DigitalX Weekly Crypto Update: Market Trends and Analysis

Market Commentary

Bitcoin rallied following last Friday’s FOMC meeting, while the Federal Reserve continued with the higher for longer narrative, as risk markets were reprieved from their decision to taper QT at a faster than expected rate. The rally failed to sustain throughout the week, with the US Securities and Exchange Commission putting further pressure on American crypto companies, with the regulator serving Robinhood’s crypto arm with a Wells Notice. On the ETF front, Grayscale’s Bitcoin ETF experienced its first net inflow day backed up by a subsequent day of positive flows since the Fund’s listing in January, stemming Bitcoin supply from the sales.

One significant milestone was Bitcoin surpassing one billion transactions processed, underscoring its growing adoption and utility as a network. Additionally, institutional confidence in Bitcoin received a boost with Jack Dorsey’s Block announcing plans to increase its Bitcoin holdings, potentially paving the way for other institutions to follow suit. 

Runes, the new fungible token standard on Bitcoin, debuted amid high anticipation during the Bitcoin halving event in April. However, initial excitement has dwindled as trading volume and activity declined in the weeks following the launch. Despite this, a dedicated group continues to trade Runes, with comparisons drawn to previous Bitcoin innovations like Ordinals and BRC-20 tokens, suggesting potential for future growth and adoption. While the current landscape may be challenging, the evolving technology and opportunities for improvement signal a potentially promising future for Runes within the Bitcoin ecosystem.

CEO Comment

The Gap between Bitcoin and the S&P 500 has gradually tapered, now sitting at 15% – down from last week’s 17%. Digital asset markets seem to be closely following traditional markets at present and ETF flows regaining positive momentum with Grayscale’s GBTC turning the corner and reporting its first net inflows. This may prove to be a landmark event when we look back as supply from the halving dwindles. 

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. There are up to 1.86 billion financial transactions per day so it’s not lost on us that Bitcoin is still a nascent financial rail – nonetheless 1 billion is a significant milestone – Bitcoin surpasses one billion transactions processed, eight hundred weeks after launch, click here to read the full article.
2. The data in this report shows that the scaling up of real world asset tokenisation is gaining momentum – with Blackrock leading the way – the unspoken revolution here is that treasuries can now be bought and sold at record times. This narrative will gain momentum – BlackRock, Ondo, Superstate: The biggest movers in the RWA sector in Q1, click here to read the full report.

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 42%. I want to reiterate that this is a big opportunity, as mentioned we see this as a selective opportunity to identify and grow our alternatives portfolio via our “alThematics” work. The gaps themselves are proving to be a risk on, risk off proxy and hugely high Beta – volatility is a certainty and an opportunity – the building is happening no matter what.

1. This project will be a game changer. Why? Message me. Synthetix founder Kain Warwick targets mid-May launch for Infinex, click here to read the full article.

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

• Bitcoin surpasses one billion transactions processed, eight hundred weeks after launch
• Crypto has been ‘validated significantly’ with spot Bitcoin ETF approval, says Pantera Capital exec
• Jack Dorsey’s Block adding more Bitcoin to balance sheet, presents road map for others
• Bitcoin’s recent weakness is more tied to global markets than to anything crypto specific, Coinbase says
• Kraken’s indices provider anticipates $1B AUM in Hong ETFs by 2024 end: Bloomberg
• FTX plans full pay back of all creditors ‘plus billions in compensation’
• MicroStrategy plans to launch decentralised ID solution: report
• Coinbase benefiting from ‘hostile regulatory environment’: Bitwise
• Ethereum developers target ease of crypto wallets with ‘EIP-3074’
• MoonPay partners with BitPay to streamline crypto transactions
• Bybit to integrate Ethena Labs’ USDe as a collateral asset, and in Bitcoin and Ether spot trading pairs
• Former Sequoia exec’s fund invested $24 million in BlackRock Bitcoin ETF, over twice its position in Meta
• Proposal for Grayscale’s Ethereum Futures Trust ETF has been withdrawn
• Less than 10% of stablecoin transaction volume coming from real users: Report
• Hong Kong’s spot Bitcoin ETFs see first outflows, solely from ChinaAMC
• Tether enters transaction surveillance partnership with Chainalysis as regulatory pressure mounts
• Popular crypto wallet Metamask rolls out ‘smart transactions’ to combat Ethereum front-running
• Vodafone looks to integrate crypto wallets with SIM cards
• Exodus wallet maker becomes first US company to tokenise its common stock on the blockchain
• Grayscale’s Bitcoin ETF sees first inflow after billions lost since January
• Tokenised private-credit platform Untangled opens its first USDC lending pool on Celo
• Ethereum stablecoin volume shattered its monthly record in April, thanks to DAI
• ENS petitions to stop Unstoppable Domains’ patent
• Total number of Uniswap wallets more than doubles in the past year
• Pantera Capital invests in TON blockchain, looking to capitalize on Telegram users
• Jito becomes largest protocol on Solana with $1.4 billion in TVL
• Bitcoin’s average daily transaction fees fall back to Ethereum levels after Runes hype subsides
• JPMorgan maintains ‘cautious’ stance on crypto markets over the near term
• Bitfinex database breach ‘seems fake’, says CTO
• Venture capital pours $2.4B into crypto startups in early 2024
• Binance Wallet announces support for Bitcoin Atomical ARC-20 assets
• LayerZero cross-chain interoperability protocol completes first airdrop snapshot
• Synthetix founder Kain Warwick targets mid-May launch for Infinex
• Arbitrum surpasses $150 billion in total transaction volume on Uniswap
• QCP receives in-principal approval from Abu Dhabi regulator
• Polygon zk-based Miden Alpha Testnet is now live
• QANplatform launches world’s first quantum-resistant, EVM-compatible testnet
• Starnet Foundation launches $5M grants program
• Japanese crypto exchange Coincheck sees Nasdaq listing completion in second, third quarters
• Crypto exchange Bitpanda expands Austrian presence with Raiffeisen bank partnership
• Crypto trading firm Wintermute to provide liquidity for Hong Kong Bitcoin and Ether ETFs

The Shift List

• BlackRock, Ondo, Superstate: The biggest movers in the RWA sector in Q1
• BlackRock sees sovereign wealth funds, pensions coming to Bitcoin ETFs
• TradFi veterans pitch tokenised asset marketplace with eyes on U.S. regulatory approval
• MoonPay integrates PayPal to allow US users easier access to crypto purchases and sales
• Nasdaq-listed Tiger Brokers rolls out online crypto trading to Hong Kong
• Revolut’s crypto exchange goes live for experienced traders
• Hong Kong forms industry community to develop wholesale CBDC, tokenisation
• Susquehanna International Group adds $1B in Bitcoin ETFs to portfolio
• Leading Colombian bank launches crypto exchange and peso stablecoin
• U.S. financial industry to explore sharing ledger technology for multiasset transactions 

Macro and Regulatory Environment

• U.S. April job additions of 175K miss forecasts for 243K
• UK local elections show swing to Labour with general election pending
• Over 20% of voters in swing states consider crypto a key issue in US elections: survey
• House votes to erase SEC crypto policy while President Biden vows veto
• Democrats, Republicans clash over SEC role in [crypto] in House hearing
• UK Minister says government only has time to implement stabalecoin, staking legislation
• SEC issues Robinhood Crypto with Wells Notice, citing alleged securities violations
• SEC Chair Gary Gensler says investors lack needed crypto disclosures following multiple Wells Notices
• Crypto mixers targeted in U.S. House Democrats’ effort to ‘clamp down’ on money laundering
• SEC punts Galaxy spot Ethereum ETF decision to July
• Nigeria to ban peer-to-peer crypto trading in Naira
• Marathon Digital, Kenyan government discuss crypto policy, energy use
• South Korea’s winning party moves toward Bitcoin ETF promise: report
• SEC postpones decision on 7RCC Spot Bitcoin and Carbon Credit Futures ETF
• Australia’s tax office tells crypto exchanges to hand over transaction details of 1.2 million accounts: Reuters
• U.S. DOJ identifies and charges LockBit ransomware gang leader with fraud, extortion
• CFTC’s Behnam warns crypto industry that more enforcement actions are coming
• Crypto-friendly Reps. Nickel and Flood urge SEC to give the green light to options on spot Bitcoin ETFs
• CFTC Commissioner Johnson proposes AI recommendations, looping in DeFi
• Coinbase faces new lawsuit over alleged investor deception
• Australian court rules against Qoin issuer BPS Financial on 4 charges
• U.S. Senate’s Warren warns National Security chiefs about Iranian crypto mining
• Former Cred executives indicted on wire fraud, other charges
• BTC-e operator Alexander Vinnik pleads guilty to money laundering conspiracy charge
• Nigerian court postpones another Binance case to May 17
• Indonesia authorities bust synthetic marijuana lab supported by crypto
• EU crypto regulations undermined by lack of enforcement, say observers
• Indonesia regulator forms crypto committee to monitor industry’s operation, compliance
• Ripple and the SEC’s legal fight continues ahead of final judgement

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.