April 2024 Crypto Assets Market Review

Market Overview

In April, the Crypto Assets market experienced extreme volatility, with Bitcoin's price undergoing significant fluctuations. At the beginning of the month, Bitcoin's price plummeted over 5%, falling below $66,000. Throughout the month, the price fluctuated between $73,000 and $60,000, mainly influenced by macroeconomic factors and changes in market sentiment. This aligns with the changes in U.S. interest rate expectations, highlighting Bitcoin's sensitivity to global economic trends.

The derivatives market indicates this adjustment, and the decrease in the funding rate of Bitcoin perpetual contracts suggests an impending correction. For many observers, the change in market sentiment makes this adjustment inevitable. A significant liquidation event occurred outside of U.S. ETF trading hours.

Changes in U.S. interest rate expectations may be another factor influencing the sentiment shift around Bitcoin. This serves as a reminder that while many view Bitcoin as a "store of value", it remains sensitive to macroeconomic changes.

The price of Bitcoin fluctuated between $73,000 and $60,000 throughout the month. This relative stability may be attributed to several factors. One significant influence is the unexpected decline of the US Dollar Index (DXY). A weaker dollar makes Bitcoin more attractive, thereby supporting its price.

Investors' attitudes towards the Bitcoin halving event may lead to expectations of a price surge. This is another factor that could influence market sentiment. However, this expectation did not materialize, and the price of Bitcoin was not significantly affected.

Despite the slowdown in pace, ETF funds continue to flow in and support the market.

At the end of April, Bitcoin was at the lower end of the price range, showing obvious market weakness, which may lead to more interesting developments.

Crypto Assets Investment Product Innovation

An important development in April is the ongoing exploration of asset tokenization, particularly with the launch of an institutional-level digital liquidity fund by a large asset management company. This fund is represented by tokens on Ethereum and is only open to accredited investors who meet the minimum investment amount. It primarily invests in safe, income-generating assets such as US Treasury bonds and repurchase agreements, with dividends paid in tokens. This innovative model not only provides new investment options but also demonstrates how blockchain can enhance the liquidity and accessibility of traditional financial assets.

The fund manages assets exceeding $375 million from 10 holders, highlighting significant progress in integrating real-world assets with blockchain technology.

In addition, the token is further enhanced through collaboration with multiple parties. This cooperation connects the token to the USDC smart contract pool, enabling direct redemption and continuous liquidity. Investors can convert their holdings into USDC at any time, supporting instant global transactions. This is particularly beneficial for crypto companies managing large finances, providing a seamless way for enterprises to quickly access funds. This integration marks a significant advancement in liquidity management in the financial sector.

Regulation and Regional Expansion

The regulatory actions in the crypto world in April are particularly important, especially with the Hong Kong Monetary Authority approving Bitcoin and Ethereum spot ETFs. This is a significant change for the Asian market, particularly for the Hong Kong market, although access for mainland Chinese investors remains strictly restricted. This decision involves three major investment groups and highlights the importance of integrating Crypto Assets into a broader financial ecosystem.

The development of Crypto Assets in Europe is also advancing. A large bank in Germany has announced plans to provide encryption trading and custody services. This action by a traditionally conservative financial institution highlights the growing perception of Crypto Assets as legitimate investment assets. The bank's approach is particularly noteworthy, focusing on integrating encryption services as part of its business model, rather than merely chasing speculative profits. This reflects a deeper and more practical application of blockchain technology in corporate finance.

Ethereum and Regulatory Challenges

The trend of Ethereum is similar to that of Bitcoin, but it is under closer scrutiny in terms of regulation. The SEC has been slow to decide on the Ethereum spot ETF application, requesting public comments on the proposed amendments, indicating the cautious attitude of regulators and the ongoing uncertainty in the regulatory environment.

It is worth mentioning that a certain Ethereum-related company has sued the SEC, challenging the decision to classify "ETH as a security". This lawsuit could clarify Ethereum's regulatory status, while also affecting other Crypto Assets. If successful, it may impact market dynamics and boost investor confidence.

Bitcoin Halving

The Bitcoin halving event occurs this month, reducing miners' block rewards by half. This has significant long-term implications for the network economy. Although there has been no direct impact on the price, over time, the reduction in rewards could lead to higher transaction fees, as miners rely more on transaction fees to maintain profitability. This shift is crucial for the future of Bitcoin as a transaction network, especially since higher fees may diminish its appeal for small transactions. On the positive side, the development of layer two networks is underway, helping to balance the trade-off between security, which is more critical for large transfers, and cost, which is more important for small transfers.

Macroeconomic Environment

( Gold rises steadily in connection with Crypto Assets

Gold remains the focus in April. Despite the decline in holdings of the largest gold ETF in the United States, gold prices continue to rise. This divergence is noteworthy, especially as Asia recorded net inflows into gold ETFs, despite having less developed market infrastructure compared to North America and Europe.

Central banks have been active buyers of gold, continuing a decade-long purchasing trend. The latest data shows that central banks buy gold mainly for traditional market diversification and crisis hedging motives, rather than to detach from the dollar. The only increased motivation last year was gold's performance during crises, highlighting global geopolitical and economic uncertainties.

This interest in gold seems to coincide with the discussions in the crypto assets community about "finding international payment options outside of the dollar," highlighting a broader demand in the market for reliable alternatives outside of the conventional financial system.

) interest rate expectations and economic signals

April began with a heightened focus on the U.S. financial markets, with vigorous discussions sparked by expectations of interest rate cuts. Stronger-than-expected economic data dampened hopes for rate cuts in 2024. The U.S. economy appears to be more resilient than previously thought.

( U.S. employment and FOMC progress

The U.S. employment data is under close scrutiny, with the ADP payroll expected to reveal a slight weakening in the labor market. This data usually serves as a precursor to the official employment statistics released a week later, which also indicate a softening, with the unemployment rate holding steady at 3.8%. The JOLTS and Challenger layoff reports further provide information on hiring and layoffs.

The FOMC press conference is particularly critical, with the chairman discussing the ongoing issues of inflation and the Federal Reserve's interest rate strategy.

) The bond market is tense and the US fiscal quarterly report.

The Treasury Department's quarterly report reveals key financial strategies, detailing the upcoming bond issuance plans and overall fiscal adjustments that directly impact market liquidity. This update is also reflected in the government bond market, as liquidity has decreased and volatility has increased since the end of 2021, attracting close attention from investors. The report also emphasizes the Treasury's expected borrowing adjustments for the second quarter, which are $41 billion higher than previously anticipated, totaling $243 billion. Although this increase seems significant, it remains relatively small compared to the United States' enormous national debt of ###, which currently exceeds $34.5 trillion and continues to rise ###.

Global Perspective

The global economy is also worth paying attention to. Operations in the Japanese currency market suggest that the government may intervene to support the yen. Essentially, "yen bounce" ### refers to the sudden increase in the value of the yen ( occurring simultaneously with a decline in the DXY dollar index, leading to speculation that the Bank of Japan may intervene in the currency market to influence the value of the yen.

At the same time, South Africa is taking measures to regulate Crypto Assets, indicating that the country's institutions are becoming increasingly interested in digital assets. In contrast, Venezuela is facing difficulties using USDT), a digital coin ###, in oil transactions due to sanction risks.

Highlights of This Month

• The former CEO of a trading platform was sentenced to four months in prison for anti-money laundering violations, highlighting regulatory actions in the encryption field.
• A certain asset management company's institutional-grade digital liquidity fund manages assets exceeding $375 million, indicating strong institutional interest in digital assets.
• Hong Kong has launched six new Bitcoin and Ethereum ETFs, significantly expanding the regulated Crypto Assets investment options in Asia, reflecting the trend of regulatory approval for Crypto Assets investments.
• A certain company expanded its Bitcoin holdings to 214,400 BTC, continuing its Bitcoin investment strategy.
• A certain company is facing SEC regulatory challenges, which may affect the legal classification of Ethereum and the broader regulatory treatment of Crypto Assets.
• Australia plans to launch its first spot Bitcoin ETF by the end of the year, which may expand the region's Crypto Assets investment market.
• A certain stablecoin launched USDT and XAUT on the TON blockchain to enhance liquidity and access for decentralized applications.
• Hong Kong plans to launch additional Bitcoin and Ethereum spot ETFs to further expand regulated crypto investment options in the Asian market.
• In the first quarter of 2024, the South Korean Won surpassed the US Dollar to become the most traded currency in Crypto Assets transactions, demonstrating South Korea's growing influence in the encryption field.
• A certain NFT project's price has plummeted, marking a significant decline in the once thriving digital collectibles market.
• Bitcoin miners move $3 million worth of long-dormant Bitcoin, sparking speculation that early miners may be cashing out.
• A certain company's spot Bitcoin ETF has attracted $15 billion in inflows over three months, indicating an increase in investor confidence.
• Solana developers are solving network congestion issues, enhancing transaction processing capabilities, and alleviating bottlenecks.
• A payment company has launched stablecoin international remittance services for American customers, eliminating transaction fees.
• A certain bank launched a stablecoin experiment on the Polygon network, integrating digital currency into the gaming and sports ecosystem, reflecting Japan's evolving regulatory environment.

On-chain Analysis

• Currently, despite Bitcoin performing strongly, overall interest in Crypto Assets is sluggish, especially towards altcoins.
• Despite the challenges in the market, major Bitcoin miners have not significantly given up, and miners with efficient equipment and low-cost electricity are still profitable. However, retail miners using older equipment and facing higher electricity bills are struggling.
• The surge in Crypto Assets projects has increased market complexity. The latest report shows that as of April 2024, the number of Crypto Assets has risen to approximately 2.5 million, a 570% increase compared to 2022, although many projects may not be actively maintained or lack credibility.
• A report from a certain analysis platform shows that the "frenzy phase" of Bitcoin has weakened and cooled following market restructuring. The sell-off led by newer investors indicates that as the selling pressure nears its end, the market may be approaching its bottom. The report also points out that the local distribution pattern in March is similar to past bull markets.
• The Layer 2 network of a certain exchange is performing strongly, attracting 50,000 to 100,000 new Crypto Assets users daily, with a total user count nearing 9 million.
• Short-term holders are selling at a loss. Investors who purchased at higher prices in the past six months are currently at a loss and may panic sell below the SOPR, indicating that the market may be approaching a local bottom.
• Most on-chain activities are calm, with only a few exceptions drawing attention. Trading volume is on a downward trend as cautious sentiment persists. Typically, the impact of Bitcoin halving will manifest after a delay of 1-2 months.

![Crypto Assets market April review: BTC迎来强