Bitcoin once again traded in a narrow range over the weekend, before exploding into life as ETF markets opened on Monday, when it grew from $62,800 to $67,800
On Tuesday, it rose swiftly from the low $66,000 range to a new high of $69,170
As often happens, the record wasn’t long-lived, as traders quickly moved to book profit, which drove the price as low as $61,340, almost equal to the weekend low of $61,270
Bitcoin hit a new record versus the Euro on Monday, before the US dollar landmark followed the next day
Ether reached a weekly high of $3,940 on Thursday, its best performance since December 2021
Growth was steady throughout the week, except for a flash crash in the wake of market-wide post-record profit-taking, which dropped the price to a low of $3,360
Ether outperformed Bitcoin, and registered its second straight week of growth above 15%
Network activity continued to increase across the Ethereum blockchain thanks to surging trading and DeFi activity; bringing the annual supply deflation (based on last seven days’ activity) to -1.43%; equivalent to burning $9.5bn of Ether
Momentum has been positive across the entire market; 89 of the top 100 projects by market capitalisation were green on the weekly (despite last week’s historic market performance)
Bloomberg reported that “An index tracking the bottom half of the largest 100 digital assets is up about 60% over the past month, beating the 56% advance in Bitcoin. During the same period, the overall value of tokens jumped by more than $800 billion”
According to data from K33 Research, retail traders are returning to the market, with a 45% increase in 90-day crypto exchange traffic compared to August-October, alongside a 66% increase in visits to market aggregators like Coinmarketcap and Coingecko
However, metrics on both still lag behind the levels of summer 2022, before the Terra Luna blockchain collapse set off industry-wide contagion and truly kickstarted crypto winter
Overall digital asset market capitalisation rose above $2.5tn for the first time since December 2021; a 20% increase since hitting $2tn in late February
According to industry monitoring site DeFi Llama, total value locked in DeFi was once again buoyed by Ether’s performance and grew over $8bn to $98.5bn, putting the metric within touching distance of $100bn once more
Digital assets achieved double digit growth as Bitcoin reached a new record and Ether secured its highest value since 2021. Bitcoin’s all-time high was facilitated by more record-breaking performances across ETFs, even stablecoins achieved record values (by circulating supply), an asset manager moved to purchase $250m of tokens from the FTX bankruptcy estate, multiple startups inked eight-figure VC deals, MicroStrategy announced plans for another $700m of Bitcoin acquisitions, Deutsche Börse launched a spot crypto exchange, and further remnants of 2022’s crypto contagion moved towards conclusion amidst extradition deals and debt agreements.
Bitcoin’s recovery from previous high to new high was markedly quicker this time around than during the previous cycle; Bitcoin topped out around $20,000 in December 2017, a mark it wouldn’t hit again for another three years, until December 2020
According to some blockchain analysts, these sell-offs included a large amount of Bitcoin mined in 2010, potentially setting a new record for profitability, as Bitcoin never broke above a dollar that year
According to your currency of choice however, Bitcoin had already beaten its all-time high earlier; hitting a GBP record at the start of the month, a JPY record in mid-February, and a EUR record in early March—just 11 days after the European Central Bank (issuers of the Euro) published a blog post claiming that Bitcoin’s “fair value should be zero” and describing its performance over the last year as a “dead cat bounce”
Even before Bitcoin broke its record, options interest was already positioned for continued bullish momentum, with open interest in month-end strike prices of $70,000, $75,000, and $80,000 climbing on Monday
Hedge fund billionaire and digital asset advocate Anthony Scaramucci urged caution rather than full-blown euphoria after the new record, telling Bloomberg “I’ve been humbled by life. I’ve been humbled by markets,” he said. “The industry is back. I don’t think it’s going to be a straight line up”
Bloomberg noted that “At its high on Tuesday, Bitcoin was up about 63% so far in 2024, outperforming global stocks and spreading optimism across the digital-asset market”
Bitcoin’s record performance this week was matched (and partially driven) by record performance across Bitcoin ETFs as well
Monday registered the second-biggest trading day since ETF launch, clocking in at around $5.5bn of volume—but industry observers didn’t have to wait long to see that record broken
The ten spot ETFs combined for $10bn of trading volume, exceeding the previous record by over $2bn
This included records for BlackRock, Fidelity, Bitwise, and ARK’s ETFs
BlackRock’s IBIT was particularly impressive once again, registering $788m of inflows; according to Bloomberg ETF analyst Eric Balchunas, “for context on relative size of $IBIT's cash haul, it now ranks 2nd among all ETFs in 1D flow, 1W flow, 1M flow and 3rd in YTD flows”
IBIT also exceeded $10bn in AUM, less than seven weeks after trading began; the fastest-ever new ETF to reach that mark (and one of only 152 in total)
Balchunas characterised this performance as “bananas numbers for ETFs under 2 months old”
A corollary of this record volume (and the pullback from profit-taking) is that other Bitcoin-focused ETFs also experienced record trading, including BITI (a short Bitcoin ETF), and futures ETFs BITX and BITO (which did $2.5bn of volume)
These volumes also included a sharp uptick in outflows from Grayscale’s GBTC; which aligned with a recent agreement by crypto exchange Gemini to pay back in-kind assets lost due to the bankruptcy of lending partner Genesis
Vetle Lunde, senior analyst at K33 Research, believes that “Based on the pace of outflows, all the Gemini/Genesis flows should be cleared by the end of the week”
Speaking of GBTC, despite almost $10bn of outflows thus far (spurred by their fees sitting significantly higher than all competitors), GBTC actually has the same asset value as when it launched, thanks to the “bull market subsidy” of Bitcoin’s appreciation
According to Nate Geraci of The ETF Store, Grayscale’s elevated fees “look like a savvy business move at this early juncture”, taking advantage of its status as a converted fund, rather than a newly-launched ETF
In terms of total metrics, spot ETFs have now grown to over $50bn of assets, after launching with around $30bn; “about $8b of it is from flows, the rest from bitcoin value going up”
Balchunas points out that with current momentum “If they keep up this pace and add $10b a month (which is pretty insane but very poss if BTC price complies) they will pass gold ETFs this summer”
A student-run fund at Stanford University (funded by the university’s endowments) made the news through a 5% allocation towards Bitcoin ETFs in its portfolio
In other ETF news, closed-end fund (and pre-conversion GBTC rival) Ospreay Bitcoin Trust announced that it intends to be bought out or merged with a Bitcoin ETF, otherwise it “intends to liquidate and dissolve the Trust within 180 days from today [Tuesday]”
GBTC owners Grayscale introduced a new fund predicated on staking digital assets for income, known as the Grayscale Dynamic Income Fund (GDIF)
This fund will feature assets from nine different blockchains, including Ethereum
The Arizona state senate advanced a resolution obliging local lawmakers to look into adding spot Bitcoin ETFs to the state’s retirement fund
The SEC delayed a decision on potential approval for options trading on spot Bitcoin ETFs, and (as widely expected) delayed a decision on BlackRock’s proposed spot Ether ETF a second time
The final deadline date for the first spot Ether ETF filings falls on May 23rd, so it’s not widely anticipated (based on precedent from the Bitcoin ETF process) that final approval or rejection would happen anytime before then
US Dollar-pegged Tether, the largest stablecoin on the digital asset market, surpassed $100bn in circulating supply for the first time this week, a consequence of rising demand for Bitcoin
Despite its USDT stablecoin’s express purpose being to remain (as the name suggests) stable in value, Tether as a company has experienced a wildly profitable year, thanks to the yield on the liquid backing for its tokens
According to its latest attestation report, around 76% of backing value for USDT is held in short-dated US treasury bills, and at the end of the year the firm’s excess reserves stood at $2.85bn
On Monday, Tether announced a new recovery mechanism, allowing users to bridge their Tether between different blockchains in the event that one chain becomes disrupted
According to their press release “Users would be able to verify ownership of their addresses on an unresponsive blockchain and a recipient address on another supported blockchain, and Tether will transfer the USDT between them”
Tether stated that “This strategic collaboration aims to position Uzbekistan as a central hub for peer-to-peer and blockchain technology, igniting a revolution of innovation and economic growth”
This includes assistance to government agencies in developing legal frameworks and regulation for digital assets in Uzbekistan, as well as “facilitating the development and implementation of Uzbekistan's digital currency, exploring the potential of asset tokenization mechanisms, analysing and improving Uzbekistan's digital currency payment infrastructure and collaborating on educational initiatives to raise awareness and understanding of blockchain technology and stablecoins”
Last June, Tether signed a similar MoU with Georgia, and in November it announced $500m of investments in Bitcoin mining initiatives across Uruguay, Paraguay, and El Salvador
In other stablecoin news, rival issuers USDC agreed a deal with hardware wallet developers SafePal and Swiss bank Fiat24 to launch “a crypto-focused Visa card and in-app banking services with the dollar-pegged stable coin USD Coin (USDC) as the default deposit currency”
Do Kwon went on the run in 2022, following the collapse and depegging of an algorithmic stablecoin on the Terra Luna blockchain ecosystem which he developed—setting off a chain of crypto contagion events that led to cascading liquidations (including the $40bn ecosystem he’d created) and a brutal industry-wide bear market
Both the United States and Korea sought to try him for financial fraud, but it now appears his destination will be his homeland
He travelled into Montenegro on a false passport, and was apprehended through an international arrest warrant; but there nonetheless exist possibilities that Korea (his lawyers’ preferred destination due to lighter punishments for white-collar crime) could themselves strike a deal to extradite him to the US for trial in New York first
e-Bank Revolut this week announced Revolut Ramp, a feature allowing customers to top up their Metamask wallets directly from their Revolut bank account
Metamask is the leading self-custodied browser-based wallet for DeFi activity, available as a plugin on major web browsers—but up to now it has suffered for a lack of convenience in terms of fiat on-ramps
Revolut Ramp will allow users to “use their fiat currency balance in their Revolut account or pay with Visa or Mastercard cards” in order to top up the balance on their Metamask accounts
The service is limited to customers within the UK and EEA, and follows on from plans to release a crypto exchange for “advanced traders” first revealed last month
Lorenzo Santos, senior product manager at Metamask developers Consensys commented “This partnership is really about giving our users what they want—more control over their crypto, in a straightforward way, using platforms they already know and trust. It also plays a crucial role in fostering broader crypto adoption, opening up the world of crypto to more people”
MicroStrategy, the leading corporate balance sheet holders of Bitcoin, are looking to expand their exposure further, through the issuance of $700m in convertible senior notes to fund further Bitcoin purchases
The notes will offer an interest rate of 0.625% per annum, payable semi-annually, until they mature in 2030
2030 is only around halfway through what MicroStrategy founder and chairman Michael Saylor believes is now the “Gold Rush Era” of Bitcoin
He posits a 10 year “gold rush” window for Bitcoin starting now and ending in 2034, on the basis that “when spot ETFs were approved… that was the most consequential thing that kicked off the gold rush… in November 2034, 99% of all Bitcoin will have been mined”, meaning that supply has essentially peaked, since the last 1% will release over generational timeframes
MicroStrategy also announced in a press release that “The conversion rate for the notes will initially be 0.6677 shares of MicroStrategy class A common stock per $1,000 principal amount of notes, which is equivalent to an initial conversion price of approximately $1,497.68 per share… a premium of approximately 42.5% over the last reported sale price”
According to their press release, DBDX offers a “secure ecosystem for trading, settlement and custody of crypto assets”
Initially, the exchange will operate on a Request for Quote (RfQ) basis, followed later by multilateral trading
Swiss firm Crypto Finance will provide the custody and settlement services, enabling an experience more akin to institutional TradFi than the “one stop shop” approach of most native digital asset exchanges
Carlo Kölzer, Head of FX & Digital Assets at Deutsche Börse, stated: “Our new solution is a game changer for digital ecosystems. We aim to provide trusted market operations for crypto assets, ensuring transparency, security, and regulatory compliance for institutional clients in Europe”
VanEck, one of the ten issuers of spot Bitcoin ETFs, believes that digital assets will play a key role in its overall asset management strategy and European footprint, according to a recent interview with industry publication Coindesk
The firm’s Europe CEO Martijn Rozemuller says that 10% of the company’s assets are currently derived from crypto investing products, but believes “that balance will shift. Crypto will become more important … and it will be closer to 50/50”
VanEck is one of the most tenured ETF issuers in terms of (attempted) digital asset exposure; they first filed for a Bitcoin ETF in 2017, six years before BlackRock entered the spot Bitcoin race
Back in 2021, VanEck launched the VanEck Crypto and Blockchain Innovators UCITS ETF in 2021; containing shares of publicly-traded industry firms like Coinbase Global, Block, MicroStrategy, and miners Marathon Digital and Bitfarms
This ETF is one of their top 15 performers by AUM, though Coindesk noted that it does face more fluctuations in value with the industry market cycles
What happened: VC News—multiple eight-figure raises
How is this significant?
The recent industry venture capital resurgence continued this week, with several firms achieving raises in the tens of millions of dollars
Encryption technology firm Zama led the way, closing a $73m Series A round co-led by Multicoin Capital and Protocol Labs at a $400m valuation
Zama’s co-founders have been working on the technology since 2016, using cryptographic algorithms to secure data as it travels across blockchains
Web3 firm Taiko raised $37m to build Layer 2 scaling solutions with a particular focus on decentralisation, setting aside $30m for developer grants to foster creation of Dapps and protocols
Without disclosing an exact valuation, Taiko did confirm unicorn status to TechCrunch
The firm aims to build wallets compatible across several blockchains, splitting the private keys through multi-party computation (MPC) in order to eliminate single points of failure in security
A Utila spokesperson said the firm “has onboarded 35 institutions and digital asset firms to its platform to date and has facilitated $3 billion in crypto transactions over the past six months”
Baanx, an FCA-authorised crypto payments firm, raised $20m in a Series A, led by Ledger, Tezos Foundation, Chiron, and British Business Bank
The firm aims to fund US expansion efforts with the raise, alongside services in Latin America
In a press release, the firm stated “Gluwa sets its high ambitions of onboarding millions of Nigerians by implementing its Credal technology to build credit reputations for eNaira users as a valuable new way to drive the adoption of the CBDC”
Reuters reported this week that FTX has agreed to pay bankrupt lender BlockFi up to $874m, the conclusion of a series of lawsuits between the two contagion-felled firms
This includes a prioritisation of $250m payment to BlockFi, with the balance contingent on FTX repaying its own customers
BlockFi had issued Sam Bankman-Fried’s hedge fund Alameda Research with several loans, before the collapse of both Alameda and FTX
FTX recently indicated a belief they will repay customers in full (in cash based on November 2022 digital asset prices), but according to Reuters BlockFi sees itself as “unlikely to fully repay customers who had interest-bearing BlockFi accounts”