DigitalX Weekly Crypto Update: Market Trends and Analysis

Market Commentary

Bitcoin consolidated around the US $69,000 – $71,000 mark during the week as it approaches its quadrennial halving event in just under 10 days (expected 20 April). The higher than expected CPI print in the US did not deter buyers as the price of Bitcoin ended positive following the print. Year to date inflows from ETFs were at their highest level at US $13.8 billion.

Firms that gained the US Securities and Exchange Commission’s approval for a spot Bitcoin exchange-traded fund are not feeling very confident that the agency will greenlight proposals for an Ethereum product, according to reporting from CNBC. Firms including Fidelity and BlackRock have applied for a spot Ethereum ETF and optimism gained steam after the SEC approved 11 spot Bitcoin ETFs in January, but has since dwindled over the past few weeks.

Uniswap Labs (creator of Uniswap; the largest decentralised exchange) received a Wells Notice indicating a potential incoming lawsuit from the SEC. While the SEC has had some cases involving decentralised organisations, this is the first time it has gone after a major protocol. Uniswap’s founder Hayden Adams posted on X “I’m not surprised. Just annoyed, disappointed, and ready to fight. I am confident that the products we offer are legal and that our work is on the right side of history”.

CEO Comment

The Gap between Bitcoin and the S&P 500 has shrunk to 13%, a mild decrease from last week’s 20%. There is the potential for the Gap to hit zero post halving which is approximately 10 days away give or take. The big question is, what is priced in – I read a great anecdote this week – the halving is priced in for the 1% of people who watch Bitcoin prices. It is important to remember the nascent stage of take-up we are at, similar to the internet in 1994 or mobile phones in 1997. Al Gore has a great slide on this topic where he shows the “outrageous” Nokia take-up targets of 100 million total global phone sales in the 2000’s – we all know that number was well into the billions!

As for the shift list, which we define as the major events and announcements facilitating the broader market’s transition to Web3 financial rails or the internet of value, the top shifts for this week include:

1. 1. I wrote this section to watch positive shifts AND we need to acknowledge leverage in the sector if it builds up too quickly. We are closely watching leveraged projects to keep an eye on it, particularly projects like Athena whose fast growing nature is a little troubling with the futures exposure and worth keeping an eye on – with an emphasis on how much money is flowing in Athena. 
   2. You can drive a truck between the views on whether there will be an Ethereum ETF within the coming months. DigitalX is in the risk-on business and I do sit in the JP Morgan camp here. 

Our Top “alts shifts” for this week, featuring shifts in our altcoin universe that drive our thematic approach, saw the second gap, or the broader digital asset market, remain flat at circa 36%. There is a big opportunity here, as we see this as a selective opportunity to identify and grow our alts portfolio via our “alThematics” work. 

1. The build up of Base is quite phenomenal – it just shows how crypto curious developers are! Which is when you see huge shifts into rails – this may happen faster than we can imagine.

What are our favourite thematics for 2024? We continue to like any infrastructure plays of the shift from Web2 to Web3 financial rails and any plays in the real-world asset tokenisation infrastructure, data validation and decentralised storage, as well as scale-up technologies such as ZKrollups. We are closely following all the ”de’s” – DeFi, DePin, DeSoc – (want to know what that means? – message us). 

Lisa Wade, CEO DigitalX

CRYPTO TOP 20 7 DAY PRICE CHANGE

*All figures throughout are in USD unless otherwise specified

Market Updates

• Ripple CEO expects crypto market cap to double by year-end: CNBC
• Bitcoin’s bullish quarter eases consumer scepticism: Deutsche Bank
• Bitcoin’s acceptance as ‘digital gold’ may spur demand from new investors: Coinbase
• Crypto industry reacts to SEC serving UniSwap with Wells Notice: ‘The war on DeFi has begun’
• VanEck CEO says transaction fee is bigger story than Bitcoin or Ethereum ETFs
• Fidelity’s FBTC spot Bitcoin ETF surpasses 150,000 BTC within three months
• Base hits $4B TVL as monthly txs outstrip Ethereum and Arbitrum
• Ethena onboards Bitcoin as backing asset to make USDe ‘safer’
• Coinbase says Canadian license makes it country’s biggest registered crypto exchange
• Uniswap hits a historic $2 trillion in trading volume
• Binance NFT marketplace to end support for Bitcoin NFTs
• BTCFi innovation to match Ethereum DeFi in the future  – MerlinSwap co-founder
• Coinbase to list BRC-20 token ORDI and Worldcoin perpetual futures
• HashKey’s crypto exchange goes live after winning license in Bermuda
• TON’s $5M incentive program aims to drive digital ID verification
• EigenLayer and EigenDA launch on Ethereum mainnet
• Venture firm a16z releases Jolt, a ‘zero-knowledge virtual machine’
• Solana-based Zeta Markets debuts governance token Z
• Crypto.com obtains full Dubai operational license
• Metaplanet shares soar as Japanese firm mimics MicroStrategy on Bitcoin buying
• BCB Group moves custody of digital asset operations to Metaco’s platform
• Staking provider P2P launches staking-as-a-business for institutions
• Hong Kong’s HashKey group unveils Ethereum Layer-2 chain

The Shift List

• DWS, Galaxy Digital list exchange-traded commodities offering BTC, ETH exposure in Germany
• BlackRock adds Goldman Sachs, Citigroup, UBS as APs for Bitcoin ETFs
• Australian asset manager Monochrome applies with Cboe Australia for a spot Bitcoin ETF, eyes decision by mid-year
• SEC to eventually approve spot Ethereum ETFs, says JPMorgan
• Hong Kong subsidiaries of Chinese asset managers apply for spot Bitcoin ETFs
• Sony Bank to conduct a stablecoin trial on Polygon: report
• Hong Kong bank embraces stablecoin issuers
• DeFi firm 1Inch introduces Web3 debit card in partnership with Mastercard and Baanx
• Stablecoins are seeing adoption as a cross-border settlement mechanism: Bernstein

Macro and Regulatory Environment

• U.S. added 303K jobs in March, outpacing expectations for 200K
• Consumer prices rose 3.5% from a year ago in March, more than expected
• New Zealand crypto policy should support industry, Minister for Commerce says
• Terraform co-founder Do Kwon found liable for civil fraud: reports
• South Korea to tighten crypto exchange listings with upcoming guidelines: report
• Paraguay introduces bill to temporarily ban crypto mining due to power crisis
• Coinbase cleared in lawsuit over crypto transactions
• US to begin fraud trial on Avi Eisenberg’s $116 million Market Mangos exploit
• Republicans and Democrats call for changes to tackle crypto-related illicit financing during Senate hearing
• Former Ethereum advisor Steven Nerayoff sues US government for $9.6 billion over ‘fabricated’ charges

About DigitalX

DigitalX Ltd (ASX:DCC) is a leading ASX-Listed Bitcoin and digital asset funds management business. The Company has a 9 year track record mining Bitcoin, blockchain and smart contract development. DigitalX Asset Management is the investment manager of digital asset investment products that provide qualified investors with highly secure and streamlined access to digital asset exposure. To learn more contact the team at [email protected] or visit our website https://digitalx.fund/.

Disclaimer:

DigitalX Asset Management Pty Ltd is a corporate authorised representative (CAR) of Boutique Capital Pty Ltd (AFSL 508011), and True Oak Investments Ltd (AFSL 238184). To the extent to which this document contains advice it is general advice only and has been prepared by the CAR for individuals identified as wholesale investors for the purposes of providing a financial product or financial service. The information herein is presented in summary form and is therefore subject to qualification and further explanation. The information in this document is not intended to be relied upon as advice to investors or potential investors and has been prepared without taking into account personal investment objectives, financial circumstances or particular needs. Recipients of this document are advised to consult their own professional advisers about legal, tax, financial or other matters relevant to the suitability of this information. Past performance is not indicative of future performance.