Author: Faith Yakubu

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Ether has demonstrated strong performance against Bitcoin for two consecutive weeks, indicating a growing interest in altcoin gains following recent market developments, according to analysts at Bitfinex. Despite bitcoin’s halving event, ether recorded a notable 7.5% increase in its trading pair with BTC, marking its most significant weekly gain against bitcoin since early January.

Bitfinex’s Alpha report underscored ether’s resilience, even amidst regulatory challenges. Concerns regarding the potential SEC classification of ether as security and scrutiny over the Metamask software have raised uncertainties in the market. Nevertheless, ether’s ability to outpace bitcoin suggests a shifting sentiment among investors and market dynamics within the altcoin space.

The decline in bitcoin dominance further supports this narrative, with attention gradually shifting towards altcoins following the halving event. Historically, such events have prompted a surge in altcoin activity, leading to a decline in Bitcoin’s dominance. Currently, bitcoin’s dominance stands at 50.5%, while ether commands a dominance of 15.9%, according to Coingecko data.

Meanwhile, early Monday trading saw a significant depreciation in the Japanese yen, prompting bitcoin to trade at a slight premium against the weakening currency. On the Japanese crypto exchange bitFlyer, the bitcoin-Japanese yen pair traded at a 0.2% premium to bitcoin’s dollar-denominated price on Coinbase. However, as the yen rebounded amidst speculation of intervention by the Bank of Japan, the BTC/JPY pair retreated to trade at 9,797,502 JPY at the time of reporting.

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A recent griefing attack on the Bitcoin testnet has caused significant disruption, leading to the generation of three years’ worth of blocks in just one week. Griefing attacks involve intentionally spamming transactions on a network, increasing its workload, and disrupting its normal operations. Jameson Lopp, co-founder and Chief Security Officer of Casa, publicly claimed responsibility for the attack, generating over 165,000 blocks within the past week.

Lopp explained that the purpose of the attack was to advocate for a reset of Bitcoin’s test network, ensuring that testnet coins have no value and developers can test their software without incurring costs. He also highlighted a bug in the testnet’s consensus code that allows for the creation of massive block amounts in a short time, urging developers to address this vulnerability.

Hashrate and difficulty data on the Bitcoin network testnet indicated a spike to 2,315 TH/s on April 19 before returning to 346 TH/s on April 28. The attack caused interruptions in node syncing, making it impossible to reach the tip due to the high volume of new blocks.

Leo Weese, technical content lead at Lightning Labs, observed the disruption, expressing concerns about the future of permission-less testing networks. While the Bitcoin testnet didn’t suffer significant harm, it did disrupt the testing efforts of open-source Bitcoin application builders.

Despite Lopp’s characterization of the incident as a “free stress test,” it faced backlash from the crypto community. Francis Pouliot, co-founder of Bull Bitcoin, emphasized the impact on legitimate testing efforts, highlighting the wasted time and resources of developers.

While the Bitcoin testnet withstood the attack, the incident underscores the challenges of maintaining open and accessible testing environments in the crypto space amidst malicious activities.

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Trust Wallet has made a swift return to the Google Play Store after experiencing a temporary removal on Monday morning, causing concern among Android users relying on the crypto wallet service.

The company addressed the issue via its official channels, acknowledging Google’s decision to temporarily remove the app from the Play Store. Despite submitting an appeal weeks prior, Trust Wallet was taken down while awaiting a response from Google.

During the removal period, Trust Wallet advised Android users to download an Android Package Kit (APK) from its website to access the wallet service. However, the company reassured existing Android users that their funds remained secure and unaffected by the app’s removal.

Furthermore, Trust Wallet highlighted that users who had uninstalled the app would need to wait for Google to relist it before being able to download it again. While the iOS version and Google Chrome Browser Extension of Trust Wallet remained unaffected, the company expressed concerns about potential scams involving fraudulent applications impersonating the legitimate wallet service.

Fortunately, Trust Wallet’s hiatus from the Google Play Store was short-lived, with the company announcing its swift return by 7:30 a.m. EST. The Android version of the app was restored on the Play Store, much to the relief of users and the Trust Wallet team alike.

In the wake of Trust Wallet’s brief removal, the native coin of the wallet service, Trust Wallet Token (TWT), experienced a 5.2% decline in value as of Monday morning.

The incident with Trust Wallet’s removal raised concerns among users, especially in light of increased regulatory scrutiny in the U.S. surrounding self-custody crypto wallets. Notably, Wasabi Wallets recently announced a ban on U.S.-based users due to regulatory uncertainties, following money laundering charges against the founders of another self-custody wallet service, Samourai Wallet.

As regulatory pressures mount, the status of self-custody crypto wallets like Trust Wallet remains uncertain, with potential implications for their classification and regulatory oversight in the future.

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Tether, the prominent issuer of stablecoin USDT, announced on Monday a significant investment of $200 million to acquire a majority stake in Blackrock Neurotech, a pioneering brain-computer interface company. Through its venture capital arm, Tether Evo, the company aims to support the development and commercialization of Blackrock Neurotech’s groundbreaking medical devices.

Blackrock Neurotech specializes in the creation of medical devices driven by brain signals, with a focus on assisting individuals affected by paralysis and neurological disorders. It’s worth noting that the technology firm is distinct from the asset management giant BlackRock.

The infusion of capital from Tether will facilitate the deployment and market entry of these innovative medical devices. Additionally, funds will be allocated towards ongoing research and development initiatives to further enhance the company’s offerings, as highlighted in the press release.

With a market capitalization of $110 billion, Tether stands as a leader in the stablecoin market. In recent times, the company has diversified its interests by establishing four divisions beyond stablecoin issuance.

Paolo Ardoino, CEO of Tether, expressed the company’s commitment to fostering emerging technologies with transformative potential. He emphasized the belief in the revolutionary capabilities of Blackrock Neurotech’s Brain-Computer Interfaces, which can revolutionize communication, rehabilitation, and cognitive enhancement.

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Total net outflows from 11 U.S. spot bitcoin ETFs reached $120 million on Wednesday, with eight products recording zero flows, a trend deemed normal by analysts.

Grayscale’s GBTC witnessed $130.42 million exiting the converted bitcoin ETF, while Fidelity and Ark Invest’s funds were the sole recipients of inflows, totaling approximately $10 million. Among the eight funds with zero flows were BlackRock’s IBIT and Bitwise’s BITB, with IBIT ending its 71-day positive streak on Wednesday.

According to Rachael Lucas, a crypto analyst at BTC Markets, days with zero inflows are typical and do not necessarily indicate product failure. She suggests that such occurrences often align with market performance and geopolitical tensions, underscoring the complexities beyond ETF flows.

Joe Caselin, head of institutional marketing at BIT crypto exchange, echoes this sentiment, stating that zero flows in an ETF are not unusual but may signify a cooling down of ETF excitement. He emphasizes the gradual integration of fiat into the Bitcoin narrative, anticipating fresh inflows to occur intermittently as traditional finance gradually merges with crypto.

Bloomberg ETF Analyst James Seyffart previously explained that ETF shares are created or destroyed in units, a process triggered by significant disparities in supply and demand. This phenomenon explains why zero flows are commonly observed in such products.

The Block ETF data dashboard reports that the cumulative trading volume for all 11 spot Bitcoin ETFs is approaching $230 billion.

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A recent report from Fidelity Digital Assets highlights a substantial increase in the number of Bitcoin addresses holding at least $1,000 worth of Bitcoin (BTC). Fidelity’s analysts reveal that this segment soared to an unprecedented 10.6 million wallets in mid-March, marking a doubling from the 5.3 million addresses recorded in 2023.

The surge in Bitcoin addresses with smaller holdings suggests a widening distribution of the cryptocurrency and its growing adoption among the general populace, according to Fidelity’s analysts. Despite escalating prices, the data indicates that small addresses persistently accumulate and store Bitcoin, a trend Fidelity describes as positive growth.

Fidelity’s analysts offer an optimistic outlook for Bitcoin in the short term, based on various long-term data points. Out of the 16 metrics tracked, half were deemed positive, while a quarter were categorized as negative or neutral.

The report also delves into the amount of Bitcoin held on cryptocurrency exchanges, which continued its downward trajectory in the first quarter of 2024. The total amount plummeted by 4.2% to 2.3 million Bitcoin, approximately 30% lower than the peak of over 3 million Bitcoin held in 2020. However, Fidelity underscores that this decline in exchange-held Bitcoin does not necessarily imply an uptick in self-custody. Custodians like Fidelity are actively developing solutions that empower customers to retain control of their private keys while engaging in trading activities through exchanges.

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For 71 consecutive days, BlackRock Inc.’s Bitcoin fund experienced an impressive streak, accumulating nearly $18 billion in one of the most significant exchange-traded fund launches in history. However, investor interest has waned as the fervor surrounding cryptocurrencies subsided.

Data compiled by Bloomberg reveals that daily inflows into the ETF, identified by the ticker IBIT, dwindled to virtually zero on Wednesday. Throughout April, IBIT has garnered a net inflow of $1.5 billion.

IBIT’s achievement marks a notable shift in the crypto market sentiment, following the ETF-induced excitement that propelled Bitcoin to an all-time high of nearly $74,000 in March. Since then, the original cryptocurrency has declined by nearly 15%, and the much-anticipated “halving” event on April 20 failed to deliver an immediate boost.

Nevertheless, these new investment vehicles have left a significant mark on the crypto landscape. Collectively, they have attracted approximately $54 billion, introducing Bitcoin into the portfolios of potentially millions of investors. Hong Kong, positioning itself as a crypto-friendly jurisdiction, is preparing to debut its first listings of Bitcoin and Ether ETFs, with other markets likely to follow suit.

Despite the halt in net inflows, IBIT is swiftly closing the gap on Grayscale Bitcoin Trust, the current market leader. On Wednesday alone, approximately $130 million flowed out of GBTC, bringing total outflows for the year to $17 billion, according to Bloomberg data.

GBTC, identified by the ticker GBTC, imposes a management fee of 1.5%, the highest among the cohort of funds launched in early January. The launch of ETFs in Hong Kong may intensify the fee competition that has exerted pressure on GBTC.

Rebecca Sin, an ETF analyst at Bloomberg Intelligence, suggested that the launch of spot Bitcoin ETFs in Hong Kong, coupled with issuers waiving management fees, might lead to additional outflows, potentially indicating further changes in market dynamics.

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Bitcoin’s inflation rate has plummeted to a historic low of approximately 1.74% following the recent Bitcoin halving. With 93.3% of Bitcoin already mined, amounting to 19.6 million out of a possible 21 million BTC, the scarcity element is poised to escalate demand, potentially propelling the leading cryptocurrency’s price surge. In contrast, fiat currencies grapple with higher inflation rates due to governmental controls and economic policies. For instance, in 2023, countries like Argentina encountered exceptionally high inflation rates, hitting 161.0%, as per Inflation Data. The European Union reported more moderate levels, with the euro area’s annual inflation rate at 2.9% in December 2023.

The recent halving event is anticipated to further diminish Bitcoin’s inflation rate, impacting both its scarcity and investor sentiment. The trend suggests that each halving event, which halves the reward for mining new blocks, tends to bolster buyer interest due to reduced supply growth.

According to a report from CoinGecko, historical data reveals a consistent trend of significant growth in Bitcoin prices following each halving event. Following the first halving in 2012, Bitcoin’s price surged by an impressive 8,858%. Subsequent halvings witnessed diminishing returns, with increases of 294% and 540% respectively, yet the pattern of price spikes post-halving remains discernible. These events not only affect Bitcoin but also resonate across other leading cryptocurrencies, such as Ethereum, albeit with varying impacts due to differing supply mechanisms.

The completion of the fourth halving has triggered speculation within the cryptocurrency community regarding short-term market dynamics. Recently, Bitwise noted that while the month immediately following the halving typically witnesses a modest price decline, the subsequent year often heralds exponential gains. After the 2012 halving, Bitcoin experienced a meager 9% increase in the month post-halving, only to soar by a staggering 8,839% over the following year. Similar patterns were observed after the 2016 and 2020 halvings, with Bitcoin’s price witnessing significant surges in the year following each event.

Bitcoin’s market cap fluctuations around halving events provide valuable insights into consumer behavior during these critical periods. Initially pegged at $123.3 million during the first halving, the market cap swiftly surged to $947.4 million shortly thereafter. 

Similar patterns were observed in subsequent halvings, reflecting a tendency among Bitcoin holders to speculate around halving events, often opting to hold onto their assets in anticipation of value increases. The analysis of pre-and post-halving periods suggests a strong inclination toward holding Bitcoin, deemed to become more valuable as future supply constraints tighten post-halving.

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Runes, resembling BRC-20s, emerge as a significant protocol utilizing the Bitcoin network, claiming a substantial 68% share in Bitcoin transactions since the halving. However, Bitcoin miners face diminishing returns amidst this surge.

Similar to BRC-20s, Runes operates by compensating fees in Bitcoin to mint new tokens. Differing from Ordinals’ “inscription” account model, Runes utilizes the Unspent Transaction Output (UTXO) framework to imprint new tokens on the Bitcoin network. This methodology enables users to allocate unique identification numbers to individual satoshis, embedding them with diverse data directly into the Bitcoin blockchain.

Since its inception on April 20th, Runes has processed over 2.38 million transactions, as per data from a Dune Analytics dashboard shared by Crypto Koryo, a blockchain research firm. Pitted against Ordinary peer-to-peer Bitcoin transactions, BRC-20s, and Ordinals, Runes accounts for a significant portion of the total Bitcoin transaction volume.

On April 23rd, Runes witnessed its peak transaction volume, exceeding 750,000 transactions. However, the subsequent day witnessed a notable decline, with transactions dwindling to 312,000.

Much of the initial fervor stemmed from the halving event at block 840,000, where users vied for prime digital real estate in Bitcoin’s history, utilizing the Runes protocol to imprint “rare satoshis” on the block. Consequently, Runes contributed over $2.4 million in miner fees, constituting over 70% of the total fees on halving day.

Amidst declining mining rewards post-halving, from 6.25 BTC to 3.125 BTC, Runes Protocol was initially touted as a lifeline for struggling miners, offering a new avenue for income. Pseudonymous Ordinals developer Leonidas stated, “Runes degens have single-handedly offset the drop in miner rewards from the halving.” However, the sustainability of this assertion has been questioned, given the fluctuating daily total fees post-halving, ranging between 33% and 69%.

Community sentiment remains divided regarding whether Runes can provide a stable revenue stream for Bitcoin miners. Notably, the Bitcoin Miners’ Position Index (MPI) fluctuated between -1 to -0.15 post-halving, suggesting no significant movement in miners’ Bitcoin holdings and indicating no imminent sell-off.

While Runes may face challenges in sustaining its momentum, recent groundbreaking developments offer potential alternative revenue streams to mitigate the impact of the halving on miners.

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As the Dollar Index (DXY) experiences a recent pullback, crypto traders are banking on continued dollar weakness to fuel a resurgence in Bitcoin (BTC), although some banks hold a contrary view.

Recent trends have seen Bitcoin trading within the $60,000 to $70,000 range since mid-March, with the dollar’s bounce on the DXY contributing to this stabilization. However, a reversal in the DXY’s trajectory, coupled with expectations of a weaker dollar, has reignited optimism among Bitcoin bulls.

Mike Alfred, a value investor and managing partner at Alpine Fox LP, anticipates a turnaround in the DXY, projecting a move back towards 102-103, which he believes will coincide with a bitcoin rally towards $90,000 in the short term. While some banks foresee continued dollar strength, others see signs of a potential peak, with projections ranging between 107 and 110 for the DXY.

Societe Generale’s Cross Asset Research Team and Scotiabank are among those forecasting a resilient dollar, citing expectations of a prolonged hold on interest rates by the Federal Reserve. Additionally, the possibility of a U.S.-China trade war escalation, with proposed tariff hikes on Chinese imports, could further bolster the dollar, according to Barclays.

Despite divergent opinions, crypto traders remain focused on the potential impact of a weaker dollar, which historically correlates with increased risk-taking and a favorable environment for Bitcoin and the broader crypto market. As such, traders are closely monitoring shifts in the DXY and geopolitical developments that could influence the dollar’s trajectory in the coming weeks.

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