Dispatch #133: ETH Withdrawals on the Horizon!

In this patch of your weekly Dispatch:

• Ethereum gets ready for big upgrade
• CFTC goes after Binance
• BTC records best Q in 2 years

The Big Idea

The Next Phase of Ethereum

There has been a fairly consistent pattern for the last couple of years of certain parts of the crypto community underestimating Ethereum as it has undergone a massive transformation, only to be proven wrong.

It happened first with the Мerge itself, which some said would be delayed forever. When it not only happened but was completed flawlessly and without issue, some of those naysayers turned their attention to other critiques – notably that PoS validators couldn’t withdraw their ETH.

Well, guess what? With the upcoming Shapella hard fork, which is set to be activated on April 12 on the mainnet, that changes. EIP-4895 enables withdrawals from the Beacon Chain, which currently has 17.81 million staked ETH.

We’re sure there will be another skepticism after Shapella, but even more sure that Ethereum will keep right on plugging along through it.

In addition to skepticism, there is much speculation on what the upgrade will mean for ETH’s short-term price. Yes, it will unlock liquidity but at the same time validators will only be able to withdraw a portion of their stake immediately, having to wait 1-36 days should they wish to withdraw its entirety.

Not a validator? Swap your ETH for NETH tokens (1:1) on Nexo's easy-to-use platform. Just swap back to unstake.

The Latest In…

Regulatory Enforcement

Speaking of Ethereum, ETH’s status as a commodity got a little boost this week from an unlikely source. The CFTC sued Binance for running an unregistered derivatives exchange available to US customers, and as part of the complaint cited ETH (among other assets) as digital commodities. Regulatory tug of war between CFTC and SEC? Certainly seems that way.

The other big piece of enforcement news is that former Luna/Terra founder Do Kwon was arrested by local authorities in Montenegro and is currently waiting to see whether and to where he’ll be extradited.

The Latest In…

China’s Relationship with Crypto

The US-China conflict shapes a huge part of geopolitics these days, and crypto is no exception. When China banned Bitcoin mining in 2021, the US was the biggest beneficiary of the shift in global hashrate. And yet now, as the US cracks down on crypto, the other side of the planet is showing a new openness.

• Hong Kong's proposed crypto registration rules came in much less draconian than had been anticipated last fall.
• Chinese officials have reportedly been positively interacting at local crypto meetups.
• It’s reported that the US tries to push crypto out of banking, Chinese banks have been reaching out to crypto companies directly in Hong Kong.

Interesting times.

The Week’s Most Interesting Data Story

Bitcoin’s Best Quarter in Two Years

At the end of last year, in the wake of FTX’s collapse, many market observers thought Bitcoin might be headed down to $10,000. Instead, Bitcoin is closing out Q1 2023 up more than 70% – it’s its best quarter in two years. What’s going on? Part of it is a slight shift in the macro. The banking crisis has convinced markets that the Fed must end its hiking cycle soon, which has led the tech-heavy Nasdaq index to a 14% gain in the quarter. This narrative seems to be driving BTC, with even mainstream publications like the WSJ pointing out that Bitcoin is soaring while banks fail.

Hot Topics

What the Community Is Discussing

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What to Watch for Next Week:

• Will the crypto momentum run into Q2?
• Will a SEC or DOJ complaint follow?
• Can the metaverse get its mojo back?