Crypto Market Weekly Report: Bitcoin Halving Approaches, Market Trend Analysis

As the Federal Reserve continues to maintain a cautious stance on interest rate cuts, the crypto market has shown a downward trend similar to stocks and other risk assets. Against this backdrop, gold has emerged as the biggest winner, with its price reaching new highs driven by increased purchases by central banks, escalating geopolitical risks, and inflation concerns.

The launch of the Endgame plan for the Maker protocol and the recent governance changes made to increase revenue have attracted widespread attention in the market. Although these rapid changes are seen by some industry insiders as high-risk initiatives.

Market Dynamics

Recent remarks by the Federal Reserve Chairman indicate a cautious attitude towards interest rate cuts, leading to a significant decline in the crypto market. Uncertainty in the market is not only reflected in the cryptocurrency space, but stocks and other risk assets also performed poorly last week. Concerns about re-inflation have intensified, with expectations for interest rate cuts by the end of the year even surpassing the Federal Reserve's predictions for the first time.

In this environment, gold has performed outstandingly, reaching new price highs. It is worth noting that the appreciation of gold is usually associated with the Federal Reserve lowering interest rates and rising inflation rates. Considering the market's recent cautious attitude towards interest rate cuts, the trend of gold may suggest that inflation issues are more serious than expected.

The recognition of Bitcoin as "digital gold" is increasing, which may attract a new group of investors. Compared to previous cycles, the market may exhibit more aggressive buying behavior even during price fluctuations. The launch of the U.S. spot Bitcoin ETF has broadened funding channels, helping to reduce volatility.

The impact of these ETFs and the increase in institutional demand can be seen from the Bitcoin futures open interest. The CME Bitcoin futures open interest has surpassed that of any single centralized exchange, accounting for more than one-third of the total Bitcoin futures market. The capital released by the ETFs may represent a fundamental change in market structure since the 2020-2021 cycle.

Considering the release of these capitals, the upcoming Bitcoin Halving (expected to occur from April 20 to 21), and other positive factors, we believe that the overall market performance in the second quarter will remain constructive.

On-Chain Dynamics: The Final Transformation

The Maker Protocol has performed exceptionally well recently, primarily due to its Endgame announcement released on March 13. The plan outlines a series of transformations across four main phases, including token restructuring, updates to governance protocol incentives, the establishment of new asset bridges, and the launch of the Spark subDAO.

As more details are released, especially regarding the future subDAO governance tokens, speculation around airdrops for MKR holders and DAI stakers is increasing. In addition to the recent governance proposals that have increased protocol revenue, the anticipated value of future airdropped tokens has also driven up token valuations.

The changes made by Maker are a reflection of the continuous development of DeFi protocols, aimed at implementing plans that have been discussed for a long time. Although these mature DeFi protocols may be perceived as stagnant in development, their brand and market share can more effectively drive innovation due to the network effect of their protocol liquidity.

However, the recent governance changes in Maker have sparked controversy in the DeFi community. Some quickly passed proposals, such as the integration with Morpho and the increase of collateral limits, while expected to significantly boost Maker's revenue, are also seen as significantly raising the risk levels. In light of this, the Aave community is discussing the possibility of removing DAI as collateral.

This conflict may herald a shift in the decentralized stablecoin market. Compared to DAI, Ethena's USDe has quickly gained market share due to its higher yield and airdrop incentives. Both assets have inherent limitations on their issuance capabilities.

Despite the increasing number and market value of decentralized stablecoins, their growth rate is not keeping up with centralized stablecoins. The market share of USDC and USDT has risen to 90%. Considering the advantages of issuing cross-chain native stablecoins and the improvements in asset bridge user experience, the adoption of decentralized stablecoins may continue to face challenges.

Encryption and Traditional Financial Market Overview

Over the past week, the market has trended towards calm. Bitcoin fluctuated within the $2000 range, and while the inflow of funds into the US spot Bitcoin ETF is positive, it has slowed down. Overall, the trading volume in the crypto market continues to decline as the market seeks the next narrative to drive upward momentum. The risk of bullish positions for bullish traders has eased, with funding rates for BTC, ETH, and various altcoins nearing their lowest levels this year.

The Bitcoin Halving expected to occur on April 20 or 21 may serve as a catalyst for price increases, but it still needs to address the sluggish period faced by the crypto market and other risk assets.

Market Dynamics

• The trading volume of the spot Bitcoin ETF increased nearly twofold in March, reaching 111 billion USD.
• The TRON Foundation and Justin Sun request the US court to dismiss the SEC lawsuit.
• Ethena token listed and airdrop claimed
• Vitalik Buterin and Arthur Hayes share their views on the Meme coin craze

Global Perspective

Europe:

• Russia explores testing the digital ruble for budget payments
• 21Shares launched a Toncoin staking ETP on the Swiss Stock Exchange.
• A US-UK investigation into whether a $20 billion crypto transaction violates Russian sanctions.

Asia:

• Hong Kong financial company VSFG plans to launch a spot Bitcoin ETF in May.
• HSBC Bank launches tokenized gold for retail investors in Hong Kong
• Singapore expands crypto regulation, introducing enhanced user protection requirements
• Indonesia implements regulatory sandbox for crypto companies
• The Taiwan crypto industry has been approved to establish an industry association.

Important Events in the Coming Week

• April 10: U.S. CPI announced
• April 12: Financial reports released by JP Morgan, Wells Fargo, Citigroup and other financial institutions.