Geopolitical Tension & Bitcoin

As mentioned in the previous email, the recent outbreak of war between Israel and Iran has escalated geopolitical tensions in the Middle East, leading to significant uncertainty and a substantial downturn in global markets, including the digital asset sector. Despite this turmoil, Bitcoin has shown some resilience, being down only 7.6% over the week, although it experienced a sharper drop of 17.5% from its peak to its lowest point within the week.

Bitcoin Weekly Price Chart

This volatile period saw massive liquidations on major centralised exchanges, totalling over $500 million on April 12th and 13th, with $375.3 million attributed to long liquidations.

Bitcoin Total Liquidations Chart

Coinbase Q1 2024 Estimates

Estimates suggest that Coinbase's net revenue for Q1 2024 is expected to be around $1.5 billion, representing a significant growth of 65% compared to the previous quarter. This surge in revenue can be attributed to the approval of a Bitcoin spot ETF, which has led to a doubling of trading volume on the platform during the first quarter of 2024. The approval of the Bitcoin spot ETF and the subsequent all-time-highs in the cryptocurrency market have contributed to this impressive performance.

Coinbase Price Chart

Coinbase stock exhibits a strong correlation with the digital asset class, being the largest centralised exchange in the United States by trading volume. Many investors consider Coinbase stock a high conviction investment this cycle, viewing it as a diversified gateway to the broader crypto market with multiple revenue streams. The primary revenue stream comes from transaction fees from its users, which increase significantly during bullish cycles like the one we are currently in. Additionally, Coinbase benefits from early access to top seed deals via its venture capital arm. It also serves as the custodian for nine Bitcoin ETFs, including those of Grayscale and Blackrock. Recently, Coinbase further expanded its services by launching Base, its own Layer 2 Ethereum solution which is currently thriving.

Hong Kong ETFs & Bitcoin ETF Flows

On Monday, Hong Kong took a significant step by conditionally approving its first spot bitcoin and ether exchange-traded funds (ETFs), positioning itself as the first city in Asia to recognise these cryptocurrencies as mainstream investment tools. This development comes amidst a turbulent weekend in the crypto market, marked by intense sell pressure. Despite this, the Bitcoin ETFs experienced a robust opening on Monday, with net flows totaling only -$36.7 million. There were $73.4 million in inflows, indicating that investors were actively buying the dip.

Additionally, the average outflow of GBTC has decreased to $253.3 million, down from the previous week, though it's noteworthy that average daily inflows also saw a decline, from $470.1 million to $444.2 million. Over the seven trading days from April 5th to April 15th, Bitcoin ETFs recorded a trading volume of $19.60 million, underscoring continued investor engagement despite the volatile market conditions.

Bitcoin ETF Flow Table (US$m)

Solana Upgrade  

Solana is down over 17% on the weekly, dropping as much as 34.5%. This is due to the congestion issues the network has been experiencing as well as the war between Israel and Iran. However Solana has recently released a mainnet beta update to address the persistent issue of network congestion that we have experienced for the past couple of weeks.

Developers are actively working to tackle the challenges posed by network congestion, aiming to improve the overall performance and reliability of the Solana network. This update is a crucial step in enhancing the user experience and ensuring the scalability of the Solana ecosystem.

Solana Weekly Price Chart

Stacks Nakamoto Upgrade

Stacks is a layer 2 scaling solution for Bitcoin built on the Bitcoin blockchain, and is undergoing its long-awaited Nakamoto upgrade. This upgrade will significantly improve the speed and efficiency of the Stacks blockchain. Specifically, the upgrade will settle transactions within five to ten seconds and provide enhanced protection, ensuring the overall stability and security of the network.

We believe this could give rise to the Bitcoin DeFi narrative as the increased user experience will attract developers and users to the network and utilise the untapped capital within Bitcoin.

Stacks is currently down 25.6% on the weekly, the Stacks (STX) cryptocurrency has experienced a 25.6% decline on a weekly basis. This price drop is likely due to a combination of geopolitical tensions impacting the broader cryptocurrency market, as well as a "sell-the-news" event surrounding the upcoming Nakamoto upgrade for the Stacks blockchain. Investors who had previously bought Stacks in anticipation of the upgrade appear to be taking profits, leading to the observed price decline following the run-up leading up to the upgrade.

Stacks Weekly Price Chart

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