Dispatch #190: The Other Side of Hype: Bitcoin’s Rainy Week

May 03 4 min read

Dispatch

In this patch of your weekly Dispatch:

ETFs around the Globe 🌐
May’s Token Unlocks 🔓
The Crypto Low We Need 🛡️

The Big Idea

Bitcoin vs. Inflation

“What goes up, must come down.” This old adage appeared to be the overwhelming sentiment across crypto markets in the past week – it saw the biggest decline since the crypto winter in 2022. That proverb, however, didn’t apply where it is most needed – towards the rate of inflation in the U.S. and the all-important Federal Reserve interest rates. You see, when the issuer of the world’s dominating currency looks to curb spending, digital assets have to follow suit and retrace to more attractive levels. That appeared logical to leading finance news outlet Investing.com upon discussing the latest dip with a Nexo expert. On Dispatch, we’re looking at the source of it all:

On Wednesday, the Federal Reserve stated that interest rates will remain at their highest level in two decades, between 5.25% and 5.5%, due to persistent inflation above the target of 2%.
Despite hopes for rate cuts, inflation has fluctuated between 2% and 4%. Fed Chair Jerome Powell expressed skepticism about rate changes given recent inflation data, indicating a prolonged period before any adjustments. The focus remains on achieving sustainable inflation levels.

We know the dedicated Dispatch audience is no stranger to macroeconomics’ effects on crypto prices. Yet Bitcoin, even with its latest slide below $60,000, has rewarded holders – this Week’s Most Interesting Data Story has the chart to prove it. And there’s a silver lining amidst all the volatility.

The Build on Bitcoin (BOB) project has launched its first phase, blending Bitcoin's reach with Ethereum's DeFi features. With close to $300M locked and 40 dapps, BOB aims to simplify liquidity transfers and bridge Bitcoin and Ethereum ecosystems. This brings us to this week’s big idea – could Bitcoin’s enhanced transaction processing be the backbone of the asset whenever inflation and global tension test its stability?

The Latest In…

The ETF Spring

Australian ETFs: Australia's largest ASX stock exchange is gearing up to list its first batch of approved spot Bitcoin ETFs by the end of 2024. VanEck, BetaShares, and DigitalX are among the issuers with pending ETF applications.
Asian ETFs: Six spot Bitcoin and Eether ETFs debuted in Hong Kong, marking Asia's first launch of such ETFs. Despite mixed results and lukewarm trading, these debuts underscore Hong Kong's ambitions as a global digital asset hub.

U.S. ETFs: Spot Bitcoin ETFs in the U.S. witnessed their largest net daily outflows to date, totaling $563.7M on Wednesday. Fidelity's FBTC led ($191M), followed by Grayscale's GBTC ($167.3M). Despite these outflows, the cumulative total net inflow for the 11 ETFs stands at $11.2B.

The Latest In…

It’s All About the Token

Token unlocks and airdrops frequently create a strong buzz in their communities – here is what’s planned this month for some of the assets on Nexo:

Avalanche: Ethereum competitor Avalanche will release 9.54 millionM AVAX tokens, valued at $329M, on May 22. This includes tokens for the team, foundation, strategic partners, and a 1.13 million AVAX airdrop.
Arbitrum: Ethereum Layer 2 network Arbitrum will unlock 92.65 million ARB tokens, worth $103.76M, on May 16. These tokens will be distributed among the team, future team, advisors, and investors.

Bored Ape: ApeCoin, associated with Bored Ape Yacht Club, will release 15.6 million APE tokens, valued at close to $20M on May 17. These tokens will mainly go to the treasury and Yuga Labs.

The Latest In…

Crypto’s Feel-Good Story

For all the bad weather that crypto markets saw this week, an intriguing development has emerged to make us all feel better. Blockchain security firm CertiK reported a significant decrease in crypto-related exploits and scams in April. The total losses plummeted by 68% compared to the previous month, reaching a historic low of $25.7M.

Notably, private key compromises, which typically lead to substantial losses, were minimal in April, with only three incidents surpassing the $1M mark compared to 11 in March. This leads us to believe that people are getting more pro in terms of their cybersecurity which makes us extremely happy.

The Week’s Most Interesting Data Story

Still the Best Performing Asset?

We will refrain from speculating on the near-term market situation – instead, simply take a look at the chart below and Bitcoin’s monthly returns since 2023. While the pullbacks are clearly notable, so are Bitcoin returns and many would argue – they are more intense.