April 2024 Crypto Assets Market Monthly Analysis

Market Overview

In April, the Crypto Assets market experienced significant volatility, with Bitcoin's price undergoing a major adjustment. At the beginning of the month, Bitcoin's price plummeted over 5%, falling below 66,000 USD. Throughout the month, the price fluctuated multiple times, primarily influenced by macroeconomic factors and changes in market sentiment. These fluctuations align with changes in U.S. interest rate expectations, highlighting Bitcoin's sensitivity to global economic trends.

The derivatives market hinted at this decline, and the decrease in the funding rate of Bitcoin perpetual contracts indicates an impending correction. For many observers, the shift in market sentiment makes this adjustment seem inevitable. A significant liquidation event occurred outside of US ETF trading hours.

Changes in U.S. interest rate expectations may be another factor affecting the shift in BTC sentiment, and the recent decline may be related to this. This reminds us that although many people consider BTC to be a "store of value", it remains sensitive to macroeconomic changes.

The BTC price fluctuated between $73,000 and $60,000 throughout the month. This stability may be attributed to several factors. One significant influence is the unexpected decline of the dollar index DXY. A weaker dollar makes the BTC price more attractive, thereby supporting the BTC price.

Investor expectations regarding the BTC halving event may also have influenced market sentiment. Many anticipate that the halving will lead to a price surge. However, this expectation has not materialized, and the BTC price has not been significantly affected.

Despite the slowdown, ETF inflows continue to support the market.

At the end of April, BTC was at the lower end of the price range, showing obvious market weakness, which may bring more interesting developments.

Crypto Assets Investment Product Innovation

An important development in April is the ongoing exploration of asset tokenization, especially with the launch of an institutional-grade digital liquidity fund by a large asset management company. This fund is accessible only to accredited investors who meet the minimum investment amount, represented by tokens on Ethereum. It primarily invests in secure, income-generating assets such as U.S. Treasury bonds and repurchase agreements, with dividends paid in token form. This innovative model not only provides new investment options but also demonstrates how blockchain can enhance the liquidity and accessibility of traditional financial assets.

The fund manages assets of over $375 million from just 10 holders, highlighting significant progress in integrating real-world assets with blockchain technology.

In addition, the token has been further enhanced through partnerships with several well-known companies. This collaboration connects the token to the smart contract pool of USDC, enabling direct redemption and continuous liquidity. As a result, investors can convert their token holdings into USDC at any time, supporting instant global transactions. This feature is particularly beneficial for crypto companies managing large finances, providing a seamless way for businesses to access funds quickly, as stablecoins become increasingly important in international transactions.

Regulation and Regional Expansion

April's regulatory actions in the Crypto Assets world are particularly significant, especially with the Hong Kong Monetary Authority approving Bitcoin and Ethereum spot ETFs. This approval marks a major shift for the Asian market, particularly the Hong Kong market, although it is worth noting that due to strict regulations, access for investors from mainland China remains heavily restricted. This decision involves three major investment groups, highlighting the importance of integrating Crypto Assets into a broader financial ecosystem.

In Europe, a large German bank has announced its readiness to provide Crypto Assets trading and custody services. This move by a traditionally conservative financial institution highlights the growing perception of Crypto Assets as legitimate, investable assets. The bank's approach is particularly noteworthy as they focus on integrating Crypto Assets services as part of their business model, rather than merely chasing speculative profits. This reflects a deeper and more practical application of blockchain technology in corporate finance.

Ethereum and Regulatory Challenges

The trend of Ethereum is similar to that of Bitcoin, but it is under closer scrutiny in terms of regulation. The SEC has yet to decide on the application for the Ethereum spot ETF and has requested public comments on the proposed amendments, indicating the cautious attitude of regulators and the ongoing uncertainty in the regulatory environment.

It is worth mentioning that a certain Ethereum development company has sued the SEC, challenging the decision to classify "ETH as a security". This lawsuit may clarify Ethereum's regulatory status and also affect other Crypto Assets. If successful, it could impact market dynamics and boost investor confidence.

The lawsuit strongly suggests that the issuer is operating under the assumption that the approval will ultimately be granted.

Bitcoin Halving

The Bitcoin halving event is happening this month, which will reduce miner block rewards by half. This change has significant long-term implications for the network economy. While we have not seen a direct impact on prices, over time, the reduction in rewards may mean higher transaction fees, as miners rely more on Gas to remain profitable. This shift is crucial for the future of Bitcoin as a transaction network, especially since higher fees could diminish its appeal for small transactions. On the positive side, the development of Layer 2 networks is underway, which helps balance the trade-off between security ( being more critical for larger transfers ) and costs ( being a larger factor ) in smaller transfers.

Macroeconomic Environment

Gold steadily rises in connection with Crypto Assets

Gold in April remains the focus. Despite the decrease in holdings of the largest gold ETF in the United States, gold prices continue to rise.

This divergence is noteworthy, especially in Asia, where net inflows into gold ETFs have been recorded despite less developed market infrastructure compared to North America and Europe.

Central banks have also been actively buying gold, continuing a decade-long purchasing trend. The latest data shows that central bank purchases of gold are mainly driven by motives of traditional market diversification and crisis hedging, rather than a departure from the US dollar. The only increased motivation last year was gold's performance during crises, highlighting global geopolitical and economic uncertainties.

This interest in gold seems to coincide with the discussions in the world of Crypto Assets about "finding international payment options outside of the US dollar," highlighting a broader demand in the market for reliable alternatives to the conventional financial system.

interest rate expectations and economic signals

April began with heightened attention to the U.S. financial markets, with fervent discussions sparked by expectations of interest rate cuts. Stronger-than-expected economic data dampened hopes for rate reductions in 2024. It seems that the U.S. economy may be more resilient than we had imagined.

U.S. Employment and FOMC Progress

People are closely watching the US employment data, which is expected to show a slight weakening in the labor market. This data is typically a precursor to the official employment statistics released a week later, which also indicate a softening, with the unemployment rate remaining at 3.8%. The JOLTS and Challenger layoff reports further provide information on hiring and layoff conditions.

In these announcements, the FOMC press conference is particularly critical, as the chairman discussed the ongoing issues of inflation and the Federal Reserve's interest rate strategy.

The bond market is tense and the US Treasury quarterly report

This month, the Treasury Department's quarterly report revealed some key financial strategies, detailing the upcoming bond issuance plan and adjustments to the overall finances, which directly impact market liquidity. This update is also reflected in the government bond market, as liquidity has decreased and volatility has increased since the end of 2021, drawing close attention from investors. Additionally, the report emphasized the borrowing adjustments projected by the Treasury for the second quarter, which are now $41 billion more than previously expected, totaling $243 billion. Although this increase seems substantial, it remains relatively small compared to the massive total of U.S. national debt (, which currently exceeds $34.5 trillion and continues to rise ).

Global Perspective

The global economy is also worth paying attention to. Japan's monetary market operations suggest that the government may intervene to support the yen. Essentially, "yen bounce" ( refers to the sudden increase in the value of the yen ), which occurred simultaneously with a decline in the DXY dollar index, leading to speculation that the Bank of Japan may intervene in the monetary market to influence the value of the yen.

Meanwhile, South Africa is taking measures to regulate Crypto Assets, indicating that institutions there are becoming increasingly interested in digital assets. In contrast, due to the risks of sanctions, Venezuela is facing difficulties using USDT(, a type of digital currency), in its oil transactions.

Highlights of the Month

• The former CEO of a trading platform was sentenced to four months in prison for anti-money laundering violations, highlighting regulatory actions in the encryption field.
• An asset management company's USD institutional-grade digital liquidity fund manages assets exceeding $375 million, indicating strong institutional interest in digital assets.
• Hong Kong has launched six new Bitcoin and Ethereum ETFs, significantly expanding the regulated Crypto Assets investment options in the Asia region, reflecting the trend of regulatory approval for Crypto Assets investments.
• A certain company increased its total holdings to 214,400 BTC by purchasing more Bitcoin, continuing its Bitcoin investment strategy.
• A certain Ethereum development company is facing regulatory challenges from the SEC, which may impact the legal classification of Ethereum and the broader regulatory treatment of Crypto Assets.
• Australia plans to launch its first spot Bitcoin ETF by the end of the year, potentially expanding the region's Crypto Assets investment market.
• A stablecoin has launched USDT and XAUT on the TON blockchain to enhance liquidity and access to decentralized applications.
• Hong Kong plans to launch additional Bitcoin and Ethereum spot ETFs to further expand regulated Crypto Assets investment options in the Asian market.
• The Korean won surpassed the US dollar in the first quarter of 2024, becoming the most traded currency in Crypto Assets transactions, showcasing the country's growing influence in the encryption field.
• The price of Bored Ape Yacht Club NFTs has plummeted, marking a significant downturn in the once booming digital collectibles market.
• A Bitcoin miner moved $3 million worth of long-dormant Bitcoin, sparking speculation that early miners may be cashing out.
• The IBIT spot Bitcoin ETF of a certain asset management company attracted $15 billion in inflows just three months after its launch, indicating increased investor confidence.
• Solana developers are addressing network congestion issues to enhance transaction processing capabilities and alleviate bottlenecks.
• A certain payment company has launched an international remittance service for American customers using the PYUSD stablecoin, eliminating transaction fees.
• A certain bank has launched a stablecoin experiment on the Polygon network, integrating digital currency into the gaming and sports ecosystem, reflecting Japan's evolving regulatory environment.

On-chain Analysis

• Currently, despite Bitcoin's strong performance, overall interest in Crypto Assets is showing a lull, especially for altcoins.

• Despite the challenges in the market, major Bitcoin miners have not significantly given up, as those with efficient equipment and low-cost electricity.