Here’s what happened in blockchain and crypto this week.
Bitcoin surged past $30,000 for the first time since June 2022 this week. As a result, Bitcoin dominance, i.e. its market capitalization vs. all cryptoassets, briefly jumped to 45.6% – its highest level in almost two years. The price of ether also rallied amid Ethereum’s successful Shapella upgrade which allows users to withdraw their deposits from the protocol’s staking contract. Despite concerns of potential ETH sell pressure, the cryptoasset hit a new 11-month high. In equities, bank stocks rallied on the back of strong 1Q23 reports by JPMorgan, Wells Fargo, Citigroup and others. In macroeconomic news, US headline inflation for March came in at a lower-than-expected 5.0% while core CPI was in line with expectations at 5.6%. A higher core CPI reading (which excludes food and energy) than headline CPI suggests that both energy and food have been the main driver behind the slower pace of inflation (i.e. disinflation). US Treasury yields fell in reaction to the CPI release as the government bond market is now pricing in lower yields down the road.
On Wednesday, Ethereum’s core developers implemented the much-awaited Shapella upgrade through a hard fork. The upgrade took place at around 6:30PM ET on April 12, marking the first major change since “The Merge” last year. Users and validators can now withdraw their staked ETH on the network. Moreover, Shapella also optimizes Ethereum gas fees on certain transactions.
Prior to the upgrade, there was much debate about the impact of the event given the large amount of staked ETH and ETH staking rewards that can now be withdrawn and potentially sold. Despite the lack of clarity as to whether the event would create sell pressure for the price of ether, the initial skepticism quickly gave way to optimism when ETH surpassed $2,000 for the first time since May 2022. This was partly due to the fact that the net staking balance, i.e. the total amount of ETH deposited subtracted by the total amount of ETH withdrawn, was actually positive.
On Friday, 17.39 million ETH worth roughly $37 billion (or 15.4% of the total supply) remained deposited in the staking contract. While the amount of staked ETH waiting to be withdrawn has surpassed $3.1 billion in total value as of late Friday, Kraken is the most prominent unstaker of ETH. The crypto exchange initiated withdrawal requests for their staked ETH totaling over 551,000 ETH ($1 billion). The firm is expected to unstake all ETH for US clients amid recent regulatory pressure.
The price of Bitcoin’s jump above $30,000 has also benefitted crypto-exposed equities, especially mining stocks such as IREN, MARA and RIOT which each have registered gains to the tune of 50% and more, partly on the back of better-than-expected March production updates. CleanSpark (CLSK) outperformed, gaining 72% on the week on the back of news that it spent $145 million on 45,000 Bitcoin mining machines and plans to double its mining capacity by the end of the year.
Market Overview
The global cryptoasset market capitalization currently amounts to $1.33 trillion – up from the $1.22 trillion a week ago, with bitcoin accounting for 44.3%. Among the Top 30 cryptoassets by market cap, OKB outperformed, gaining more than 28% over the week. The price of bitcoin (BTC) increased by 8.8% to $30,390 and the price of ether (ETH) rose by 12.6% to $2,101. The total value locked (TVL) in DeFi is sitting at roughly $53.7 billion – with Ethereum (excluding Layer 2s) accounting for more than 59% of TVL.
This Week’s Headlines
- Twitter partners with eToro to let users trade crypto and stocks
- The U.S. is losing its edge in crypto, venture firm Andreessen Horowitz warns in new report
- London Stock Exchange‘s LCH division to clear bitcoin index futures and options
- Uniswap has gone live with its iOS mobile wallet on the Apple App Store after getting out of “jail”
- Paxos follows dYdX in exiting the Canadian market next month
- Lies, hot wallets and missing funds: new interim bankruptcy report by FTX paints a stark picture
- SBF denied access to FTX’s director and officer liability insurance policy to reimburse his legal bills
- Two-thirds of Americans don’t trust crypto, according to a Pew Research survey
- MicroStrategy‘s $4 billion bitcoin bet in the green as price hits $30,000
- Crypto exchange Bitrue exploited for $23 million in ether and tokens
- SushiSwap falls victim to an exploit – users who interacted with the DEX in the four days prior to the hack affected
- Solana’s crypto-ready Android “Saga” smartphone goes on sale on May 8
Notable Deals and Fundraising
- Winklevoss twins lend $100 million to their Gemini crypto exchange, Bloomberg reports
- Sei Labs raises $30 million for trading-focused Layer 1 blockchain
- Information protocol RSS3 raises $10 million via token sale to DWF Labs
- AI-focused blockchain CryptoGPT raises $10 million in funding at a $250 million valuation
- Bankruptcy trading platform Xclaim closes $7 million round, adds crypto focus
- CAT Labs – a start-up building forensic and cybersecurity tools to fight crypto-enabled crime – raises $4.3 million in a pre-seed round
- Bitget unveils $100 million venture fund with focus on Asia
Manuel Trojovsky, Head of Crypto Investments & Research
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