Author: Faith Yakubu

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In a recent 13F filing with the Securities and Exchange Commission, the State of Wisconsin Investment Board disclosed substantial investments in various crypto entities, marking a significant foray into the digital asset space.

The Board revealed ownership of 2,450,400 shares of the iShares Bitcoin Trust (IBIT), a spot bitcoin exchange-traded fund managed by BlackRock, valued at approximately $99.2 million by the end of the first quarter of 2024. Additionally, the Board disclosed ownership of 1,013,000 shares of the Grayscale Bitcoin Trust (GBTC), valued at around $63.7 million.

Aside from bitcoin trusts, the Board’s crypto portfolio includes investments in leading cryptocurrency firms such as Coinbase, Marathon Digital, Riot Platforms, Block, Cipher Mining, Cleanspark, and MicroStrategy.

This significant move by the State of Wisconsin Investment Board underscores the growing institutional interest in digital assets. The Board, tasked with managing investments for public retirement and other trust funds in Wisconsin, has joined the ranks of institutional investors embracing cryptocurrencies as part of their diversified investment strategies.

BlackRock’s IBIT and Grayscale’s GBTC are prominent players in the spot bitcoin ETF market, commanding significant market share. The Board’s substantial investment in these ETFs reflects its confidence in the long-term potential of cryptocurrencies as an asset class.

Commentary from Bloomberg’s ETF analyst highlights the swift adoption of spot bitcoin ETFs by institutional investors. The Board’s quick entry into IBIT signals a departure from the usual timeline for institutional adoption, indicating growing confidence in the maturity and liquidity of crypto ETFs.

IBIT’s rapid growth and surpassing of previous ETF records underscore its significance in the evolving investment landscape. As institutional investors continue to explore opportunities in digital assets, the trajectory of spot bitcoin ETFs like IBIT will likely shape the future of crypto investment strategies.

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Galaxy Digital Holdings disclosed robust growth in revenue and profits for the first quarter, propelled by its mining operation’s exceptional performance amidst the cryptocurrency price surge.

The financial services firm focused on digital assets revealed that its net income surged to $421.7 million ($1.23 per share) in the quarter ending March, marking a remarkable 214% increase compared to the same period last year. This significant bottom-line growth was underpinned by a surge in revenue, which reached $259.7 million, up from $146.7 million year-on-year. These impressive results signal Galaxy’s recovery trajectory following a $1 billion net loss in 2022.

Breaking down the company’s business segments, Galaxy’s mining operation emerged as a key contributor, generating $31.5 million in revenue. This division’s robust performance was driven by a record hashrate of 5.7 exahash per second for mining transactions, demonstrating its resilience amidst market fluctuations. Notably, the mining operation’s revenue surge complemented similar increases recorded by Galaxy’s Global Markets and Asset Management divisions during the first quarter.

In April, Galaxy secured $125 million in funding, earmarked for expanding its trading operations and enhancing its mining infrastructure. This strategic move underscores Galaxy’s commitment to capitalizing on market opportunities and strengthening its position in the rapidly evolving digital assets landscape.

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The latest report from Bernstein reveals a notable 6% decline in Bitcoin (BTC) mining difficulty last week, marking the most substantial drop since the crypto winter of December 2022. This downturn is seen as a beneficial shift for miners, particularly those with lower operational costs.

According to analysts Gautam Chhugani and Mahika Sapra, this adjustment in mining difficulty reflects broader market dynamics post-Bitcoin halving, with higher-cost mining rigs being phased out due to escalating costs and lower Bitcoin prices. This has led to a decrease in the overall hashrate—the total computational power used in mining and processing transactions on Bitcoin’s proof-of-work blockchain.

The report highlights that the reduction in hashrate has allowed lower-cost miners to increase their market share by approximately 20 basis points since the halving. Companies like Riot Platforms (NASDAQ:RIOT) and CleanSpark (NASDAQ:CLSK), known for their low production costs and robust financial positions, are particularly well-placed to benefit. These companies are expected to continue consolidating their market share through both organic growth and mergers and acquisitions.

Bernstein also points out that a temporary stabilization in Bitcoin prices could advantage these efficient miners, allowing them to capitalize on their expansion strategies without the pressure of a rising hashrate. Furthermore, when Bitcoin prices eventually regain momentum, these miners are positioned to generate increased revenue due to higher production capabilities.

Despite the current fluctuations, Bernstein does not foresee a significant downturn in Bitcoin prices. They predict that the cryptocurrency will remain range-bound in the short term, with the potential for an upward breakout as spot exchange-traded funds (ETFs) begin to receive allocations from registered investment advisors (RIAs), wealth platforms, and other institutional investors.

Bernstein maintains an ‘outperform’ rating for CleanSpark and Riot Platforms, indicating a favorable outlook for these firms, while Marathon Digital (NASDAQ:MARA) holds a ‘market-perform’ rating, suggesting a more neutral expectation.

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Keith Gill, known as @TheRoaringKitty on X (formerly Twitter), recently sparked a significant rally in both meme coins and stocks, notably GameStop (NYSE:GME), after making his first post since late 2021. The post, a meme suggestive of an intense focus period, inspired users to surge into trading, propelling GameStop shares up by 44% in pre-market trading and even doubling during market hours before a trading halt. Similarly, AMC Entertainment Holdings (NYSE:AMC) saw its shares jump as much as 30% after the market opened.

This activity extended into the cryptocurrency sector, particularly on the Solana blockchain where a GameStop-themed meme coin surged over 550%. Other meme tokens like AMC rose by 1200%, and smaller cat-themed coins like kitty (KITTY) saw increases in the thousands of percent. Larger-cap meme coins like Dogecoin (DOGE) and Shiba Inu (SHIB) also enjoyed gains.

Gill, whose bullish stance on GameStop started gaining serious attention on Reddit in 2019, became a key figure in the January 2021 short squeeze that saw the stock skyrocket from $4 to over $120 in just one month, making his initial $53,000 investment worth nearly $50 million at its peak. This dramatic event impacted major hedge funds, notably Melvin Capital, which suffered significant losses due to its short positions in meme stocks.

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Marathon Digital Holdings, Inc. (NASDAQ:MARA), one of the leading bitcoin mining companies, experienced a slight downturn in its stock price, dropping about 1.5% in after-hours trading on Thursday. This decline came in response to the company’s failure to meet revenue expectations for the first quarter, primarily due to several operational challenges.

During the first three months of the year, Marathon Digital mined a total of 2,811 bitcoins, marking a significant 34% decrease from the previous quarter. The reduction in bitcoin production and subsequent revenues were attributed to a series of unforeseen issues, including equipment failures, maintenance of transmission lines, and higher-than-expected weather-related curtailments at its Garden City location and other sites, as stated in the company’s recent announcement.

Despite these setbacks, Marathon Digital reported earnings per share of $1.26 for the quarter, which at first glance appears to surpass the Wall Street expectations of just $0.02 per share. However, this figure is not directly comparable to analyst forecasts due to the company’s adoption of the newly approved Financial Accounting Standards Board (FASB) fair value accounting rules, which included a beneficial mark-to-market adjustment prompted by the recent surge in bitcoin prices.

Looking forward, Marathon remains committed to its 2024 operational goals, aiming to increase its mining capacity to 50 exahash per second (EH/s) and anticipating further growth into 2025.

Despite these optimistic projections, Marathon’s stock has seen a 26% decline this year, in contrast to a steeper 40% drop in shares of its peer, Riot Platforms (NASDAQ:RIOT). This performance reflects the volatile nature of the cryptocurrency mining sector, influenced heavily by fluctuating bitcoin prices and operational challenges.

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Dogecoin (DOGE), the leading meme cryptocurrency by market capitalization, is showing signs of entering another bullish phase reminiscent of its spectacular rise in early 2021. According to CoinDesk, Dogecoin’s market cap currently stands at approximately $22 billion, with a remarkable year-to-date price increase of over 70%, significantly outstripping Bitcoin’s (BTC) near 50% gain.

A critical technical indicator, the ‘golden cross’, is nearing confirmation for Dogecoin. This occurs when the 50-week simple moving average (SMA) crosses above the 200-week SMA, signaling potential long-term upward momentum. Such crossovers are often used by momentum traders to pinpoint optimal market entry and exit points.

Historically, Dogecoin experienced a golden cross in early January 2021, which preceded a four-month rally leading to an unprecedented 8,000% increase in its price, peaking at 76 cents on Binance. However, it’s crucial to approach such indicators with caution as past performance is not always indicative of future results, and moving average crossovers can sometimes lag behind actual market movements.

Moreover, the dynamics around meme cryptocurrencies like Dogecoin differ significantly from more traditional investments. Lacking substantial real-world applications, their market movements are largely driven by speculative trading. This makes them particularly vulnerable to shifts in global financial conditions such as liquidity and interest rate changes.

During Dogecoin’s 2021 rally, global interest rates were at or near zero, fostering an environment ripe for high-risk investments. Currently, however, with U.S. interest rates exceeding 5%, the economic backdrop is considerably different, potentially influencing the trajectory of speculative assets like Dogecoin.

Investors should remain vigilant, considering both the technical setup and broader economic factors when evaluating the potential for another major rally in Dogecoin’s price.

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April witnessed a monumental surge in the total volume of stablecoins traded on Ethereum, with DAI emerging as the dominant contributor to this unprecedented growth. The rise in DAI volume can be attributed to its increasing involvement in complex Miner Extractable Value (MEV) transactions, often facilitated by flash loans.

Record-Breaking Month

After several months of stagnant activity, Ethereum’s total monthly stablecoin volume has experienced a consistent uptick for the past three months, culminating in April’s historic milestone. It’s essential to note that flash loan activity is included in these figures, amplifying the overall volume significantly.

DAI’s Role in the Surge

DAI has emerged as the primary catalyst behind Ethereum’s soaring stablecoin volume, with its involvement in complex MEV transactions drawing significant attention. Notably, one transaction alone added nearly $1 billion in DAI volume, showcasing its pivotal role in Ethereum’s ecosystem.

DAI’s April Performance

In April, DAI’s volume surged to $636 billion, constituting the majority of Ethereum’s total on-chain stablecoin volume, which reached nearly $1.2 trillion for the month. DAI’s supply has also experienced substantial growth, adding approximately $1 billion worth of tokens since March 7, bringing the current supply to 5.44 billion.

Potential Challenges Ahead

While DAI’s performance has been stellar, competitors like Ethena’s USDe and Ripple’s upcoming stablecoin pose potential challenges to its dominance. Nevertheless, DAI’s supply has continued to expand, with an additional $220 million added since May 1, as reported by MakerBurn.

Market Response

Despite the surge in DAI volumes, the price of Maker, the token associated with MakerDAO, experienced a decline throughout April. However, a slight uptick in early May hints at potential market resilience amid DAI’s growing prominence in the stablecoin landscape.

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Ethereum (ETH) witnessed a significant decline in daily ETH burned, hitting a yearly low primarily due to decreased gas fees. Gas fees currently range between 5 and 10 gwei, marking one of the lowest levels observed this year.

The Ethereum network experiences a notable decrease in the daily volume of ETH burned, reaching its lowest point this year, largely influenced by a recent decline in average gas fees. Presently, gas fees fluctuate between 5 and 10 gwei, representing one of the lowest levels recorded year-to-date and impacting ETH issuance.

The reduction in network fees translates to a decrease in ETH burned. On Sunday, only 610 ETH were burned, marking a record low for the year, while Ethereum’s gas fees remained minimal. In contrast, the daily volume of ETH burned during the first four months of this year consistently exceeded 2,500–3,000 ETH.

The ongoing decline in gas fees is attributed partly to a shift in activity towards Layer 2 scaling solutions and the increasing adoption of blob transactions introduced with the Dencun upgrade in March, which helps alleviate transaction costs on Layer 2s.

The dynamics of gas fees and ETH burning are closely monitored aspects of the network’s economic model. While low fees benefit network users, the recent decrease in ETH burn impacts Ethereum’s deflationary characteristics.

The London hard fork, also known as EIP-1559, implemented in August 2021, fundamentally altered Ethereum’s fee structure. The upgrade introduced a base fee that is burned and a priority fee acting as a tip to validators. As the base fee correlates with network usage, higher fees result in a greater amount of ETH being removed from circulation through burning.

In the past week, Ethereum’s supply has turned inflationary, with a growth rate of 0.49%, contrasting its previous deflationary trend, as reported by ultrasound.money. If activity surges and more ETH is burned than issued, Ethereum will return to a deflationary state.

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Phishing attacks within the crypto industry decreased by 46% to $38 million in April, marking the lowest amount recorded this year, according to the security firm Scam Sniffer. Notably, this decline aligns with CertiK’s findings, indicating that crypto-related exploits and scams reached a historic low of $25.7 million in April.

April’s Phishing Attack Insights

According to Scam Sniffer’s analysis, the Coinbase-backed Ethereum layer-2 network Base experienced a notable surge of 145% to $8.2 million in phishing incidents during the past month. Interestingly, two of the top 10 largest single thefts occurred on this chain, constituting 21% of the month’s total theft.

ERC-20 tokens faced the brunt of these attacks, with a staggering 88% of the stolen assets belonging to this class.

Tools and Tactics Employed by Attackers

Scam Sniffer has pinpointed fake accounts on the social media platform X (previously known as Twitter) as the primary tool utilized by scammers. These attackers impersonated prominent projects like Renzo, Avail, Ether.fi, Wormhole, and Omni. These fake accounts often displayed counterfeit verification marks, giving them an appearance of authenticity that was exploited to lure unsuspecting users.

Using these fake accounts, the attackers posted deceptive comments on social media platforms to redirect unsuspecting individuals to malicious sites where their assets could be stolen.

Additionally, the attackers frequently utilized phishing signatures such as Permit, IncreaseAllowance, and Uniswap Permit2. These malicious signatures enabled the attackers to access their victim’s funds without their knowledge.

Scam Sniffer further added that despite wallets increasing phishing alerts for certain signatures, wallet drainers are actively finding ways to circumvent these alerts by using legitimate contracts like Disperse and Uniswap Multicall, along with variants of value normalization.

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Coinbase announced a remarkable first quarter, with revenue reaching $1.6 billion, marking a substantial 72% increase from the previous quarter and a significant rise from $736 million in the same period last year. The company also reported a notable swing in net income, posting $1.18 billion for the quarter compared to a loss of $79 million in the previous year’s corresponding period. Additionally, Coinbase generated $1.01 billion in EBITDA, surpassing expectations with earnings of $4.04 per share, exceeding the consensus estimate of $1.15 per share.

The surge in revenue reflects Coinbase’s strategic investments in product expansion, operational discipline, and favorable market conditions, according to the company’s earnings statement. Notably, the company observed increased market share in US spot and derivatives, achieving all-time highs on Coinbase Prime, and witnessing growth in USDC market capitalization.

Transaction revenue for both consumer and institutional clients experienced a substantial uptick, totaling $1.08 billion for the quarter. Institutional transaction revenue notably grew by 113% from the previous quarter to $85 million. Coinbase’s consumer-facing business remained its primary revenue stream, generating $935.2 million from consumer transactions. The company also reported growth in user numbers alongside revenues collected from its subscription service.

Looking ahead, Coinbase anticipates continued growth, stating that it generated over $300 million of total transaction revenue in April, with expectations for Q2 subscription and services revenue to fall within a range of $525-$600 million.

Despite surging nearly 9% in regular trading, Coinbase shares dipped about 3% in after-hours trading to $222 as of 4:32 p.m. ET. Nonetheless, Coinbase shares have seen a remarkable increase of nearly 50% over the past year.

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