investors are increasingly optimistic about the prospects of AI technology in the blockchain field. Virtuals Protocol, as a project focused on AI agents, has naturally seen its token price attracted by funding.

However, some analysts remind us that the rise of the AI sector has a certain speculative nature. Currently, most AI projects are still in the early stages, and the true product implementation and business models await time to test. Investors need to view this rationally and control risks.

4. Meme coins explode, Moo Deng's intraday increase exceeds 600%

On May 12th, the price of the Meme coin Moo Deng experienced a surge, with an increase of up to 600% within the day, reaching a new high. Meanwhile, other Meme coins such as PEPE, BONK, and FLOKI also saw varying degrees of increase.

Analysts believe that the recent surge of Meme coins is mainly driven by social media hype, lacking substantial fundamental support. As a cultural symbol and entertainment product, the price fluctuations of Meme coins are often closely related to speculative trading and crowd sentiment.

However, some analysts point out that the surge of Meme coins reflects the speculative nature of the cryptocurrency market. In an unregulated environment, any kind of hype can lead to extreme volatility, which is a "double-edged sword" for investors. Therefore, investors need to remain rational and control their risk exposure.

5. Trading volume of stablecoins rises, demand in emerging markets increases.

Recent data shows that the trading volume of stablecoins has seen a significant increase over the past period, especially in emerging markets and developing economies. Analysts believe this is mainly due to the cost-effectiveness advantages of stablecoins in cross-border payments and fund transfers.

Compared to traditional financial channels, stablecoin transactions are faster and cheaper, making them highly favored in emerging markets where some channels are restricted or costs are high. Additionally, the decentralized nature of stablecoins helps to circumvent the impact of regulatory measures such as capital controls.

However, some analysts point out that the regulatory issues surrounding stablecoins remain a significant challenge. Balancing innovation and regulation, protecting investors' rights while not stifling industry development, requires joint efforts from all parties. At the same time, the development of stablecoins also needs more practical application scenarios, rather than purely speculative trading.

3. Project Highlights

1. NFTGo launches DMind Benchmark and tops the Hugging Face leaderboard.

NFTGo is an artificial intelligence research organization focused on the Web3 and digital finance sectors. Recently, the organization launched a Web3 large model evaluation benchmark called DMind Benchmark, aimed at assessing the performance of large language models in the Web3 vertical.

The DMind Benchmark covers 9 major tracks including blockchain fundamentals, smart contracts, DeFi, DAO, NFT, etc., with a total of 1917 questions. It combines multiple-choice questions and subjective reasoning to comprehensively assess the model's knowledge depth and reasoning ability in Web3 scenarios. This benchmark dataset has currently topped the Hugging Face dataset ranking.

NFTGo aims to provide a standardized evaluation system for the development of artificial intelligence in the Web3 field through DMind Benchmark, promoting the implementation of large models in emerging areas such as blockchain. The launch of this benchmark is expected to accelerate the construction of the Web3 artificial intelligence ecosystem, providing references for model developers and application scenarios within the industry.

Industry insiders believe that the emergence of DMind Benchmark marks the transition of Web3 artificial intelligence from concept to practice, and it is expected to play a significant role in areas such as finance, governance, and digital assets in the future. However, some analysts also warn that Web3 artificial intelligence is still in its infancy and requires continuous investment and innovation to meet industry demands.

2. The Berachain community has released the PoL V1.1 proposal to optimize BERA value capture.

Berachain is a blockchain project based on the Cosmos ecosystem, aimed at building a decentralized financial infrastructure. The core of the project is the PoL(Proof of Liquidity) mechanism, which maintains system operation by incentivizing users to provide liquidity to the ecosystem.

Recently, the Berachain community released the PoL V1.1 proposal, optimizing the original mechanism to better achieve the value capture of the BERA( project token ). The core content of the proposal includes:

1. Optimize the allocation of incentive funds, using the variable part of the BGT incentives to build permanent liquidity, including establishing BERA-HONEY/BERA-mainstream asset liquidity pools in the BEX( project ), as well as staking BERA to support the validator nodes of ecological projects.

2. BEX fees are used in a targeted manner to strengthen the liquidity construction of mainstream trading pairs for BERA through an automatic incentive mechanism.

3. Relax the PoL participation standards and lower the entry threshold for the new reward pool.

The proposal aims to further incentivize community participation, enhance the utility value of the BERA token, and inject new vitality into the Berachain ecosystem. Analysts believe that this optimization will help Berachain attract more liquidity and improve its position and influence within the Cosmos ecosystem.

However, there are also views that point out that Berachain is still in a relatively marginal position within the existing ecosystem, and it will take time to achieve large-scale applications. The future development of this project relies on its innovation capability in the field of financial infrastructure.

3. Lido oracle was hacked, 1.46 ETH was stolen but the impact is limited.

Lido is a liquidity provision protocol based on Ethereum that allows users to stake ETH and receive corresponding stETH tokens. Recently, Lido's oracle service was hacked, resulting in the theft of 1.46 ETH.

According to Chorus One(, the oracle service provider for Lido), this is an isolated incident with limited impact. The affected hot wallet dates back to 2021 and was designed to maintain only a low balance, specifically for the operation of the Lido oracle. Therefore, it did not adhere to the same strict security standards adopted by other keys managed by Chorus One.

Chorus One stated that a comprehensive review of the entire infrastructure has been conducted, and no indications of a broader intrusion have been found, assuring that no customer funds or validator infrastructure have been affected. Currently, the Lido oracle secret keys are securely stored in HashiCorp Vault and adhere to the principle of least privilege, with strict access controls implemented.

Despite the losses caused by this hacking incident, the limited functionality of the Lido oracle and the layered verification mechanisms helped avoid catastrophic consequences. Analysts believe this incident has taught the industry a lesson, highlighting the importance of transparency and continuous evolution, which is expected to drive projects like Lido to enhance their security measures.

In the future, Lido plans to further enhance the security and trustworthiness of the system through technological upgrades and the introduction of ZK technology.

4. Virtuals lead the way, CreatorBid stealthily advances, who will dominate the AI Agent track?

AI Agent is considered an important track in the Web3 artificial intelligence field. It has been 7 months since this boom began, during which multiple representative projects have emerged, such as Virtuals, CreatorBid, tensor, etc.

From the perspectives of ecological construction, product iteration, community distribution, and token value, Virtuals is currently the most advanced in terms of speed and popularity maintenance. The project closely follows trends and continuously launches new features, with the token price performing quite impressively.

In contrast, CreatorBid's execution pace is relatively slow, but its vision is clear, focusing on the tensor intelligent agent ecosystem, with long-term potential to be expected. Tensor itself, as the infrastructure for AI agents, is also steadily advancing.

Overall, the AI Agent track is still in its early stages, and the focus in the future may shift towards infrastructure development and the exploration of real consumption scenarios. Analysts believe that this track has broad prospects but also faces technological challenges and commercialization issues, requiring more innovative breakthroughs.

It is worth noting that under the hype of AI concepts, some Meme projects have also emerged in the AI Agent track, attracting market attention. However, whether these projects can truly bring value to the industry remains to be tested by time.

5. BIS Report: Capital Flow Management Measures are Essentially Ineffective in Cryptocurrency Trading

The Bank for International Settlements ( BIS ) recently released a report titled "Empirical Analysis of Cross-Border Flows of Bitcoin, Ethereum, and Stablecoins," which studies the cross-border cryptocurrency flows of 184 countries from 2017 to mid-2024.

The report found that the impact of geographical distance and language barriers on cryptocurrency trading is much smaller than their impact on traditional financial flows. In contrast, global factors such as increased market volatility and widening credit spreads have become important driving forces determining the flow of native crypto assets.

The conclusion of the report shows that the capital flow management measures adopted by various countries currently seem to be largely ineffective in terms of cryptocurrency trading. This is closely related to the decentralized and borderless nature of cryptocurrencies.

Analysts point out that this finding highlights the dilemma faced by regulators in controlling the flow of cryptocurrencies. Traditional capital control measures have become insufficient to fully restrict the cross-border movement of crypto assets, and regulatory authorities may need to rethink their governance strategies.

At the same time, the report also reflects the deep connection between the cryptocurrency market and traditional financial markets. Changes in the global economic and financial situation will have a direct impact on crypto assets. In the future, regulators and the industry need to work together to promote the orderly development of the cryptocurrency market under the premise of manageable risks.

Overall, the BIS report provides a new perspective on cryptocurrency regulation, helping policymakers to gain a more comprehensive understanding of the characteristics of crypto assets and to formulate more scientific and effective regulatory measures.

4. Economic Dynamics

1. U.S. April CPI data exceeded expectations, inflationary pressures persist.

The data released by the U.S. Bureau of Labor Statistics on May 10 shows that the Consumer Price Index for April rose by 4.9% year-on-year, higher than the market expectation of 4.8%, and also higher than the 5% in March. This indicates that inflationary pressures continue to persist against the backdrop of economic recovery.

Economic Background: The US economy is recovering from the impact of the pandemic, with the job market continuing to improve and the unemployment rate dropping to a 50-year low of 3.4%. However, factors such as supply chain bottlenecks, geopolitical tensions, and labor shortages have increased production costs and price levels.

Important event: The Federal Reserve has been raising interest rates continuously since March of last year to curb inflation, increasing the federal funds rate from near-zero levels to a target range of 5%-5.25%. However, the latest data shows that inflationary pressures have not fully eased.

Market reaction: Investors are concerned that persistent high inflation will force the Federal Reserve to raise interest rates further, thereby increasing the risk of an economic recession. After the CPI data was released, U.S. stocks fell, with the S&P 500 index dropping 0.57%.

Expert Opinion: Goldman Sachs economists state that although the inflation rate has decreased, core inflation is still rising, which may prompt the Federal Reserve to raise interest rates again in June. Bank of America Merrill Lynch believes that the Federal Reserve may pause interest rate hikes later this year.

( 2. The US and China have reached a consensus on economic and trade issues, injecting certainty into the global economy.

High-level economic and trade talks between China and the United States were held in Geneva, Switzerland, where important consensus was reached, agreeing to establish an economic and trade consultation mechanism, and a joint statement was released on May 12. This progress brings hope for easing the trade tensions between China and the United States.

Economic Background: The United States and China are the two largest economies in the world, and the development of their bilateral trade relationship is crucial for global economic growth. In recent years, the two countries have experienced divergences and frictions in areas such as trade and technology, exacerbating global economic uncertainty.

Important event: This meeting is the first high-level economic and trade dialogue between China and the US since the conversation between the two heads of state on January 17. Both sides agreed to establish an economic and trade consultation mechanism, clarify the leaders, and create conditions for managing differences and deepening cooperation.

Market reaction: The market reacted positively to the outcome of this meeting, with US stock futures rising and safe-haven assets like gold declining. Investors expect that the improvement in China-US relations will benefit the smooth operation of the global supply chain and reduce geopolitical risks.

Expert Opinion: WTO Director-General Iweala stated that the talks mark an important step and are crucial for alleviating global tensions and restoring predictability. Goldman Sachs analysts believe that even if a comprehensive agreement cannot be reached in the short term, establishing a dialogue mechanism between the two sides will boost market confidence.

) 3. The European Central Bank raised interest rates by 75 basis points to address inflation challenges.

On May 4, the European Central Bank announced an increase of 75 basis points in its three key interest rates to curb rising inflation. This marks the fourth consecutive rate hike by the European Central Bank, demonstrating its determination to tackle inflation.

Economic Background: The inflation rate in the Eurozone reached 8.4% in 2022, far exceeding the European Central Bank's target of 2%. Factors such as soaring energy prices, supply chain disruptions, and the war in Ukraine have all contributed to the inflationary pressures.

Important event: The European Central Bank's current interest rate hike exceeds market expectations, reflecting its determination to combat inflation. At the same time, ECB President Lagarde hinted that further rate hikes will continue in the future.

Market reaction: The euro to US dollar exchange rate rose slightly after the European Central Bank raised interest rates. Investors believe that the rate hike may help boost the euro's appeal, but it could also increase the risk of an economic slowdown.

Expert Opinion: Analysts at Deutsche Bank indicate that the European Central Bank's interest rate hike exceeded expectations, showing that it is intensifying its efforts to curb inflation. However, Goldman Sachs analysts warn that overly aggressive rate hikes could lead the Eurozone economy into recession.

5. Regulation & Policy

1. The Democratic Party of Korea officially announces its cryptocurrency policy agenda.

The Democratic Party of Korea recently officially announced its cryptocurrency policy agenda. As the largest opposition party in South Korea, the Democratic Party's policy proposals have attracted significant attention, and its cryptocurrency agenda may have a substantial impact on the regulatory landscape for cryptocurrencies in South Korea.

The agenda mainly includes the following aspects:

1. Promote the listing of spot cryptocurrency exchange-traded fund ### ETF ### to provide more investment channels for institutional investors.

2. Reduce cryptocurrency trading fees to ease the trading burden on investors.

3. Establish a clear regulatory framework for cryptocurrencies to create a favorable environment for industry development.

4. Strengthen anti-money laundering and anti-tax evasion regulations to maintain order in the cryptocurrency market.

5. Support blockchain technology innovation and promote the development of related industries.

The Democratic Party believes that cryptocurrencies have become an emerging asset class that cannot be ignored, and it is necessary to establish a reasonable regulatory framework to promote the healthy development of the industry. This agenda aims to balance innovation and regulation, creating a safe and transparent environment for investors.

Market participants generally welcome this. The South Korean cryptocurrency exchange Up stated that the listing of the ETF will attract more institutional funds into the market, benefiting the long-term development of the industry. However, some investors are concerned that excessive regulation may limit innovation.

Industry experts have stated that South Korea's cryptocurrency regulatory framework urgently needs improvement, and the agenda of the Democratic Party may serve as an important reference. However, the specific policy details and implementation path remain to be observed. Overall, this agenda is expected to promote the South Korean cryptocurrency market towards a more regulated and transparent direction.

( 2. The SEC plans to introduce a "tokenized securities registration exemption mechanism".

The U.S. Securities and Exchange Commission ) SEC ### is studying a "tokenized securities registration exemption mechanism" policy aimed at providing a legal pathway for certain companies to issue and trade tokenized securities.

This mechanism allows eligible enterprises to issue, trade, and settle tokenized securities based on distributed ledger technology ( DLT ) without the need for traditional securities registration processes. This initiative is seen as a significant breakthrough in the SEC's regulatory policy for digital assets.

SEC Commissioner Hester Peirce stated that the mechanism aims to provide a compliance path for innovative companies while protecting investors' rights. Companies must meet certain conditions, such as disclosure obligations and investor suitability requirements.

Previously, the SEC's regulatory policies on digital assets were relatively strict, resulting in many projects being in a gray area. The introduction of the new mechanism will provide legitimacy support for qualified token projects, which is beneficial for industry development.

Market participants have mixed reactions to this. The Trump Media Group stated that the mechanism may benefit its planned launch of the DJT token. However, some individuals are concerned that overly lax regulation could bring new risks.

Experts believe that this mechanism is conducive to attracting more innovative projects, but the SEC needs to establish clear compliance standards. At the same time, token issuers need to strengthen information disclosure to protect investors' rights. Overall, this mechanism may promote compliance innovation in the digital asset space.

( 3. Bank for International Settlements: Capital control measures difficult to curb cryptocurrency trading

The Bank for International Settlements ) BIS ### recently released a research report indicating that the capital flow management measures implemented by various countries are essentially ineffective in curbing cryptocurrency transactions.

The report analyzes the cross-border cryptocurrency flows of 184 countries from 2017 to mid-2024. The study found that the impact of geographical distance and language barriers on cryptocurrency transactions is much smaller than their impact on traditional financial flows.

The report states that global factors such as increased market volatility and expanded credit spreads have become important driving forces in determining the trading of native crypto assets. At the same time, stablecoins are more closely related to remittance costs and trading demand.

The BIS believes that this highlights the dual role of crypto assets as speculative investments and trading tools, necessitating further evaluation of their impact on financial inclusion and economic stability.

The report has sparked heated discussions in the market. Cryptocurrency supporters believe that the findings demonstrate the globalization attributes of cryptocurrencies, and that regulatory measures are difficult to impede their development. However, some individuals are concerned that a lack of effective regulation could pose financial risks.

Experts say that cryptocurrency regulation is a global challenge. The control measures of a single country are difficult to be effective, and there is a need to strengthen international cooperation to establish unified regulatory standards. At the same time, the innovative potential of cryptocurrencies should also be valued, and their development should be supported under the premise of controllable risks.

Overall, the BIS report again highlights the complexity of cryptocurrency regulation, requiring efforts from all parties to seek a balance and promote the long-term healthy development of the industry.