April 2024 Crypto Market Review

Market Overview

The crypto market experienced significant volatility in April. After reaching an all-time high in March, Bitcoin's price underwent severe fluctuations this month. At the beginning of the month, the price of Bitcoin plummeted by over 5%, falling below $66,000. Throughout the month, the price fluctuated dramatically several times, primarily driven by macroeconomic factors and changes in market sentiment. These trends were consistent with changes in U.S. interest rate expectations, highlighting Bitcoin's sensitivity to global economic trends.

The derivatives market indicates this round of decline, and the decrease in the funding rate of Bitcoin perpetual contracts suggests an impending adjustment. For many observers, the change in market sentiment makes this adjustment seem inevitable. A significant liquidation event occurred outside of U.S. ETF trading hours.

Changes in U.S. interest rate expectations may be another factor affecting BTC sentiment shifts, and the recent decline may be related to this. This serves as a reminder that, despite many considering BTC as a "store of value", it remains sensitive to macroeconomic changes.

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

Investor expectations regarding the BTC halving event may lead to expectations of a price surge. This is another factor that could influence market sentiment. However, these expectations did not materialize, and the BTC price was not significantly affected.

In addition, although the pace has slowed, 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 fatigue, which may bring more interesting developments.

Crypto Investment Product Innovation

An important development in April is the ongoing exploration of asset tokenization, especially with the launch of an institutional-level digital liquidity fund by a large asset management company. This fund is open only to accredited investors who meet a high minimum investment requirement, represented by tokens on Ethereum. It primarily invests in safe, 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 multiple institutions. 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 trade. This integration marks a significant advancement in liquidity management within the financial sector.

Regulation and Regional Expansion

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

In Europe, the encryption sector is also advancing. One of Germany's largest banks has announced its readiness to offer encryption trading and custody services. This action taken by a traditional conservative financial institution highlights the growing perception of cryptocurrencies as legitimate, investable assets. The bank's approach is particularly noteworthy as they focus on integrating encryption 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 has received more intense scrutiny from regulators. Regulatory agencies have yet to make a decision on the application for the Ethereum spot ETF, requiring the public to comment on the proposed amendments, which indicates the cautious attitude of regulators and the ongoing uncertainty in the regulatory environment.

It is worth mentioning that a certain organization has sued the regulatory agency, challenging the decision to "classify ETH as a security." This lawsuit could clarify Ethereum's position regarding regulation and also impact other cryptocurrencies. If successful, it may affect market dynamics and boost investor confidence.

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

Bitcoin Halving

The Bitcoin halving event will occur this month, reducing the block rewards for miners 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 lead to higher transaction fees, as miners increasingly rely on Gas to remain profitable. This shift is important for the future of Bitcoin as a transaction network, especially since higher fees may diminish its attractiveness for small transactions. On the positive side, the development of Layer2 networks is underway, which helps to balance the trade-off between security, which is more critical for larger transfers, and costs, which are a larger factor for smaller transfers.

Macroeconomic Environment

( The steady rise of gold and its connection to the crypto market

In April, gold remains the focus of attention. Despite a decline in holdings of the largest gold ETF in a certain country, the price of gold continues to rise.

This differentiation is worth noting, especially in Asia, where despite less developed market infrastructure, there has been a net inflow into gold ETFs compared to North America and Europe.

Central banks have also been active buyers of gold, continuing a buying trend that has lasted for a decade. The latest data shows that central banks purchase gold mainly for the purposes of diversification in the traditional market and crisis hedging, rather than to distance themselves from the dollar. The only added motivation last year was gold's performance during crises, which highlights global geopolitical and economic uncertainties.

This interest in gold seems to align with the discussion in the cryptocurrency world about "seeking international payment options beyond the US dollar," reflecting a broader demand in the market for reliable alternatives outside the conventional financial system.

) interest rate expectations and economic signals

April opened with a heightened focus on the U.S. financial markets, and expectations for interest rate cuts sparked lively discussions. Stronger-than-expected economic data dampened hopes for rate cuts in 2024. It seems that the U.S. economy may be more resilient than we had imagined.

( U.S. employment and the Federal Open Market Committee ) FOMC ### progress

People are paying close attention to the U.S. employment data, with the payroll expected to reveal a slight weakening in the labor market. This data is usually a precursor to the official employment statistics released a week later, which also indicates a softening, with the unemployment rate holding steady at 3.8%. The JOLTS and Challenger layoff reports further provide information on hiring and layoff conditions.

In these releases, the FOMC press conference is particularly crucial, as the chairman discussed the ongoing issues of inflation and the central bank's interest rate strategy.

The bond market is tense and the US Treasury quarterly report

This month, the quarterly report from the Treasury Department revealed some key financial strategies, detailing the upcoming bond issuance plans and adjustments to overall finances, which directly affect market liquidity. This update is also reflected in the treasury market, as the reduction in liquidity and increased volatility since the end of 2021 has drawn close attention from investors. Furthermore, the report highlights the borrowing adjustments expected by the Treasury in the second quarter, which are now $41 billion more than previously anticipated, totaling $243 billion. While this increase may seem significant, it is relatively small compared to the massive total U.S. national debt of ###, 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 rise in the value of the yen ( occurring 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.

At the same time, South Africa is taking measures to regulate encryption, indicating that institutions there are becoming increasingly interested in digital assets. In contrast, due to sanctions risks, 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 has been sentenced to four months in prison for anti-money laundering violations, highlighting regulatory actions in the crypto market.
• A USD institutional-grade digital liquidity fund managed by an asset management company: The fund manages assets exceeding $375 million, indicating strong institutional interest in digital assets.
• Bitcoin and Ethereum Spot ETFs in Hong Kong: Hong Kong has launched six new Bitcoin and Ethereum ETFs, significantly expanding the regulated encryption investment options in the Asia region, reflecting the trend of regulatory approval for crypto investments.
• A certain company expands its Bitcoin holdings: The company increases its total holdings to 214,400 BTC by purchasing more Bitcoin, continuing its Bitcoin investment strategy.
• Legal developments between a certain company and regulatory authorities: The company faces regulatory challenges that could affect the legal classification of Ethereum and the broader regulatory handling of encryption.
• Australia's potential spot Bitcoin ETF: Australia plans to launch its first spot Bitcoin ETF by the end of the year, which may expand the crypto market in the region.
• Expansion of a stablecoin on the TON blockchain: The stablecoin has launched USDT and XAUT stablecoins on the TON blockchain to enhance liquidity and access for decentralized applications.
• Hong Kong's cryptocurrency leap: Hong Kong plans to launch additional Bitcoin and Ethereum spot ETFs, further expanding regulated crypto investment options in the Asian market.
• The Rise of Cryptocurrency in South Korea: The South Korean Won surpassed the US Dollar in the first quarter of 2024, becoming the most traded currency in cryptocurrency transactions, showcasing the country's growing influence in the encryption field.
• The price of a certain NFT plummeted: The price of a well-known NFT series has collapsed, marking a significant downturn in the once-thriving digital collectibles market.
• Bitcoin miner activates long-dormant BTC: A Bitcoin miner moved $3 million worth of long-dormant Bitcoin, sparking speculation that early miners may be cashing out.
• A certain asset management company's spot Bitcoin ETF surges: The company's spot Bitcoin ETF attracted $15 billion in inflows just three months after its launch, indicating increased investor confidence.
• A public chain developer is addressing network congestion issues: The public chain developer is working on resolving network congestion issues to enhance transaction processing capacity and alleviate bottlenecks.
• A payment company introduces stablecoin for international payments: The company has launched a stablecoin international remittance service for US customers, eliminating transaction fees.
• A certain bank's stablecoin pilot on a public blockchain: The bank has launched a stablecoin experiment on a public blockchain, integrating digital currency into the gaming and sports ecosystem, reflecting Japan's evolving regulatory environment.

On-chain analysis

• Currently, although Bitcoin is performing strongly, overall interest in the crypto market is sluggish, especially towards altcoins.

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