Coin360 Weekly Dispatch | Crypto Market Updates & Highlights | April 27 - May 3, 2024

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Crypto Weekly Market Update

Table of Contents

Crypto Market Updates

• Crypto Weekly Recap
• Hong Kong and U.S. Bitcoin ETFs Experience Mixed Fortunes
• Australia's ASX Expected to Launch Bitcoin ETFs
• EigenLayer Adjusts Token Distribution Strategy
• Challenges Plague Friend.tech's Token Launch

Regulatory and Banking Updates

• Former Binance CEO Sentenced Following Bank Secrecy Act Violations
• ConsenSys Sues SEC Over Ethereum's Security Status

Crypto Exchanges and Platforms

• Tokenized Treasury Funds Experience Rapid Growth
• Upcoming Token Unlocks Totaling $3.1 Billion in May 2024
• Yuga Labs Restructures for Greater Focus on Core Projects
• AnimeCoin and Azuki Launch Gacha Grab Game on Ethereum

Crypto Weekly Recap

Bitcoin

• Weekly change: -4.38%
• BTC slid from the $63,000 range it held over the weekend, influenced by U.S. stagflation worries, hesitancy towards Hong Kong's spot crypto ETFs, Federal Reserve's upcoming FOMC insights, and incorrect rumors of a Russian crypto ban.
• On Tuesday, MicroStrategy announced its increased Bitcoin holdings to over $15.2 billion, acquiring an additional 122 BTC, despite a 5.5% drop in revenue.
• Hong Kong's spot crypto ETFs also launched on Tuesday with volumes lower than anticipated, unable to offset outflows from US ETFs.
• BTC peaked at $64,300 then plummeted to $59,230 the same day; CZ received a four-month prison sentence, and Grayscale transferred over $245 million in Bitcoin to Coinbase.
• On May 1, Bitcoin recorded a 15% monthly decline, its steepest since August 2023, bottoming out at $56,900 due to macroeconomic issues and dwindling ETF flows.
• BlackRock's IBIT witnessed its first day of negative inflows, and ETFs monitored by Farside saw their largest outflow since April 15, totaling -$563.7 million.
• Bitcoin rose to $59,000 on Thursday after the Fed's decision to hold interest rates steady, which analysts viewed as a dovish economic indicator; Michael van de Poppe suggested a looming recession due to reduced Treasury purchases and quantitative tightening.
• On Friday, Bitcoin surged past $61,000 following an unexpected rise in April unemployment to 3.9%, and the creation of 175,000 new jobs helped stabilize the market, despite ongoing outflows from US spot Bitcoin ETFs.
• On their second trading day, Hong Kong's three spot bitcoin ETFs saw a significant drop in daily BTC inflows to 174.73 BTC from 3,910 BTC, though trading volume stayed high at over $9.7 million; the ETFs' net assets slightly fell to $235.7 million.
• The trading community remains split over the Federal Reserve's potential interest rate cuts in 2024; Polymarket traders see a 38% likelihood of no cuts, while CME's FedWatch Tool indicates a 45% chance of a cut in September.
• Bitcoin's Fear and Greed Index dropped from "Greed" to "Fear" (43) yesterday as the price plunged, triggering panic selling, but it is also a "buying" signal to some investors who are looking for an entry.

Ethereum

• Weekly change: +2.23%
• Ethereum's price fell from a weekend high of $3,342 to $3,148 on Monday, with gas fees dropping to a six-month low of $1.12. The network saw substantial growth, adding over 139,560 new addresses.
• Franklin Templeton listed an Ethereum ETF under the ticker 'EZET' on the DTCC, although the SEC has not approved it. Skepticism arose within the community, while Tron's Justin Sun doubted a May approval, contrasting with whale accumulation behaviors.
• Ethereum's price dipped below $3,000 on Tuesday following revelations that the U.S. SEC had been classifying it as a security since 2023.
• On Wednesday, Ethereum's value continued to decline, reaching a low of $2,850, marking a 17.29% monthly decline.
• Despite macro factors and market sentiment, Ethereum's price rebounded above $3,000. However, the recovery was tempered by the launch of new Ethereum-based restaking protocols like Eigen and Renzo and the market’s attention on Layer 2s, which intensified activity.

Altcoins

• Thai regulators cracked down on deceptive crypto ads.
• Omnity introduced cross-chain transfer functionality for Runes.
• Stripe integrated Avalanche C-Chain, enabling direct AVAX purchases through its platform.
• Grayscale’s outflows slowed as investor interest in altcoins like Solana, Polkadot rose.
• A bankruptcy judge signed off on a $450M FTX-Voyager settlement.
• Samourai Wallet developer Keonne Rodriguez was placed under home incarceration after securing $1 million bail.
• DTCC announced the exclusion of collateral for crypto ETFs, impacting market dynamics.
• Terraform Labs lawyers sought to reduce the penalty to $1M instead of $5.3B.
• Tether, USDC, and DAI transaction volume surpassed Visa's 2023 monthly average.
• Dune Analytics X account was hijacked to shill an airdrop.
• Renzo (REZ) plunged moments after its Binance listing.
• Over 80% of Algorand (ALGO), Sandbox (SAND), Arbitrum (ARB) holders were losing money.
• April recorded the lowest crypto hack and scam losses since 2021.
• Celsius Network burned the entirety of its CEL holdings, eliminating 94% of total supply.
• Vitalik Buterin broke down ‘Binius’ as a way to speed up zero-knowledge proofs.
• Curve Finance awarded $250K for finding a reentrancy vulnerability.
• BONK's market cap surged to $1.40 billion, surpassing Floki Inu.
• Pike Finance admitted to an error following a $1.7 million exploit, denying USDC's fault.
• A16z’s major OP purchase sent prices skyrocketing.
• Robinhood partnered with Uniswap to simplify crypto purchases for US users.
• Synethix founder Kain Warwick targeted a mid-May launch for Infinex DEX.
• Aave Labs unveiled ambitious plans for Protocol V4.
• LayerZero completed its first airdrop snapshot.
• Shiba Inu team unveiled a two-phase hard fork strategy for Shibarium.
• AltLayer introduced the reALT token in the second phase of its staking program.
• Tether netted $4.52B Q1 profit from investments.
• Base unveiled its second on-chain summer hackathon.
• The Open Network (TON) secured fresh funding from Pantera Capital.
• MOONPAY partnered with PayPal for fiat-to-crypto transactions.
• Coinbase's $1.6 billion quarterly profits were boosted by stablecoins and rising crypto prices.
• The popular Dogecoin (DOGE) Layer-2 solution Dogechain will shut down wallet services next month.
• Fantom aimed to attract memecoin traders, reserving $6.5M FTM.
• The community was split on an ENS petition against Unstoppable Domains patent.
• ZKasino scam suspect was arrested, and $12.2M seized by Dutch authorities.
• ZkSNACKs decided to sunset its coinjoin anonymizing service amid a US coin mixer crackdown.
• Hybrid L2 Build on Bitcoin launched its mainnet, facing geo-blocking for US users.
• Polkadot experienced increased user activity in Q1, but revenue dropped 91% due to lower transaction fees,

Hong Kong and U.S. Bitcoin ETFs Experience Mixed Fortunes

The Hong Kong Stock Exchange witnessed the introduction of new cryptocurrency ETFs, with mixed results. Although the China Asset Management (CAM) Bitcoin ETF outperformed expectations, collectively, trading volumes fell short, reaching only $11.9 million. Hong Kong's favorable regulatory environment, setting it apart from the U.S., positioned the region as a pioneer market for spot Ethereum ETFs. 

Meanwhile, U.S. Bitcoin ETFs faced significant outflows, with $563.7 million withdrawn in a single day. Despite the market volatility, institutional interest in Bitcoin ETFs grew, with BNP Paribas investing in BlackRock's iShares Bitcoin Trust and VanEck reporting substantial assets under management.  

Australia's ASX Expected to Launch Bitcoin ETFs

Australia's financial landscape is reportedly undergoing a significant transformation as the Australian Securities Exchange (ASX) prepares to approve its first spot Bitcoin ETFs by the end of 2024. The move aligns with global trends and is anticipated to attract $3 billion to $4 billion in the initial three years. Key applicants such as DigitalX Ltd., VanEck Australia, and BetaShares have filed for ETFs, reflecting strong interest. 

Meanwhile, at the time of the publication, Hong Kong was poised to introduce spot crypto ETFs, with China Asset Management's Hong Kong subsidiary leading the charge. These moves signal a global shift in regulated crypto investment products, with significant potential for asset growth and market expansion.  

EigenLayer Adjusts Token Distribution Strategy

EigenLayer's airdrop strategy faced backlash due to restricted token distribution, a lengthy waiting period, and exclusions from 30 countries, sparking discontent within the crypto community. Notable criticism focused on uneven token allocation favoring insiders. The subsequent surge in withdrawals, totaling around $89 million, highlighted dissatisfaction among smaller investors. 

EigenLayer responded with adjustments, distributing an additional 28 million EIGEN tokens, prioritizing fairer token distribution and addressing previous oversights. These measures aim to restore community trust, with future plans including token unlock on mainnet launch, a structured lockup period, and revised allocations for testnet users.  

Challenges Plague Friend.tech's Token Launch

Friend.tech's token launch faced significant challenges. Users encountered issues claiming airdropped tokens, leading to dissatisfaction. The FRIEND token experienced extreme price volatility, plummeting over 98% within hours of its release. Liquidity problems contributed to substantial price fluctuations, exacerbating the situation. Technical glitches in the Money Club feature further hampered the platform. Unequal token distribution and criticism towards management escalated community distrust. 

Despite these obstacles, experts believe that the sell-off could lead to a more balanced token distribution, potentially stabilizing the market. The success of this effort will rely on sustained community trust and effective management of ongoing issues by the developers.  

Former Binance CEO Sentenced Following Bank Secrecy Act Violations

Changpeng Zhao, the former CEO of Binance, was sentenced to four months in prison after a plea deal with the US Department of Justice for violations of the US Bank Secrecy Act, including inadequate anti-money laundering measures and processing illicit transactions related to organizations like Al-Qaeda and Hamas. Despite the severity of the charges, his sentence was significantly reduced from the expected three years due to his cooperation and plea of guilty, which also required him to step down from Binance, which was fined $4.3 billion. 

After sentencing, Zhao expressed his intentions to focus on education through his new project, Giggle Academy, and remain a passive investor in crypto. He acknowledged the importance of compliance, especially post his legal challenges and in light of the crypto industry's evolution. 

ConsenSys Sues SEC Over Ethereum's Security Status

ConsenSys has sued the SEC, arguing that Ethereum should not be classified as a security, based on a series of internal and formal investigations by the SEC since March 2023. The SEC, led by Gary Gensler, has not only conducted secretive probes into Ethereum's security status but also considered enforcement actions against entities linked to Ethereum, underlining a significant shift from its previous non-security stance towards Ethereum. 

The litigation, expected to drag on for years, has been marked by uncertainty, especially as Ethereum's merger shifted its consensus mechanism, intensifying the SEC's scrutiny. Despite past indications of Ethereum as a commodity by other regulatory bodies, the current regulatory environment under Gensler suggests prolonged legal battles and delayed approval for Ethereum-based ETFs.

Tokenized Treasury Funds Experience Rapid Growth

According to Messari, the total value locked in real-world asset tokenization protocols surged by nearly 60% since February, reaching approximately $8 billion, driven by market interest in debt-based, high-yield investments. BlackRock's USD Institutional Digital Liquidity Fund (BUIDL) became the largest tokenized treasury fund, amassing $375 million in just six weeks and outpacing Franklin Templeton's treasury fund. 

Meanwhile, BlackRock invested $47 million in Securitize to advance the tokenization of real-world assets, indicating a significant move towards utilizing blockchain for financial securities. Additionally, Untangled Finance launched a private credit pool on the Celo blockchain, underpinned by a $6 million USDC debt ceiling, which offers accredited investors new opportunities in decentralized finance (DeFi). 

Upcoming Token Unlocks Totaling $3.1 Billion in May 2024

In May 2024, vested crypto tokens worth over $3.1 billion are set to be unlocked by various projects. Sui and Pyth Network lead, releasing tokens worth $1 billion each, with Sui's release slated for May 31. Other projects, including Avalanche, Aptos, Arbitrum, Starknet, Optimism, and Immutable, will unlock a total of over $700 million. Aptos plans to release $101 million on May 12, Avalanche $321 million on May 22, and Arbitrum $95 million on May 16. Starknet and Immutable will unlock $84 million and $56 million, respectively, while Optimism will release $70 million on May 29.