Weekly Pulse #7: April 15th – 21st

Mark Vermeulen, 4 min read
Last Updated: 22 April, 2024

Crypto Market Weekly Recap

Bitcoin Halving Brings New Era of Runes

The most significant crypto event this week was Bitcoin’s fourth-ever halving on April 20th. Along with cutting mining rewards in half to 3.125 BTC, this halving introduced Runes – new fungible tokens created by Ordinals inventor Casey Rodarmor. These crypto assets aim to accelerate decentralized finance (DeFi) and non-fungible tokens (NFTs) within the Bitcoin ecosystem.

Early opportunities around Runes involve owning tokens like PUPS and WZRD or NFT collections like Bitcoin Puppets and Runestones. As the first major expansion of Bitcoin’s functionality in years, Runes have generated substantial enthusiasm. Their integration with the most secure and decentralized blockchain unlocks new potential for Bitcoin to host sophisticated smart contract applications.

Binance Converts $1 Billion SAFU Fund to USDC

This week’s crypto market turbulence appeared to rattle Binance, the world’s largest cryptocurrency exchange. Binance converted all assets stored in its Secure Asset Fund for Users (SAFU) – totaling $1 billion – into USD Coin (USDC), a popular stablecoin.

The SAFU fund exists to reimburse users’ funds in extreme cases like a hack. Binance likely wanted to immunize it from further crypto price declines. This move aligns with Binance’s recent efforts to bolster regulatory compliance after years of living outside the law. The exchange’s run-ins with the U.S. Department of Justice seem to have prompted an about-face into a model citizen of crypto regulation.

Mango Markets $100M Exploiter Found Guilty

October 2022 saw crypto exchange Mango Markets exploited for $110 million in an elaborate scam. This week, a jury found the perpetrator – Avraham Eisenberg, known as “Avi” – guilty of commodities fraud, commodities manipulation, and wire fraud. He faces up to 20 years in prison.

Avi deposited $5 million into Mango Markets, then opened an extremely large long position on the platform’s native MANGO token. This caused MANGO’s price to skyrocket over 1000%, ballooning his collateral value. Avi proceeded to borrow assets with no intention of repaying loans. While $67 million was returned, he retained $47 million from the exploit. Avi claimed he merely won using a “legal trading strategy,” but the verdict sends a clear message that such brazen theft will not go unpunished.

Tether Expands Into 4 Divisions

This week stablecoin issuer Tether announced a major reorganization to streamline into four divisions:

  • Tether Data: Focusing on AI, big data, and peer-to-peer solutions
  • Tether Finance: Overseeing the USDT stablecoin
  • Tether Power: Managing energy and mining operations
  • Tether Edu: Building global education programs

Per CEO Paolo Ardoino, this move aims to cement Tether as empowering financial freedom worldwide, not just through its USD-pegged stablecoin. Each division targets infrastructure improvements in sectors like technology, finance, energy, and education.

While ambitious, this reorganization displays Tether’s dominance and its serious aspirations beyond stablecoins. Detractors may view it as overexpansion, but it’s a bold vision reflecting Tether’s confidence.

Vitalik Buterin Endorses Controversial Privacy Protocol

Ethereum co-founder Vitalik Buterin transferred 100 ETH to Railgun – a privacy protocol known to be used by the North Korean hacker collective Lazarus Group. This immediately sparked backlash over indirectly funding malicious actors.

However, some context is missing from this knee-jerk reaction. Firstly, this wasn’t Vitalik’s first interaction with Railgun; he has engaged with it consistently for 6 months. Also, he views Railgun as an admirable compromise between privacy and regulation. Vitalik co-authored a 10-page paper analyzing Railgun’s tradeoffs, arguing it could enable an equilibrium between honest and dishonest blockchain users.

Those quick to judge should read the paper’s abstract first. Vitalik has clearly reflected deeply on this controversial endorsement. While the optics may trouble some, understanding his rationale is critical before casting stones.

Legacy Market Weekly Recap

Stocks Rebound on Coordinated Response to Strong Dollar

Global stocks rallied this week as authorities intervened to address currency concerns sparked by the strengthening U.S. dollar. A joint statement by the U.S. Treasury and Asian finance ministers helped stabilize regional currencies and restore confidence after a volatile period driven by worries over inflation and interest rates. The shift saw the dollar and Treasury yields retreat from recent climbs.

Corporate Earnings: Tech Leaders Diverge

Earnings reports highlighted differences in tech sector performance. Taiwan Semiconductor Manufacturing Co. (TSM) posted higher profits on robust demand for its chips enabling AI and other technologies. In contrast, orders disappointed at Europe’s ASML Holding NV amid newly imposed U.S. export controls on semiconductor equipment. The U.S. also granted funding to promote domestic chip manufacturing, with Micron Technology Inc. receiving a $6.1 billion grant.

Cautious Optimism Ahead

Despite improved sentiment, caution remains regarding U.S. inflation and interest rates along with China’s faltering recovery. Ongoing monitoring of corporate earnings and guidance will shed light on economic trajectories.

Key Market Drivers

Big Tech vs GRANOLAS: Valuations and Growth Outlooks

U.S. tech giants or “Magnificent Seven” retain high valuations and sector influence, but Europe’s GRANOLAS offer stability and income potential. Investors are watching both categories amid shifting demand and economic conditions.

Fed Policy and Treasury Yields

Hawkish Fed signals and strong economic data drove yields higher over the past month, while this week’s retreat suggests a potential pause. Still, additional rate hikes are likely this year.

Oil and Energy

Oil largely recovered from geopolitical tensions between Iran and Israel. Meanwhile, energy stocks face demand uncertainty depending on economic growth and inflation trajectories.

Housing and Mortgages

The housing sector declined further as mortgage rates rose, with issues for real estate stocks and related exchange-traded funds. Housing market activity appears set to slow from recent peaks.

Currencies in Focus

Asian currencies stabilized after hitting multi-year lows against the dollar, though appreciation seems limited given growth and inflation dynamics. Indonesia may hike rates next week to defend its falling currency.

Market Movers

Among major stocks, Tesla fell after cutting prices and missing first quarter delivery estimates. Netflix dropped on announcing it will cease reporting subscriber numbers. Homebuilder and real estate stocks continued descending on higher rates.

Looking Ahead

Earnings reports from Tesla, Meta, Microsoft and Alphabet will provide wider tech and market perspectives. Success of cost cuts and AI investments will be in focus, with signs of optimism but expectations still measured.

Mark Vermeulen

A native of the Netherlands with a degree in finance, Mark has emerged as an avid crypto enthusiast and expert. His dedication to blockchain technology and bitcoin adoption has made him the driving force behind the Dutch content of Ecoinomy. Mark's adventure began during college, where his passion for decentralized finance quickly caught his eye. His ability to simplify complex concepts around crypto has earned him prestige among Dutch investors and far beyond.