xSUSHI

Katherine Ross

Ben Strack

As the crypto market rebounds after its longest bear market to date, venture capital into the space is also starting to pick back up.&nbsp;



Infrastructure projects are still in need of investments, while startups focused on the intersection of AI and blockchains are also likely to attract funding, industry watchers said.&nbsp;&nbsp;&nbsp;



There were 444 disclosed private financings during the first three months of 2024, according to a report by crypto advisory firm Architect Partners — amounting to $3.1 billion raised.



This was a substantial quarter-over-quarter increase in both categories, with capital raised up 36% and the number of financings increasing by 77%.&nbsp;



Read more: <a href="https://blockworks.co/news/ai-startups-increased-funding">Funding Wrap: AI startups score high in 2024 thus far</a>



Despite the uptick, the current pace of $12.4 billion for the year would be more than 50% below the crypto financing capital totals seen in 2021 and 2022.&nbsp;



Architect Partners managing partner Eric Risley said he expects the first quarter bump in crypto venture capital funding to persist throughout 2024 and beyond — barring a crypto market crash or regulatory challenges.&nbsp;



“Crypto has recently emerged from a challenging phase marked by fraud, inadequate risk management and instances of irrational exuberance,” he told Blockworks. “Architect Partners is optimistic that enduring lessons have been learned from this period, shaping ongoing best practices as we move into the path to maturity.&#8221;



Though the quarter’s number of early-stage financings (seed and Series A) was more than double those seen in the fourth quarter of 2023, the amount of late-stage equity financings rose at a slower rate — by 32% from the prior quarter.



“It’s common for early-stage financing to lead late-stage financing,” Risley added. “In this case, late-stage crypto investors have been adversely impacted by downward reset valuation marks, the outright exit of investors such as Coatue and Tiger, and crypto-focused growth funds like 1RoundTable currently focused on fundraising.”



<h2 class="wp-block-heading">Follow the money</h2>



Venture capital investors have shown a growing interest in using blockchain-based technologies as the backbone for other activities, KPMG executives wrote in the company’s first quarter Venture Pulse report.



The rebound of funding for crypto- and blockchain-related projects has so far led to several companies gaining unicorn status this year.



Polyhedra Network’s $20 million fundraise last month in a round led by Polychain Capital gave it a $1 billion valuation.&nbsp;



Monad Labs <a href="https://blockworks.co/news/evm-compatible-layer-1-blockchain-vc-interest">raised $225 million earlier this month</a> as part of a Series A round led by Paradigm — giving it a roughly $2 billion valuation, according to Pitchbook <a href="https://pitchbook.com/news/articles/monad-labs-225m-paradigm-series-a-unicorn#:~:text=Monad%20Labs%2C%20an%20ethereum%20blockchain,billion%2C%20according%20to%20PitchBook%20data.">data</a>.&nbsp;&nbsp;



Asia crypto financial services company <a href="https://blockworks.co/news/trading-market-making-staking-see-funding">HashKey Group raised $100 million</a> in a January Series A funding round at a $1.2 billion valuation.



Also notably, Eigen Labs’ development studio — responsible for creating Ethereum staking-focused startup EigenLayer — raised $100 million in Series B funding from Andreessen Horowitz in February.



Read more: <a href="https://blockworks.co/news/eigenlayer-fundraise-ecosystem-development">EigenLayer’s $100M haul ignites series of adjacent investments</a>



Looking ahead, one subsection of start-ups within crypto that could see more funding this cycle are infrastructure-based projects, according to Pitchbook analyst Robert Le.&nbsp;



“I still think infrastructure is still underdeveloped,” he said, citing prices he’s seen on Base. “There&#8217;s no way that we can say infrastructure [and blockchains are] mature when you pay $5 to sign a transaction.”&nbsp;



He doesn’t expect a lot of funds to go toward layer-1s this time around, but layer-2s could “see a lot of capital go into that space.”



The segment has already seen a decent chunk of funds go towards infrastructure projects, according to ByBit’s institutional report.&nbsp;



“These projects span a wide range of sectors, from hardware wallets to blockchain data providers, offering essential solutions to address various industry challenges and facilitate innovation,” the report said.



Outside of infrastructure, ByBit’s report highlights two emerging trends: projects leveraging AI and those building atop Bitcoin’s blockchain ecosystem.&nbsp;



In February, Exohood Labs — a start-up leveraging <a href="https://blockworks.co/tag/artificial-intelligence">AI</a> technology — raised $112 million at a valuation of $1.4 billion. 



Read more: <a href="https://blockworks.co/news/decentralized-artificial-intelligence-innovation">Funding Wrap: Decentralized AI is all the craze</a>



“Likely the hottest area of investment in the space is [and] will be models that include an overlap of blockchain and AI,” Conor Moore, the global Head of KPMG Private Enterprise, told Blockworks. “Also, companies focused on the Lightning Network are getting attention.”



The rise of decentralized network Bittensor and The Render Network — focused on the blockchain-fueled rendering of 3D graphics —&nbsp; exhibit the possibilities of combining blockchain and AI, ByBit’s report notes.



“These technologies’ rapidly evolving natures, combined with regulatory uncertainties, presents both opportunities and risks,” it adds. “As the AI sector continues to expand and evolve, the synergy between these two areas of technological advancement is expected to fuel further innovation and growth in the cryptocurrency space.”



<h2 class="wp-block-heading">We’re not back…yet</h2>



But don’t get too optimistic about a bull market yet, Le cautioned. He told Blockworks that he’s not seeing enough data to firmly say the overall market — much less the <a href="https://blockworks.co/tag/venture-capital">VC</a> landscape — is there yet, though the money is coming back. 



Crunchbase, in a report Thursday, noted that the three biggest rounds of last quarter came in below $300 million.&nbsp;



KPMG’s first quarter Venture Pulse report noted that crypto venture capital funding could see positive momentum through the second quarter of this year.&nbsp;



There have been some sizable raises early in the second quarter too. Most notably, Andreessen Horowitz said it raised $7.2 billion for <a href="https://blockworks.co/news/a16z-seven-billion-fundraise">venture funds focused on sectors that include</a> gaming, which the firm previously said could invest in Web3.&nbsp;



While a slew of smaller deals have been announced, the horizon for bigger deals looks bright as start-ups like Citadel-backed Hidden Road Partners look at founding rounds over $100 million, <a href="https://www.bloomberg.com/news/articles/2024-04-17/citadel-backed-prime-brokerage-in-talks-to-raise-fresh-capital?utm_source=website&amp;utm_medium=share&amp;utm_campaign=twitter">per</a> Bloomberg. The potential raise follows <a href="https://blockworks.co/news/evm-compatible-layer-1-blockchain-vc-interest">a $100 million raise for Berachain</a> earlier this month.



“The regulatory landscape is still somewhat of an inhibitor to exits,” KPMG’s Moore said. “And with so many global elections in the next 12 months, things may get more uncertain on that front.”



While due diligence into crypto and blockchain-related investment opportunities can delay a flood of money into the space, KPMG executives said venture capital firms are bolstering staff focused on that.&nbsp;&nbsp;&nbsp;&nbsp;



“Due diligence involves a lot, including size of total addressable market, technology ownership and protection…and regulatory concerns, to name a few,” Moore said.



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As crypto fundraising sees an uptick, where’s the capital set to go?

Macauley Peterson

The halving of the bitcoin block reward isn’t the only thing happening on Bitcoin block #840,000 in the early hours of April 20. The event will also mark the launch of Runes, a new standard for fungible tokens issued directly on Bitcoin.



Casey Rodarmor, the creator of Ordinals, developed Runes as an alternative to BRC-20, the first bitcoin fungible token system built on Ordinal inscriptions.



Bitcoin was not designed to support such tokens, and BRC-20s only work with help from off-chain indexers that read the data inscribed, a suave way of saying “written to” individual <a href="https://app.blockworksresearch.com/glossary#S">satoshis</a> — rather like shoving a square peg in a round hole.



Read more: <a href="https://blockworks.co/news/op-cat-bitcoin-taproot-wizards">Satoshi-era Bitcoin code idea gets a boost from Taproot Wizards</a>



Like BRC-20s as they are used today, Runes are basically <a href="https://blockworks.co/tag/meme-coins">memecoins</a>. Unlike BRC-20, Runes do not depend on the Ordinals mechanism of inscribing, Rodarmor <a href="https://x.com/rodarmor/status/1774613900119699701">said</a> on X.



<a href="https://blockworks.co/tag/bitcoin">Bitcoin</a>&#8216;s blockchain primarily operates on a system called UTXOs (Unspent Transaction Outputs). Each transaction generates new UTXOs, which can be thought of as individual pieces of bitcoin that have not been spent after being created in a transaction.



All the UTXOs are tracked by the network to ensure that new transactions are legitimate, meaning that the sender has the bitcoin they attempt to send.



Read more: <a href="https://blockworks.co/news/bitcoins-21-million-limit-myth">Bitcoin’s 21 million limit is a boomer myth</a>



&#8220;Runestones&#8221; are special messages stored in Bitcoin transaction outputs — essentially embedded scripts that specify what operations should be performed, like creating, minting or transferring runes.



Each runestone corresponds to a UTXO. One consequence of the fact that balances are stored in UTXOs is they can readily be locked in Hashed Time-Locked Contracts (<a href="https://docs.lightning.engineering/the-lightning-network/multihop-payments/hash-time-lock-contract-htlc">HTLCs</a>) meaning Runes can be easily integrated with the Bitcoin <a href="https://blockworks.co/tag/lightning-network">Lightning Network</a>.



This compatibility is expected to facilitate faster and cheaper transactions, expanding its utility and appeal, potentially giving the runes standard an edge.



<a href="https://blockworks.co/tag/ordinals">Ordinals</a> have also been controversial for causing state bloat on the Bitcoin network, although they have been a boon for miners.



Read more: <a href="https://blockworks.co/news/ordinals-impact-on-bitcoin-network">Ordinals are driving up Bitcoin fees — but that may be good for the network</a>



The launch block coinciding with the halving was selected arbitrarily by Rodarmor. Unlike a soft fork, there’s <a href="https://www.reddit.com/r/Bitcoin/comments/1c6pzo6/halvingnothing_will_change_for_medca">nothing</a> special about blocks after the <a href="https://blockworks.co/tag/bitcoin-halving">halving</a> that make it so.



But with media attention focused on Bitcoin around the quadrennial milestone, it seemed like the perfect time to push runestones on-chain.



“I&#8217;m highly skeptical of ‘serious’ tokens, but runes is without a doubt a ‘serious’ token protocol,” he <a href="https://x.com/rodarmor/status/1774613900119699701">said</a>.



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Bitcoin Runes look to spice up the halving party

Adam Swick

Ahead of the looming Bitcoin halving, miners must soon confront the new reality of a potential substantial drop in profitability. This dynamic has spurred the reevaluation of miners’ relationship with energy, which is their largest input cost. 



With block subsidies being reduced by half, miners can no longer be passive energy consumers. Instead, they must evolve into strategic energy partners that create new forms of value to ensure they thrive amidst the evolving bitcoin mining landscape.



To bolster profit margins, miners have traditionally prioritized low-cost energy sources. The Bitcoin halving will only intensify this pursuit, compelling miners to explore unconventional energy avenues and establish symbiotic relationships with energy producers to increasingly lower or offset their cost of energy. This shift signifies a departure from mere energy consumption towards more active participation in optimizing energy generation and transmission.



Renewable energy emerges as a promising solution for miners grappling with shrinking margins and seeking more cost-effective energy options. Technologies like wind and solar power, once considered niche, now attract considerable attention. While the intermittent nature of renewable sources poses challenges for the average consumer, miners can leverage their ability to quickly power up and down to align energy consumption with intermittent energy supply, reducing costs and stimulating investment in clean energy infrastructure.&nbsp;



Often, sites like hydropower or solar farms produce “stranded energy” that cannot reach end users. However, bitcoin miners can operate around those sites, thereby monetizing the otherwise unused energy resources and converting them into bitcoin. Marathon, for example, operates sites colocated with a <a href="https://ir.mara.com/news-events/press-releases/detail/1332/marathon-digital-holdings-continues-international-expansion">hydro dam in Paraguay </a>and a <a href="https://ir.mara.com/news-events/press-releases/detail/1347/marathon-digital-holdings-enters-definitive-agreement-to">wind farm in Texas</a>.



Moreover, miners can help to spearhead initiatives that harness overlooked sources of waste energy. Marathon <a href="https://ir.mara.com/news-events/press-releases/detail/1330/marathon-digital-holdings-announces-energization-of-its">launched a pilot project</a> aimed at converting methane emissions from landfills into electricity exemplifying this innovative approach. By repurposing waste into a valuable resource, miners not only diminish their environmental impact but also access a cost-effective energy alternative. While many of these pilot projects are in their infancy and don’t yet make huge contributions to the total BTC global hash rate, they do serve as powerful proofs of concept that could scale significantly in the future.&nbsp;



Efforts to optimize the heat generated by mining rigs represents another frontier in the pursuit of low-cost energy. Collaborating with industries that can utilize surplus heat, like <a href="https://www.wenatcheeworld.com/business/shrimpcoin-or-bitcoin-east-wenatchee-miner-marathon-digital-holdings-seeks-space-for-pilot-project/article_cda608d4-6964-11ee-a4ed-f7d26a6a90bd.html">agriculture</a> or <a href="https://techcrunch.com/2024/01/11/hestiia-bitcoin-radiator/">domestic heating</a>, enables miners to diversify revenue streams while reducing dependence on conventional energy sources. 



Read more from our opinion section: <a href="https://blockworks.co/news/bitcoin-clean-energy-etfs">Bitcoin ETFs could actually be good for the environment</a>



The need to curtail energy costs post-halving also necessitates technological ingenuity within the mining sector. From more energy-efficient ASICs to immersion cooling, miners are driving advancements that transcend their own industry, with the potential to also revolutionize global energy consumption. As energy demand continues to reach record highs across the US, this type of innovation stands to benefit not only the mining sector but a much broader swathe of power-intensive industries.&nbsp;



In the face of adversity, miners have the power to reshape the energy sector, paving the way for a greener, more efficient future. By providing a service and becoming valuable energy partners rather than customers, bitcoin miners can contribute not only to the sustainability of Bitcoin but also to a more sustainable world at large.



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<div class="wp-block-post-author-biography">Adam Swick is the Chief Growth Officer at Marathon Digital Holdings. Prior to joining Marathon, he served as a principal at Refinery Ventures, where he was responsible for identifying and recommending business strategies to accelerate the growth of all companies in Refinery’s portfolio. Before Refinery, Swick was the director of strategic finance at Kraken Digital Asset Exchange, where he managed the company’s balance sheet, debt program, investor relations, and all forecasting activities. Prior to Kraken, he founded Swick Capital, a crypto-asset hedge fund, worked at Pritzker Group Venture Capital, and was a consultant at Boston Consulting Group. Swick holds an MBA from the Kellogg School of Management at Northwestern University and a BS in finance from the Wharton School of Business at the University of Pennsylvania.</div>


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This Bitcoin halving cycle, miners need a new energy strategy

Demand for spot bitcoin ETFs has slowed down in the days ahead of the BTC halving.&nbsp;



The fund category collectively tallied net outflows for a fifth straight day on Thursday — albeit only slightly at about $4 million, according to Farside Investors data.



The five-day net outflow total beginning on April 12 amounts to $319 million, reflecting an average of $64 million over the span. That peaked on Wednesday, when $165 million left the 11-fund sector.&nbsp;&nbsp;&nbsp;



Such an outflow streak has happened just once before, with US spot bitcoin ETFs bleeding assets each day from March 18 to March 22. Those outflows were heavier than the latest active streak, totaling $888 million.



The main culprit driving the net outflows is the Grayscale Bitcoin Trust (GBTC). The higher-priced fund, which converted to an ETF in January, has averaged $116 million of net outflows per day over the last five trading days.



Aside from GBTC, only the Ark 21Shares Bitcoin ETF (ARKB) has contributed any meaningful net outflows, seeing $43 million exit the fund on Wednesday. Others meanwhile have watched their inflows completely stop.&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;



Unique to its competitors, the flow-gathering leader in the space, BlackRock, has kept its daily flows positive.&nbsp;



Nine US spot bitcoin ETFs saw zero inflows on both April 12 and April 15, according to Farside Investors <a href="https://farside.co.uk/?p=997">data</a>. IBIT’s net inflows were $111 million and $73 million on those days, respectively.&nbsp;&nbsp;



Read more: <a href="https://blockworks.co/news/blackrock-extends-bitcoin-etf-inflows">BlackRock extends bitcoin ETF inflows lead as category demand slows</a>



Still, net inflows into BlackRock’s iShares Bitcoin Trust (IBIT) hit an all-time low level of $18 million on Wednesday, and about $19 million on Thursday. The Fidelity Wise Origin Bitcoin Fund (FBTC) edged IBIT in net flows on Thursday, tallying $37 million.&nbsp;



But the world’s largest asset manager is the only bitcoin ETF issuer to see net inflows each day since starting to trade on Jan. 11.&nbsp;



The streak stands at 68 days after Thursday’s positive total, according to data by Bloomberg Intelligence analyst Eric Balchunas.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Speaking of <a href="https://twitter.com/search?q=%24IBIT&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$IBIT</a> it has slid into 13th place all time with inflow streak of 67 days.. total net flows now at $15.3b which is second most of all 3000+ ETFs and $5b ahead of #3. <a href="https://t.co/YSGFvn7ZAM">pic.twitter.com/YSGFvn7ZAM</a>&mdash; Eric Balchunas (@EricBalchunas) <a href="https://twitter.com/EricBalchunas/status/1780951564200395129?ref_src=twsrc%5Etfw">April 18, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



US spot bitcoin ETFs have welcomed about $12.3 billion of net inflows in just over three months on the market — even with $16.7 billion leaving GBTC.



As for the recent outflows, Balchunas added in a separate X post that it is “totally normal for [an] ETF category to cool off after [a] breathtaking pace like this,” particularly during a bitcoin price dip.



<a href="https://blockworks.co/news/bitcoin-below-60k-pre-halving-volatility">Bitcoin’s price dropped below $60,000 on Wednesday</a>, just a few days ahead of the bitcoin halving. A roughly quadrennial event, this halving will result in the number of bitcoins produced per block falling from 6.25 BTC to 3.125 BTC. The halving is expected to occur late Friday ET.



One BTC was worth nearly $65,000 just after 7 a.m. ET Friday — down about 7% from a week ago.



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Bitcoin ETF segment sees record-tying fifth straight day of outflows

Binance has secured a virtual asset securities provider (VASP) license from Dubai’s Virtual Assets Regulatory Authority.&nbsp;



Binance said that its Dubai arm can now offer services to the retail market, as well as expand services to both qualified and institutional investors.&nbsp;



According to a blog post, Binance FZE will now “introduce new options through its lending and borrowing services,” which will include virtual asset loans.&nbsp;



“Management and investment services will enable users to leverage features such as ETH staking, BNB Vault, and Launchpool to amplify the earning potential of their digital assets,” the post continued.



The <a href="https://blockworks.co/news/binance-dubai-operational-license">exchange previously held a minimum viable product license</a>, which it was granted back in July 2023.&nbsp;



Bloomberg reported that the firm was granted the license upgrade after former CEO Changpeng Zhao agreed to give up his voting control in the entity. Last year, <a href="https://blockworks.co/tag/changpeng-zhao">Zhao</a> stepped down as CEO of the firm after the Department of Justice and Binance <a href="https://blockworks.co/news/binance-changpeng-zhao-face-sec-charges">announced a multi-billion dollar settlement deal</a>.&nbsp;



Read more: <a href="https://blockworks.co/news/binance-comments-on-exec-nigeria-detention">Binance ‘deeply disappointed’ about the ongoing detention of an executive in Nigeria</a>



Additionally, Zhao <a href="https://blockworks.co/news/changpeng-zhao-bond-sentencing">pleaded guilty to breaking</a> US anti-money laundering laws. He faces sentencing in a US court later this month.&nbsp;



Current CEO Richard Teng <a href="https://www.binance.com/en/blog/markets/binance-fze-receives-a-vasp-licence-from-dubais-virtual-assets-regulatory-authority-6121983057450016990">said</a> that the new license “conclusively proves our steadfast commitment to revolutionizing the future of finance. Our attainment of this milestone stands as a solid affirmation of our continued drive for transparency, regulatory compliance, and responsible growth in the ever-expanding digital asset sphere.”



Elsewhere in <a href="https://blockworks.co/tag/binance">Binance</a>’s realm, the firm converted the assets held in its Secure Asset Fund for Users (SAFU) to Circle’s stablecoin <a href="https://blockworks.co/tag/usdc">USDC</a>. The fund is an emergency insurance fund that was established in 2018. Binance, in a blog post, said that it typically sets the fund’s level to $1 billion.&nbsp;



“​​We are transferring 100% of SAFU’s assets to USDC. Making use of a trusted, audited, and transparent stablecoin for SAFU further enhances its reliability and ensures it remains stable at $1 [billion],” Binance <a href="https://www.binance.com/en/blog/ecosystem/update-safu-conversion-to-usdc-270057093957213098">said</a>.&nbsp;



The SAFU fund was formerly made up of bitcoin, Binance’s native BNB, Tether’s USDT stablecoin and TUSD, <a href="https://web.archive.org/web/20240403225008/https://academy.binance.com/en/glossary/secure-asset-fund-for-users">according</a> to a Binance Academy post.&nbsp;



And while there won’t be any new updates in the ongoing back and forth between Binance and Nigeria until Monday, when a detained Binance executive is expected to have a bail hearing, a new <a href="https://www.nytimes.com/2024/04/18/technology/binance-crypto-compliance-officer-nigerian-prison.html">report</a> from the New York Times shines more light on the tension between Nigeria and the exchange.&nbsp;



A compliance officer for Binance, Tigran Gambaryan, has been detained — and is now in prison — in Nigeria. He was <a href="https://blockworks.co/news/nigerian-government-binance-fine">taken into custody back in February</a>, though authorities were careful to note that he had initially not been arrested. However, a Nigerian court sent the Binance executive to jail last week.&nbsp;



Binance <a href="https://blockworks.co/news/binance-employees-detained-nigeria">has repeatedly said</a> that Gambaryan holds no “decision-making power” in the company. According to the report from the Times, this was the second such trip the executive made to the&nbsp; country, though both he and Binance’s regional manager in Africa — Nadeem Anjarwalla, who later escaped and left the country — were not expecting to be detained by authorities.&nbsp;



It’s unclear at this point where discussions stand between Binance and Nigeria. According to the Times, the White House is reportedly engaging with the US Embassy in Nigeria to “resolve the situation.”



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Binance receives license in Dubai, moves SAFU fund to USDC

Though most mining stocks have so far taken a dive this year, industry watchers expect investors to buy back into the strongest such companies after the Bitcoin halving dust settles.



Some of the world’s largest public mining companies have watched their stock prices plummet in recent months.



The stock of mining giant Marathon Digital is down roughly 33% so far this year.&nbsp;



Shares of rivals Hut 8 and Riot Platforms are slightly worse off over that span, down about 35% and 46%, respectively. <a href="https://blockworks.co/news/adam-sullivan-core-scientific-bitcoin-halving">Core Scientific’s stock</a> has dropped about 16% since coming out of bankruptcy in January.



Las Vegas-based CleanSpark has been an anomaly, as its stock price has seen a 55% boost in 2024.&nbsp;



These nearly across the board declines come as investors wait to see which miners will be best positioned after the <a href="https://blockworks.co/tag/bitcoin-halving">halving</a> given the upcoming reduced block rewards — from 6.25 BTC and 3.125 — and the impact of that on miner profitability.



Read more: <a href="https://blockworks.co/news/mining-firms-prepare-for-bitcoin-halving">The Bitcoin halving is just weeks away — here’s how miners have prepared</a>



Bitcoin halving events, which occur every four years, often trigger “speculative bubbles” that peak about a year after each cycle, said StoneX Digital data scientist David Kroger.



“Investors may have adjusted their expectations and positions based on historical market trends surrounding halving events, including significant price fluctuations and market sentiment shifts,” he added.



Those allocating capital to the space have also had a new way to access BTC since Jan. 11, when the Securities and Exchange Commission approved the first US spot bitcoin ETFs.



“You now have a situation where there is an option to get commodity exposure as an institutional investor with the spot bitcoin ETF that mitigates the company risk that you take on when you invest in a bitcoin miner,” Sue Ennis, head of investor relations at Hut 8, said during a Tuesday X space.



While <a href="https://blockworks.co/news/bitcoin-etf-outflows-strike-again">demand for the US spot bitcoin ETFs has slowed</a> recently, the fund category has brought in roughly $12.5 billion of net inflows in just over three months on the market.&nbsp;



<h2 class="wp-block-heading">Waiting until the dust settles</h2>



Miner stocks have previously underperformed bitcoin going into the halving and outperformed BTC after the event, said Compass Point Research &amp; Trading analyst Joe Flynn.



Read more: <a href="https://blockworks.co/news/bitcoin-mining-stocks-crypto-rally">Why most bitcoin mining stocks are down amid a persistent crypto rally</a> &nbsp;



With spot bitcoin ETFs available, Flynn said miners appear to be trading based on the halving-fuelled hash price declines rather than the BTC exposure they provide.



<a href="https://data.hashrateindex.com/chart/bitcoin-hashprice-index">Hash price</a> takes into account bitcoin price, network difficulty, block subsidy and transaction fees. Measuring how much a miner can expect to earn from a specific quantity of hash rate, the metric is positively correlated to BTC price and negatively linked to fluctuations in bitcoin <a href="https://blockworks.co/tag/mining">mining</a> difficulty.



“Any bounce of hash price off the lows post-halving and we think the stocks react positively,” Flynn told Blockworks. “Based on past cycles, we would expect a period of consolidation of BTC prices before a resumption of an uptrend higher in the second half of 2024 and into 2025.”&nbsp;



Miners holding hefty sums of bitcoin on their balance sheet are likely to benefit from any post-halving BTC price growth from a stock perspective, Flynn added.



Marathon currently leads that category among miners, with 17,381 BTC BTC on its balance sheet as of March 31. Hut 8 and Riot Platforms held 9,102 BTC and 8,490, respectively, at that time.&nbsp;&nbsp;



“But we think investors [will] start to look at fundamentals like EBITDA, [free cash flow] and operating leverage on low power costs post-halving,” he said.



Executives said the public market appears to be struggling to put a proper value on mining companies.&nbsp;



Ennis argued that the market is discounting Hut 8’s managed services and high-performance computing businesses, for example.&nbsp;&nbsp;



As the market matures, she added, investors and institutions are likely to do more due diligence around the varying business models of different miners.



“I do think we are going to see capital and interest come back to this asset class after the halving after the market can see sort of who still has their shirt on and what’s the upside,” Ennis said.



Jeff Hancock, CEO of Coinpass, said he expects the mining stocks to behave similarly to bitcoin’s post-halving price action in previous cycles.&nbsp;&nbsp;&nbsp;



“It could be some time before these mining stocks recover, unless these firms can reduce their energy and operational costs,” he said. “Some of them may have to wait out the storm until bitcoin prices rise if they don&#8217;t have any additional income streams.”



Bitcoin’s price (<a href="https://blockworks.co/price/btc">BTC</a>) was at about $63,800 at 12:30 pm ET Thursday — up 4% on the day but down nearly 10% from a week ago.



The public miners could see more immediate share price gains if more bitcoin exchange-traded products are approved in areas such as Asia and the UK, Hancock argued.&nbsp;&nbsp;



Read more: <a href="https://blockworks.co/news/crypto-etf-regulation-in-asia">After crypto ETF movement in Hong Kong, other Asia regulators could act</a>&nbsp;



“These institutional spot instruments were already absorbing more bitcoin than was being mined pre-halving,” he told Blockworks. “Post-halving, we could experience an extreme supply shock returning bitcoin’s price to current or higher levels, while also increasing miners stock prices.”



<h2 class="wp-block-heading">Those that are best positioned?</h2>



Galaxy analysts said in a February <a href="https://www.galaxy.com/insights/research/bitcoin-big-halving-year/">report</a> that between 15% and 20% of the bitcoin network hash rate could come offline after the halving.



Read more: <a href="https://blockworks.co/news/bitcoin-halving-outlook-for-public-miners">Financial trouble for bitcoin miners: A look back, and ahead as the halving looms</a>



CleanSpark executive Chairman Matthew Schultz said during the Tuesday X space that access to capital — allowing companies to deploy the most efficient machine fleets — will be a real differentiator after the halving.&nbsp;



On the balance sheet alone, Marathon Digital and Riot Platforms each have more than $1 billion in combined cash and BTC.&nbsp;



CleanSpark had about $300 million in cash and 5,021 BTC (worth roughly $320 million) available at the end of March.&nbsp;



Companies with big warchests are expected to acquire machines and companies from smaller, less capitalized .&nbsp;



Stronghold Digital has seen its stock price dip 58% in 2024. The company, if deemed an attractive M&amp;A target by an industry peer, would “consider” such a deal, CEO Greg Beard previously told Blockworks.&nbsp;



Argo Blockchain, which has endured a similar share price drop to Stronghold, declined to comment on its post-halving M&amp;A strategy.



Read more: <a href="https://blockworks.co/news/post-bitcoin-halving-miner-mergers-acquisitions">Buyers and sellers: How bitcoin miners are thinking about post-halving M&amp;A</a>



As for miners with potential high upside, Flynn noted that Riot’s cash and BTC represent roughly 50% of the company’s market cap.&nbsp;



Iris Energy and Bitfarms both intend to double their hash rate this year, he said, while infrastructure-minded Core Scientific and Terawulf are “mispriced.”&nbsp;&nbsp;&nbsp;



The stock prices of Iris Energy and Bitfarms both stand about 30% below where they started the year. Terawulf has fared better, down about 7% year to date.&nbsp;&nbsp;



Flynn added: “I like miners trading at the lowest multiples that have locked in next generation machines — which lowers hash costs — and have the ability to grow to offset initial halving impact.”



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How the Bitcoin halving could impact ailing mining stocks

Casey Wagner

Crypto trader Avraham Eisenberg was convicted on Thursday in relation to trades he made in October 2022 to extract more than $100 million from Mango Markets, according to a <a href="https://www.bloomberg.com/news/articles/2024-04-18/crypto-trader-convicted-in-110-million-haul-from-mango-markets?utm_campaign=socialflow-organic&amp;utm_source=twitter&amp;utm_medium=social&amp;utm_content=crypto">report</a> from Bloomberg.



28-year-old Eisenberg was charged with commodities fraud, wire fraud and commodities manipulation. The jury found him guilty of all three counts.



After closing arguments from the government and defense, the jury deliberated Wednesday afternoon and into Thursday before returning with their verdict. The trial lasted one week and took place just a few floors below where FTX founder Sam Bankman-Fried was sentenced last month.



Read more: <a href="https://blockworks.co/news/mango-markets-wants-eisenberg-to-pay">Mango Markets wants Eisenberg to pay up, his lawyers say the &#8216;matter was settled&#8217;</a>



Eisenberg was arrested in Puerto Rico in December 2022. Prosecutors say he illegally made off with $110 million after manipulating Mango Market futures contracts and pumping the price of swaps by 1,000%. He then borrowed against the contracts and boarded a flight from Puerto Rico to Israel. 



The government says he was fleeing because he committed a crime, but <a href="https://blockworks.co/tag/avraham-eisenberg">Eisenberg</a>’s defense team claims he was running after receiving numerous threats following his trades. 



“The more he pumped, the more he could steal,” government attorneys said Wednesday during their closing arguments. “It is clear as day the defendant knew” he was committing crimes, the prosecution added.&nbsp;



The defense’s case focused on the structure of decentralized exchange <a href="https://blockworks.co/tag/mango-markets">Mango Markets</a>, which, Eisenberg’s team says, allowed for the trades to take place. 



Read more: <a href="https://blockworks.co/news/avi-eisenberg-confined-to-jail">DeFi trader Avi Eisenberg is stuck in US custody. Here’s how he got there.</a>



Eisenberg employed a “successful, legal trading strategy,” defense attorney Brian Klein told the jury Wednesday.&nbsp;



His client was never asked to prove his identity, maintain collateral on the platform or complete a credit check, Klein said.&nbsp;



In the government’s rebuttal, assistant US attorney Thomas Burnett said that the defense was trying to distract from the government’s claims.&nbsp;



“The data and documents show he was borrowing. You should believe your own eyes,” he told the court.



This is a developing story.



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Crypto trader convicted in $110M Mango Markets fraud trial: Bloomberg

David Canellis

Michael McSweeney

<h2 class="wp-block-heading">Decision time in Mango trial&nbsp;</h2>



Closing arguments in Avraham “Avi” Eisenberg’s criminal fraud trial wrapped yesterday. The jury was given the case around 3:30 pm ET and called it a night after an hour of deliberations. They will resume this morning and a verdict is expected this afternoon.&nbsp;



Prosecutors say the 28-year-old crypto trader illegally manipulated markets when he made off with $110 million in October 2022 following a series of trades on DeFi trading platform Mango Markets. Eisenberg has been charged with commodities fraud, commodities manipulation and wire fraud.&nbsp;



“The more he pumped, the more he could steal,” government attorneys said Wednesday during their closing arguments. “It is clear as day the defendant knew” he was committing crimes, the prosecution added.&nbsp;



His defense team said this week that it’s all a big misunderstanding. Eisenberg just made some good trades. Plus, he had $13 million on the line.&nbsp;



Read more: <a href="https://blockworks.co/news/avi-eisenberg-committed-fraud">Mango Markets exploiter Avi Eisenberg committed fraud, Feds say</a>



Eisenberg was arrested in Puerto Rico in December 2022. Prosecutors say he manipulated Mango Market futures contracts and pumped the price of swaps by 1,300%. He then borrowed against the contracts and boarded a flight from Puerto Rico to Israel.&nbsp;



The defense denies none of this; they just claim that it was all legal. It’s not Eisenberg’s fault he wasn’t required to submit personal information or that Mango didn’t run a credit check. That’s just how these wild crypto markets work, they said.&nbsp;



The government says he was fleeing because he committed a crime — his internet search history in the days and before and after the trades shows he was researching “fraud” and “statute of limitations on market manipulation” — but Eisenberg’s defense team claims he was running after receiving numerous threats following his trades.&nbsp;



Plus, defense attorney Brian Klein said yesterday, Eisenberg wouldn’t have continued to search these terms if he’d actually thought he did something wrong. I’d beg to differ, but maybe the jury feels differently.&nbsp;



“None of us want to be judged on our web searches,” Klein said. “None of us.”&nbsp;



Presiding Judge Arun Subramanian, one of the newer judges at SDNY — appointed in 2023 — is tasked with overseeing the landmark case. It’s the first time ever the question of whether someone manipulated crypto markets will be posed to a US jury.&nbsp;



There’s no question that lax <a href="https://blockworks.co/tag/kyc">KYC</a> rules aided Eisenberg in his trades. He executed some under the identity of a Ukrainian woman after buying her login information, the government says.&nbsp;



Also, before you get too excited about those “commodity” charges, the Department of Justice isn’t actually claiming MNGO is a commodity; they avoided classifying the token altogether. The DOJ did say that USDC is a commodity and the “perpetuals” in question are “swaps” to justify the charges, though.&nbsp;&nbsp;



The SEC’s case against Eisenberg, which is on hold until these criminal proceedings wrap, specifically calls MNGO a “crypto asset security” given its status as an “investment contract.”&nbsp;



The semantics around classification, at this point, are the least of Eisenberg’s worries, but it is something to watch out for if the <a href="https://blockworks.co/tag/sec">SEC</a> case proceeds. (If Eisenberg is found guilty of criminal charges, the civil suits might get dropped.)&nbsp;



Keep an eye on Crypto Twitter today. The jury was instructed to resume deliberations promptly at 9 am this morning. They’ve also been told they can work through lunch.&nbsp;



Subramanian, unlike Lewis Kaplan who oversaw SBF’s criminal trial, allows cell phones in the courtroom, so news when the verdict drops will travel fast.&nbsp;&nbsp;



— Casey Wagner



<h2 class="wp-block-heading">Data Center</h2>



<ul>
<li>Mango Markets has 94,000 SOL ($12.7 million) <a href="https://defillama.com/protocol/mango-markets#information">staked</a> in the app, most of it added months after the Eisenberg incident.</li>



<li>Growth in ETH supply <a href="https://www.validatorqueue.com/">staked</a> has slowed considerably since March, sitting around 26%.</li>



<li>Ethena’s USDe <a href="https://app.ethena.fi/dashboards/solvency">supply</a> has topped out at $2.37 billion for now, after rocketing from $200 million to $2 billion in two months.</li>



<li>Farcaster daily users are <a href="https://dune.com/pixelhack/farcaster">holding</a> strong at more than 40,000, down only around 15% since record highs.</li>



<li>Mantle’s on-chain <a href="https://defillama.com/treasuries">treasury</a> (excluding own tokens) is now almost as big as the Ethereum Foundation’s: $870 million to $933 million.</li>
</ul>



<h2 class="wp-block-heading">Rocky path ahead?</h2>



As someone who started her career reporting on Wall Street, I’m particularly intrigued by the upcoming <a href="https://blockworks.co/tag/bitcoin-halving">halving</a>.&nbsp;



Not just because it’s my first time getting to cover it through a crypto lens and not looking from the outside in, but also because of the way Wall Street and institutions are now interacting with crypto, specifically bitcoin.&nbsp;



With that said, let’s talk about the publicly traded miners. <a href="https://blockworks.co/tag/mining">Mining</a> as a whole is going to be vulnerable post-halving for obvious reasons, but we’ve <a href="https://blockworks.co/news/jpmorgan-bitcoin-halving-publicly-traded-miners">previously reported that Wall Street analysts</a> think that the publicly traded group could benefit from the quadrennial event. 



However, we’re just days out, and there’s a lot of red when looking at the miners as a group. Marathon’s down nearly 17% in the past five days, Riot’s shed 18%, Hut 8’s down 8%, though CleanSpark’s only down 3%.&nbsp;



Read more: <a href="https://blockworks.co/news/bitcoins-most-promising-least-dramatic-halving">Bitcoin’s most promising, least dramatic halving is almost here</a>



In total, the aggregate market cap dropped 28% as of April 15, according to data from JPMorgan. The market cap now sits at around $14.2 billion.



For some analysts on Wall Street, the question is simple: Is this a buying opportunity? For Bernstein analysts, it’s an opportunity to buy stocks such as Riot and CleanSpark.&nbsp;



As we’ve <a href="https://blockworks.co/news/bitcoin-halving-price-implications">reported previously</a>, it’s hard to know what’s going to happen post-halving for two reasons. First, this is only the fourth such event in Bitcoin’s history, so we don’t have a lot of historical data to use. Second, this is a totally different environment for Bitcoin than we’ve seen in the past.&nbsp;



Historically, yes, bitcoin’s gone on to carve out new all-time highs in the months post-halving, and there’s no reason to think it couldn’t hit six figures by the end of the year. Immediately after the event, bitcoin could undergo pressure dropping to the mid-$50,000 or even around $40,000.&nbsp;



And stocks of the bitcoin miners — <a href="https://blockworks.co/news/mining-firms-prepare-for-bitcoin-halving">despite their preparation</a> — could also face headwinds.



— Katherine Ross



<h2 class="wp-block-heading">Putting the Fi in GameFi</h2>



The metaverse may go the way of the enterprise blockchain — a forgotten fad — but GameFi is at least getting another run.



GameFi is a catch-all term for games with some sort of crypto or blockchain integration, through which players can collect and trade NFTs tied to in-game assets, including heroes and items.&nbsp;&nbsp;



While not the first, Vietnamese studio Sky Mavis largely popularized the NFT format with Axie Infinity. The game’s smart contracts are still some of the most active in the space.&nbsp;



Read more: <a href="https://blockworks.co/news/sui-playtron-handheld-web3-gaming-device">Web3 Watch: Sui unveils handheld Web3 gaming device</a>



Business and farming simulators, card battle games and tower defense apps are also common across the major gaming ecosystems with their own layer-1s: Sky Mavis’ Ronin and Gala Games’ Gala Smart Chain, as well as Merit Circle’s Avalanche subnet BEAM.



Ronin, however, is gathering its own on-chain economy. The network seems to have largely rebounded since the <a href="https://blockworks.co/news/the-ronin-hacker-made-off-with-625m-of-crypto-but-cashing-out-isnt-so-easy">debilitating $625 million raid</a> on its token bridge in early 2022. North Korea-linked hackers stole digital assets backing bridged tokens on Ronin, undermining in-game economies — particularly Axie Infinity’s — with the incident going unnoticed for six days.



Sky Mavis later moved to <a href="https://www.techinasia.com/sky-mavis-scales-150m-funding-reimbursing-users">make</a> users whole. At the time of the heist, monthly active addresses on Ronin had already fallen to 2.9 million from a peak of 5.9 million in peak bull market, in November 2021. Active addresses would drop another 65% over the next three months, and by last October, Ronin was seeing only 100,000 monthly active addresses.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/QzWqueflqFP4i-P8VCDPRzYo7cVSKn5EQ4aAFbFv9Q-371QjGApmK6n9Q39AR7d5gjCMhxvpvl0eOjUg4Esw5QQ5qeO04hFvGRav3Q75SrYMl70SGnpoa76jtYkdTfNCn4TqaxqvdDPTfQBe38nOu8c" alt=""/></figure>



Now, there&#8217;s 3.2 million, <a href="https://tokenterminal.com/terminal/projects/ronin">per</a> Token Terminal, and while it’s difficult to say how many represent unique individuals, it’s hard to argue with that growth. The number of transactions on the network hit 51.4 million last month, its highest point since the top of the last bull market.&nbsp;



Axie-related smart contracts are still driving much of the activity, but there are now five other games interacting with Ronin, including Pixels, and eventually a card battle game set in the popular Ragnarok universe. There’s also an NFT marketplace (Mavis Market) native to the network, and a budding decentralized exchange (Katana) is seeing anywhere from $60 million <a href="https://katana-analytics.roninchain.com/home">volume</a> to $4 million per day this year.



You wouldn’t think so, but Ronin is currently the ninth on monthly active user leaderboards, only just behind Uniswap and Base and ahead of TON, Optimism and Aptos.&nbsp;



— David Canellis



<h2 class="wp-block-heading">The Works</h2>



<ul>
<li>WorldCoin plans to <a href="https://blockworks.co/news/worldcoin-teases-world-chain-layer-2">launch its own layer-2</a>, dubbed World Chain, this summer.&nbsp;</li>



<li>Ivy League college students are dropping out to launch their crypto careers, Bloomberg <a href="https://www.bloomberg.com/news/articles/2024-04-17/how-to-get-a-job-in-crypto-bitcoin-price-spike-draws-young-startup-founders?utm_content=business&amp;utm_medium=social&amp;cmpid=socialflow-twitter-business&amp;utm_campaign=socialflow-organic&amp;utm_source=twitter">reports</a>.</li>



<li>This halving could be the least dramatic one yet, according to <a href="https://blockworks.co/news/bitcoins-most-promising-least-dramatic-halving">on-chain activity</a>.</li>



<li>TSMC expects a Q2 sales bump thanks to major demand for AI chips, Reuters <a href="https://www.reuters.com/technology/tsmc-set-report-5-rise-first-quarter-profit-strong-ai-chip-demand-2024-04-18/">reports</a>.&nbsp;</li>



<li>Binance received a full crypto license from Dubai after former CEO Changpeng Zhao forfeited voting control, Bloomberg <a href="https://www.bloomberg.com/news/articles/2024-04-18/binance-close-to-getting-dubai-vasp-license-after-cz-deal-bnb?utm_campaign=socialflow-organic&amp;utm_source=twitter&amp;utm_medium=social&amp;utm_content=crypto">reports</a>.</li>
</ul>



<h2 class="wp-block-heading">The Morning Riff</h2>



What does crypto sound like?



If Hans Zimmer’s <a href="https://www.youtube.com/watch?v=WNRGQMdd9gU">new</a> “theme” for Tron is any indication, it’s a three-minute soundtrack clip from a forgettable Michael Bay movie. Or some vaguely sci-fi video game intro screen. Here’s my review: meh.&nbsp;



It’s not Zimmer’s best work by any means —&nbsp;that obviously is the Interstellar score —&nbsp;but the song, announced yesterday by Tron’s Justin Sun, certainly achieves the goal of creating an association between crypto and an independently noteworthy source.&nbsp;



In this case, an Oscar-winning composer. Or at least his studio, which, <a href="https://www.vanityfair.com/hollywood/2022/02/the-ugly-truth-of-how-movie-scores-are-made">according</a> to Vanity Fair, employs dozens of so-called “Zimlings” to operate a compositional megafactory.&nbsp;



You gotta wonder how much TRX was shoveled into the great crypto furnace to pay for this one. One assumes Zimmer’s music-writing empire was fed dollars instead of crypto, but who knows?&nbsp;



Either way, I wouldn’t put this one in your Spotify inspiration playlist.



— Michael McSweeney



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Empire Newsletter: Decision time in Mango Markets trial

Andrew M. Bailey

Bradley Rettler

Craig Warmke

The Bitcoin halving is imminent.&nbsp;



But even if you know what it is, you may not know why it is.&nbsp;



In our view, the halving exists to make bitcoin interesting — and interesting things attract attention. Bitcoin’s pseudonymous inventor, Satoshi Nakamoto, could have chosen a boring issuance schedule. Instead, he imbued bitcoin with a seasonal fireworks display, commanding attention from an increasingly wide and diverse group of bitcoin users.



Bitcoin famously has a supply cap of 21 million, 1.3 million of which remain unminted.&nbsp;The network will mint these coins through the year 2140 in the same way bitcoins have always been minted.&nbsp;



Satoshi designed the system himself to reward miners who publish new blocks. He could have designed those rewards to hold steady over time with a constant amount per block, say 10. Or he might have designed the rewards to decrease steadily at a constant rate. 



Read more: <a href="https://blockworks.co/news/bitcoin-halving-inflation-and-issuance-schedule">Why is 2140 the end of bitcoin inflation?</a>



Satoshi instead chose halvings. Every 210,000 blocks, the block reward suddenly drops by half. The first 210,000 blocks each yielded 50 new bitcoin to the miner; the next 210,000 blocks yielded 25; and so on. Tomorrow, and for the next four years, each block will yield 3.125 bitcoin.&nbsp;



By their very nature, halvings bring an economic shock, especially to miners. Block 840,0001 will appear roughly ten minutes after block 840,000. But the miner of block 840,000 will earn $400,000 worth of new bitcoin, while the miner of block 840,001 will earn only $200,000 worth of bitcoin — at today’s prices, anyway.



Bitcoin’s volatility owes, in part, to its halving schedule. If demand remains relatively constant despite a sudden drop in newly available bitcoin, bitcoin’s price will likely increase. At least, that’s what has happened historically.&nbsp;



The dollar price of bitcoin increased 5,000% between the first and second halving, from $12.53 in November 2012 to $640 in July 2016; 1,300% between the second and third halving, from $640 in July 2016 to $9,000 in May 2020; and 700% between the third and fourth halving, from $9,000 in May 2020 to $70,000 in April 2024. Of course, bitcoin’s price has also crashed many times during those periods. Like the weather, demand is a fickle thing.&nbsp;



Read more from our opinion section: <a href="https://blockworks.co/news/bitcoins-most-promising-least-dramatic-halving">Bitcoin’s most promising, least dramatic halving is almost here</a>



Halvings also spark discussions about bitcoin’s price volatility in the short term — and price trajectory in the long term. Each halving brings up the same inevitable question, especially considering past wild post-halving price swings: What will we see this time? For weeks now, TV networks have been interviewing CEOs and bitcoin thought leaders about the potential impact that the halving might have on bitcoin’s price.



We think Satoshi anticipated the potential for this kind of frenzy, and deliberately chose the four-year halving cycle to attract attention to bitcoin.&nbsp;



Satoshi was familiar with the idea of global spectacles that happen every four years. The World Cup and the Olympics garner massive attention — especially from people who otherwise rarely watch sports! Would you watch the Olympics annually? Monthly? Not likely. These events garner interest partly because of their rarity. The interval allows for hype, and interest, to build. Networks run specials on the athletes expected to make a splash. Magazines run photo spreads. And when the opening ceremonies finally broadcast, three billion people watch worldwide.



Satoshi was a master promoter. He designed logos, built chat forums and schemed with users on those forums about how to stir up interest in bitcoin. He also designed a system to capture interest by being interesting.&nbsp;



Compare bitcoin to gold. Gold has a global brand earned over millennia. But when’s the last time gold mining caught major headlines? If we mined an asteroid for gold or discovered that we had mined every last nugget — that would capture attention. As things stand, however, gold mining is steady, predictable and unremarkable. Bitcoin is predictable, too. Yet it is predictably unsteady, especially with halvings thrown in, and thus remarkable.&nbsp;



Bitcoin is much younger than gold, with just 15 years since its creation. Yet bitcoin’s quadrennial halving events and corresponding price fluctuations garner headlines worldwide. Interest has snowballed with every halving, as have new users. That’s the goal.



Bitcoin halvings are spectacles, by design. And the design seems to be working. After all, it brought you to this article.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



The authors are co-authors of the forthcoming academic book Resistance Money: A Philosophical Case for Bitcoin (Routledge Press).



‍Andrew M. Bailey is an interdisciplinary teacher and scholar whose work spans philosophy, politics, and economics. He is Associate Professor of Humanities at Yale-NUS College (Singapore).



Bradley Rettler is Associate Professor of Philosophy at the University of Wyoming, and has published peer-reviewed academic articles on metaphysics, philosophy of religion, epistemology, and cryptocurrency



Craig Warmke researches money at the intersection of philosophy, economics, and computer science. He is Associate Professor of Philosophy at Northern Illinois University.



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Bitcoin’s halving is a major spectacle — that’s the whole point

The advent of EigenLayer restaking has opened up new yield opportunities for Ethereum holders. A handful of protocols now provide liquid restaked ETH, juicing returns for those who know where to look.



A new product from Index Coop aims to bundle those yields into an index token for easy access and built-in diversification.



The High Yield ETH Index (hyETH) set to launch next month, combines into a single token five yield strategies that meet minimum APY and total value locked (TVL), among <a href="https://gov.indexcoop.com/t/iip-185-launch-the-high-yield-eth-index-hyeth-pre-sale/4764">other</a> criteria, using open-source, audited protocols.



To test demand for such a product, Index Coop devised a points-inspired bootstrapping mechanism called Product Revenue Tokens (PRTs).



Read more: <a href="https://blockworks.co/news/defi-points-farming-crypto-investments">DeFi ‘points’ farming has reshaped the crypto investment landscape</a>



Index set a 30-day goal of 500 wstETH (Lido wrapped staked ether) on April 8 — about $1.8 million — at the time, but blew through that target in less than a day. After reaching the minimum to launch hyETH, deposits have since doubled.



“It has exceeded our expectation,” the ecosystem growth lead at Index Coop, who goes by Crews.eth, told Blockworks.



PRTs can only be earned by depositing into the hyETH pre-sale contract, and won’t be distributed until the product launches.



“It&#8217;s definitely inspired by the popularity of point systems, but we prefer to give people a real ERC20 token on-chain rather than just holding points in an off-chain database,” Crews said. “And we prefer to direct real yield from product revenue to the holders of those PRT tokens.”



As with many projects to offer <a href="https://blockworks.co/news/defi-bond-issuer-porter-attempts-rebrand-without-its-founder">structured products on-chain</a> in the wake of <a href="https://blockworks.co/news/barnbridge-sec-dao">Securities and Exchange Commission enforcement actions</a>, Index Coop products are only available to investors outside the US.



Index plans to distribute 30% of the 10,000 PRTs to participants in the hyETH presale, with the remaining 70% going to the Index Coop Treasury.



Prior product launches have tended to share revenue 60/40 between the coop and a methodologist partner, like the DeFi Pulse Index (<a href="https://indexcoop.com/products/defi-pulse-index">DPI</a>).



Index then used its own governance token (<a href="https://blockworks.co/price/index">INDEX</a>) to incentivize liquidity into its products.



“People require social proof when they want to deposit into a new product, so it&#8217;s really good to not have a product that, like, struggles to break through that first million dollars deposited,” Crews explained.



But it found that the partnership model was ultimately unsuccessful, Crews said, citing as an example the Bankless BED Index, which has fewer than 800 token holders and $800,000 in TVL, <a href="https://etherscan.io/token/0x2af1df3ab0ab157e1e2ad8f88a7d04fbea0c7dc6">according</a> to Etherscan.



The cooperative still plans to eventually direct protocol revenue to INDEX holders, but only after&nbsp; consistently breaking even, he said.



PRT holders will have to stake their PRTs to share in the revenue of the new product post-launch.&nbsp;



“Users want to see and know that they are being rewarded for their contributions and using a protocol,” Crews said. “You want the user to understand that you appreciate them being an early mover, an early adopter and risking their capital into an up-and-coming product.”



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Index tokens offer new path to diversified ETH yields

Bitcoin is much bigger than just the blockchain. Bitcoin has its own raft of mining CEOs in orbit, as well as exchange-traded funds, media operations, venture capitalists and lobbyist groups.



Still, the Bitcoin “industry” exists on the same plane as hobbyists mining out of their garages and in DIY farms. Regular folk run full nodes to bolster the blockchain, others operate network monitors and other free services to make it more accessible.



All that’s a far cry from the billion-dollar public companies raising debt to hoover up mining rigs non-stop.



Read more: <a href="https://blockworks.co/news/bitcoin-halving-outlook-for-public-miners">Financial trouble for bitcoin miners: A look back, and ahead as the halving looms&nbsp;</a>



Mining pools bridge these two very different worlds that exist within Bitcoin. Individual miners running a few ASICs in their basement can join a pool to hash alongside operators with thousands or rigs — and split any bitcoin mined based on the hash rate contributed.



While there are exceptions, an overwhelming majority of bitcoin is mined by pools. AntPool, Foundry and F2Pool are the <a href="https://coin.dance/blocks">biggest</a>, responsible for more than 63% of all blocks over the past week.



Blockworks caught up with bitcoin mining veteran Alejandro de la Torre to learn more about the dynamics of bitcoin <a href="https://blockworks.co/tag/mining">mining</a> and pools heading into the halving later this week.



De la Torre has worked for years in the bitcoin mining space, setting up mining operations across the globe. He led both BTC.com and Poolin as vice president and grew those two pools to be the largest for bitcoin global hash rate. Alejandro also worked for Block (formerly Square), assisting with the launch of the firm’s new bitcoin mining hardware.&nbsp;



De la Torre recently co-founded the first <a href="https://stratumprotocol.org/implementation/">Stratum v2</a> mining pool <a href="https://www.dmnd.work/">DEMAND</a>, improving security, efficiency and most importantly decentralization by allowing miners to build their own blocks — which he views as a key milestone in bitcoin decentralization efforts.



Keep reading for excerpts from Blockworks’ interview with de la Torre.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Blockworks: What are the biggest concerns for mining pool operators around the <a href="https://blockworks.co/tag/bitcoin-halving">halving</a>? If miners find it uneconomical to mine, could it reduce the number of effective pools?



De la Torre: Reduction of hash rate is the main concern for smaller pools. As they do not have much hash rate to rely on, any reduction from the mining industry due to the halving may be life threatening.&nbsp;



On that point, however, smaller pools tend to be whitelabels of larger pools, giving them a chance to survive the initial drop in hash rate and consequent build up. I still believe that smaller pools face some very hard months, let&#8217;s see.&nbsp;



Read more: <a href="https://blockworks.co/news/bitcoin-halving-impact-on-at-home-miners">‘BTC will have to hit $79K’: At-home miners brace for the Bitcoin halving</a>



Halvings usually bring in great change in the pool industry, flushing out those pools that are not up to par. I think this change is a net-good for the bitcoin mining industry.&nbsp;


<div class="wp-block-image">
<figure class="alignright size-full is-resized"><img loading="lazy" decoding="async" width="400" height="400" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/04/86JvDFZZ_400x400.jpg" alt="" class="wp-image-84268" style="width:289px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/04/86JvDFZZ_400x400.jpg?w=400 400w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/86JvDFZZ_400x400.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/86JvDFZZ_400x400.jpg?w=150 150w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/86JvDFZZ_400x400.jpg?w=257 257w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/86JvDFZZ_400x400.jpg?w=261 261w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/86JvDFZZ_400x400.jpg?w=219 219w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/86JvDFZZ_400x400.jpg?w=80 80w" sizes="(max-width: 400px) 100vw, 400px" /><figcaption class="wp-element-caption">DEMAND Mining Pool co-founder &amp; CEO Alejandro de la Torre&nbsp; </figcaption></figure></div>


Blockworks: Publicly-traded firms control somewhere around 20% of the hash rate. Are they all that important to bitcoin mining? How influential are they with regard to how pools are run?



De la Torre: Two public companies run their own pools, so yes they influence the pool space. Public companies are important to the ecosystem as they tend to be very large, commanding massive operations and hash rate.&nbsp;



However, I sometimes overestimate their importance. There is a very large amount of hash rate not controlled by public miners, all around the globe. I put more importance to these large private operations.



Blockworks: What’s your take on whether mining pools are a centralizing factor in bitcoin? Are participants in pools reactive enough to mitigate the unlikely scenario of collusion between pool operators, by leaving the offending pools to make 51% infeasible?



De la Torre: It’s concerning, this is why I decided to launch a built-from-the-bottom-up Stratum v2 pool.&nbsp;



Stratum v2 [a bitcoin mining protocol] will help decentralize bitcoin mining further by giving miners the ability to build their own blocks and add their own transactions. This right now, is done only by the pools, leading to the centralization in bitcoin mining.



Read more: <a href="https://blockworks.co/news/history-of-bitcoin-halvings-2">The history of Bitcoin halvings — and why this time might look different</a>



We need Stratum v2 and fortunately for miners, it&#8217;s here. This is the most important milestone in bitcoin mining for a very long time, in my opinion.&nbsp;



As for the 51% scenario, it is unlikely to happen, ever. Pools would be making their business obsolete if they attack bitcoin. Not to mention, it&#8217;s easy for a miner to switch pools, so a miner can monitor and act accordingly.&nbsp;



Blockworks: What is DEMAND aiming to change in bitcoin mining?



De la Torre: Give power back to the miners. Our goal aligns with the Bitcoin ethos: Continue the decentralization effort behind bitcoin mining. 



Read more: <a href="https://blockworks.co/news/bitcoin-halving-outlook-for-public-miners">Financial trouble for bitcoin miners: A look back, and ahead as the halving looms </a>



We are bitcoiners first and foremost. Filippo Merli, our chief technology officer, was the lead developer of the open-source Stratum v2 stratum reference implementation (SRI). I also helped out throughout the last two years. We know Stratum v2 and have plans to unlock its potential for the benefit of miners.&nbsp;



Aside from the security, efficiency and decentralization upgrades with Stratum v2, we will provide a transparent payment system. Usually, mining pools are a black box. With DEMAND, you&#8217;ll be able to verify all your “shares,” or accepted hash rate, you&#8217;ve sent to us. Don&#8217;t trust, verify&#8230;right?



Blockworks: If public mining companies only mine a relatively small percentage of all bitcoin, who are all the other miners? Private companies or individuals?



It&#8217;s a mix. Private companies have the largest chunk of that &#8216;other&#8217; hash rate. But we cannot underestimate the home/individual/solo mining of bitcoin. They represent a strong, ideological driven group. Vital, for the ecosystem. 



Read more: <a href="https://blockworks.co/news/state-of-bitcoin-development-ahead-of-halving">Here’s what the current state of Bitcoin development looks like ahead of the halving</a>



This is the reason why we have released a solo mining pool (now available). We do not intend to make any money from the solo pool. It&#8217;s there for this, honestly, badass group of miners.



Blockworks: What do you see happening with mining after the next halving? Is it headed towards consolidation or are there creative solutions being built?



De la Torre: Some consolidation will occur, without a doubt. This is a hell of an opportunity for those that know what they are doing.&nbsp;



Creativity and innovation is what I am excited about, every halving (this is mine and Filippo’s third) has seen an explosion of new companies coming out with solutions to problems and new ways to unlock potential.&nbsp;



There will be a lot of that in this halving. Especially since there are many more people working in this industry this time around.



This interview was edited for brevity and clarity.



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Halving Q&A: Solo bitcoin miners are ‘vital’ for the ecosystem

Jack Kubinec

EigenLayer and its more than $12 billion in total value locked (TVL) went to mainnet last week, bringing the protocol’s vision for a restaking ecosystem on Ethereum a step closer to reality.&nbsp;



Building an entire ecosystem atop Ethereum could be lucrative — a16z general partner Ali Yahya <a href="https://blockworks.co/news/a16z-series-b-eigenlayer-investment">said</a> EigenLayer has “the potential to change everything” — but it also could come with hard-to-predict risks. EigenLayer’s mainnet launch came with slashing and in-protocol payments disabled, and the protocol pledged to let the marketplace “develop and stabilize” before removing the training wheels.&nbsp;



Read more: <a href="https://blockworks.co/news/eigenlayer-restaking-protocol-on-ethereum">Restaking protocol EigenLayer heads to Ethereum mainnet</a>



In the meantime, the potential restakers, validators, actively validated service (AVS) operators and other members of <a href="https://blockworks.co/tag/eigenlayer">EigenLayer</a>’s orbit cannot be entirely certain what risks the protocol could create down the road.



In a new <a href="https://chorus.one/reports-research/optimal-risk-and-reward-on-eigenlayer-a-first-look">report</a>, the Ethereum node operator Chorus One tried to predict some of these risks. One key assertion the report makes is that EigenLayer could face pressures toward centralization, which could make potential black-swan events further reaching within Ethereum. 



The main catastrophic event that industry watchers speculate could happen to EigenLayer would be a slashing cascade.&nbsp;



Slashing occurs when an operator running one of EigenLayer’s AVSs — varied blockchain services secured by restaked ether — is penalized. In such cases, the operator has some of their stake confiscated for breaking rules set by the AVSs. If a significant amount of ether is locked in EigenLayer and a large operator suffers a major slashing event, it could lead to a cascade of slashing damage. In a worst-case scenario, this could compromise the security of the <a href="https://blockworks.co/tag/ethereum">Ethereum</a> network.



Read more: <a href="https://blockworks.co/news/matt-cutler-interview-ethereum-centralized-blocknative">Ethereum is ‘much more centralized than folks realize’: Blocknative’s Matt Cutler</a>



Put simply, a slashing event could have cascading effects “if there&#8217;s a very small number of node operators that are really big and somebody makes a mistake,” Michael Moser, the head of research at Chorus One, said.&nbsp;



It’s hard to know how big the risk of slashing events on EigenLayer could be, since AVSs are yet to set slashing rules, the report notes. But lest readers take their restaked ether and flock for the exits, it bears note that slashing on Ethereum is somewhat rare: 431 validators have ever been <a href="https://explorer.rated.network/slashings?network=mainnet&amp;timesSlashedPage=1&amp;slashesReportedPage=1">slashed</a> on the network, per Rated.&nbsp;



Most slashing scenarios are caused by human error, Chorus One’s report says, and it would take a major slashing event where the slashed operator didn’t fix the problem for a lengthy period of time for Ethereum’s security to be threatened.



In an interview, the Chorus One team said a perhaps more likely negative outcome of EigenLayer’s launch is centralization.&nbsp;



Read more: <a href="https://blockworks.co/news/restaking-ticking-time-bomb-eth">Restaking is a ticking time bomb</a>



On EigenLayer, AVSs can choose which operators to work with. Chorus One predicts AVSs will pick the operators with the largest amount of pooled security to offer, which will be professional node operators and liquid restaking projects. Even if AVSs are evenly distributed between operators, Chorus One sees the big operators still benefiting from economies of scale to achieve higher margins, meaning they can pay higher yield to those delegating their restaked ether — and cause their portion of the total supply to grow further.



The ability of AVSs to generate yield could also prove unpredictable, Chorus One notes. While running AVSs on testnet, the company found hidden costs from things like data storage or cloud computing, Chorus One’s Gabriella Sofia said. These costs could make margins slim for running some AVSs.



But EigenLayer’s potential risks haven’t stopped Chorus One from <a href="https://x.com/ChorusOne/status/1777787815386104269">drawing</a> delegations as it grows its presence as an EigenLayer operator.



“We are, of course, still running the system,” Sofia said.



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EigenLayer’s biggest risk may be centralization, report suggests

Ernst &amp; Young revealed an enterprise contract management service that would let clients put contracts on a public blockchain while keeping business information private through zero-knowledge circuits. The firm markets its OpsChain Contract Manager as running on Ethereum, although it currently runs on Polygon proof-of-stake (PoS).



The accounting firm — one of the “big four” alongside Deloitte, KPMG, and PwC — has been toying with business implications for zk proofs since at least <a href="https://www.ey.com/en_it/news/2019/04/ey-releases-zero-knowledge-proof-blockchain-transaction-technology-to-the-public-domain-to-advance-blockchain-privacy-standards">2018</a>. The announcement may show another concrete step toward the institutional use of public blockchains, a month after asset management giant BlackRock <a href="https://www.businesswire.com/news/home/20240320771318/en/BlackRock-Launches-Its-First-Tokenized-Fund-BUIDL-on-the-Ethereum-Network">launched</a> a tokenized fund on Ethereum.&nbsp;



Read more: <a href="https://blockworks.co/news/blackrock-tokenized-fund-trading-circle-usdc">Circle debuts way to trade BlackRock tokenized fund shares for USDC</a>



In a press release, EY <a href="https://www.ey.com/en_gl/newsroom/2024/04/ey-launches-opschain-contract-manager-solution-to-support-secure-private-business-agreements-on-public-ethereum">said</a> the service would bring business agreements to <a href="https://blockworks.co/tag/ethereum">Ethereum</a>, but this isn’t exactly the case. Nightfall, the zero-knowledge <a href="https://blockworks.co/tag/zero-knowledge-rollup">rollup</a> EY developed to do things like manage business contracts, actually runs on Polygon PoS, an independent blockchain.&nbsp;



EY Blockchain plans to move Nightfall to Ethereum mainnet and to a layer-3 in Nightfall’s next upgrade, Paul Brody, who has led EY’s blockchain arm since 2016, said.&nbsp;



Brody, reached through a spokesperson, added that Nightfall was developed on Ethereum and is deployed to Ethereum’s test network, but so far, EY’s industrial users have been drawn to <a href="https://blockworks.co/tag/polygon">Polygon</a> for its low transaction costs.&nbsp;



<h2 class="wp-block-heading">Private blockchains aren’t private</h2>



In a prior career stop, Brody was partly responsible for building IBM’s first blockchain based on the alpha version of Ethereum with the help of Ethereum co-founder Vitalik Buterin, Brody told Blockworks in an interview.



Using blockchain technology for enterprise is not a new idea. In earlier days of Bitcoin and blockchain, groups like the Distributed Ledger Group <a href="https://www.ofnumbers.com/2017/02/27/a-brief-history-of-r3-the-distributed-ledger-group/">sprang</a> up to find ways for businesses to make use of distributed ledger technology, often using private blockchains.&nbsp;



This era of so-called enterprise blockchain has mostly fallen out of focus for crypto’s leading edge. Brody said a future for blockchain applications for big business will lie on public blockchains like Ethereum.



Read more: <a href="https://blockworks.co/news/goldman-sachs-future-public-blockchains">Goldman Sachs head of digital assets: The future is on public blockchains&nbsp;</a>



“The problem with private blockchains is they don&#8217;t actually provide privacy,” Brody said. “People jumped into this without really understanding the technology, and it was only after they got into it that it&#8217;s like, ‘Oh, everybody in the private chain can still see everything.’”



Private blockchains kept rivals from working together partly because they would reveal sensitive information like, for instance, the quantity and prices of a business&#8217;s purchases, Brody explained.



Alongside Nightfall, EY also created Starlight, a zero-knowledge <a href="https://blockchain.ey.com/uploads/Starlight_Application_Brief.pdf">compiler</a> that takes existing smart contracts and privatizes them with hashing.



With these tools, EY will start letting businesses execute business contracts using Polygon’s smart contracts. Nightfall is only accessible to enterprises. The testnet is free, and the full product is priced by EY, Brody said, adding that using a public blockchain makes the deployment cost cheaper for enterprise purposes, since the underlying infrastructure is already built.



A promotional document for the contract manager says EY’s product “revolutionizes how enterprises help manage their contracts by harnessing privacy-enabled blockchain technology to streamline processes and enhance transparency.”



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‘Big Four’ accounting firm EY to use Polygon PoS for business contracts

Jim Myers

We’re just days away from the next <a href="https://flipsidecrypto.xyz/flipsideteam/bitcoin-halving-PDnIDK">Bitcoin halving</a>, and on-chain activity leading up to the event points to a cycle unlike any other.&nbsp;



As public trust in Bitcoin surges, we&#8217;re seeing transaction volumes surpass previous cycles and more gradual but consistent price growth. This combination of record-high transactions and relative price stability suggests a milder halving event followed by a more sustained growth cycle in the coming months.



<h2 class="wp-block-heading">Record-high transactions</h2>



The industry has experienced a sustained increase in BTC transactions leading up to every consecutive halving, with 2024 seeing the highest daily transaction volume and more extreme spikes in activity compared to previous run-ups. And while an increase in transaction volume is to be expected with every new cycle, this year’s activity appears to buck several trends.



Skyrocketing transaction volume



For instance, while daily transaction volume fluctuated similarly during the leadup to the 2016 and 2020 halvings, it skyrocketed this year. On average, the volatility of day-to-day transaction volume in the past three months is double that of the 2020 run-up, whereas the previous run-up only saw a moderate uptick relative to the 2016 cycle. At the same time, overall transaction volume has rarely dipped to levels seen in previous cycles as the market experiences a period of volatile, but elevated, activity.&nbsp;&nbsp;



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/_NaN_LkgXj2aQYr9waNM2hs3xfWC88-5tPpzwhWnw4u-S-_6JhK8CDAZ1Z6QIDQGesBCtvYmHYLysZjt3OESFsAgpliKlncV74U23pFs7K1fOg0OEEt9LqpV4vX2slnhRLuunA_Cs7o060GsykA92Ks" alt=""/></figure>



<a href="https://flipsidecrypto.xyz/flipsideteam/bitcoin-halving-PDnIDK"></a>Trend reversal in BTC transfers



Additionally, this year’s daily transferred volume is similar to that of the 2020 run-up in terms of BTC — but the actual dollar value of these transactions is multitudes higher given BTC’s price appreciation. This contrasts with the past trend, when BTC transfers dropped between 2016 and 2020. A growing daily transferred volume suggests growing user engagement and comfort with significant value transfers on the Bitcoin network as we approach this 2024 halving.



<h2 class="wp-block-heading">Sustained optimism and price support</h2>



On-chain activity from the past three months also shows more consistent price support for BTC this time around, relative to any other recent cycle.&nbsp;



Low price volatility and consistent growth



Leading up to the 2024 halving, BTC exhibited smaller price swings relative to every run-up since 2012, with a standard deviation of 2.2 (compared to 4.3 in 2020 and 2.9 in 2016).&nbsp;



This reduced price volatility — combined with the second-highest average BTC daily price increase of any halving run-up (0.56% daily growth vs. a 0.01% daily drop in the 2020 runup) — points toward a growing public confidence in the Bitcoin market. This holds true even when accounting for BTC’s recent price drop, and the fact that prices are twice as stable as the previous run-up and more consistently positive bodes well for the industry.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/gDhqOCpSdhEuQeRHZ7lGwze4mZx_16zxj3NfBg1pcNVe0uem69tlNcFywT9P2cRsa-smdBM4Tek05er9hT739eV3e-gzGw2h_ZwEdQ_oXhAfE_BtskDJPg8NtjkLXgvwV3ou0Xeko-Qyysz9Cagu6uo" alt=""/></figure>



<a href="https://flipsidecrypto.xyz/flipsideteam/bitcoin-halving-PDnIDK"></a>BTC’s gradual, sustained price growth is especially remarkable given the heightened, volatile transaction volume in recent months, which is usually accompanied by erratic price movements. This consistent price support suggests that investors are increasingly viewing BTC as a more stable asset, contributing to a more mature, self-reinforcing Bitcoin ecosystem.&nbsp;



Record whale wallet inflows



Bitcoin’s outlook looks even more optimistic when considering that net flows reached a record-breaking 2.3 million BTC over the past three months among wallets that hold at least 1 BTC — a 45% increase over the previous cycle. While BTC whale inflows dropped 15% between the 2016 and 2020 cycles, 2024 has not witnessed any major sell-off events. Instead, 2024 is setting multiple new records in single-day BTC whale inflows, which is a strong indication of Bitcoin’s continued deep-pocketed support.



<h2 class="wp-block-heading">Increasing user sophistication</h2>



Unlike the frenzied new user activity that propelled the previous cycle, we are seeing signs that this year’s pre-halving activity has a higher rate of participation among more experienced existing BTC holders.



Heightened activity among existing users



As expected, the number of active daily addresses has increased relative to 2020, though not as significantly as the jump between 2016-2020. However, the number of new BTC addresses created leading up to the halving is lower than in 2020, which suggests that current market activity is largely driven by existing participants rather than new entrants.&nbsp;



Read more from our opinion section: <a href="https://blockworks.co/news/bitcoin-halving-different-institutions-investors">This Bitcoin halving will be different — the institutions are here</a>



The argument that existing BTC holders are deepening their engagement seems especially true given the trend-defying surge in transaction volume in recent months, relative to the number of BTC addresses created this year.



More balanced exchange net flows



It’s also worth noting that net BTC outflows from centralized exchanges (CEXs) are down 13% compared to the 2020 run-up, although this run-up is still seeing significant net outflows of BTC from exchanges. Net outflows are often interpreted as a bullish signal, as more BTC is transferred to private wallets and sell pressure drops as the supply of tradable BTC decreases.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-us.googleusercontent.com/CkwnIVsr41S8pUGq6hXgz0BW4g87F1hDANzXstCoNI5Cj2yx7u5XEl5zQdTCfOll1Vf3tVd7KMmLAKZru7Awwf714mm542wUrSsf3bN0GVyU1uocR14Yw5FrjXGAtFprLCZBhFiqXFM-x-PcHumNTcg" alt=""/></figure>



<a href="https://flipsidecrypto.xyz/flipsideteam/bitcoin-halving-PDnIDK"></a>And while 2024 also logged the highest single-day inflow of BTC of any halving run-up, this may simply indicate more nuanced market behavior as market participants split between holding and trading.&nbsp;



All of which is to say, the fact that net BTC flows to and from exchanges have not skewed excessively one way or another, relative to past cycles, indicates a more balanced, moderate investor sentiment as we approach the next halving.



<h2 class="wp-block-heading">Slow and steady wins the race</h2>



A significant cohort of the crypto community expected a massive pre-halving dump leading up to this year’s halving, but these fears appear to be overblown. While BTC&#8217;s value has trended down in recent days, this is still the first cycle to see a new all-time-high in BTC&#8217;s value pre-halving, and the 2024 run-up still appears to exhibit the most consistently positive growth of any recent cycle.&nbsp;&nbsp;&nbsp;



From this perspective, the fact that BTC’s value has not experienced any massive upwards swings recently may be taken as a positive sign. Rather than undergoing seismic price shifts and frenzied sentiments, we may be witnessing the beginning of a new phase in Bitcoin’s history — one characterized by gradual but consistent growth, sustained market confidence and more balanced user behavior.&nbsp;



In contrast to the dramatic ebbs and flows of some other crypto sectors, this even-keeled growth may be exactly what the industry needs.&nbsp;



<hr class="wp-block-separator has-alpha-channel-opacity"/>


<div class="wp-block-post-author-biography">Jim Myers is an engineer, early-stage investor, and the CTO &amp; Co-Founder of Flipside Crypto, a leading blockchain data analytics and business intelligence platform. Prior to co-founding Flipside, Jim developed the core technology that took products from 0 to 1 at companies such as Mylestone, Pluralsight, and Smarterer. Jim’s journey into the crypto industry began in 2015, eventually co-founding Flipside Crypto in 2017 to help empower crypto communities to create and share data-driven insights on the projects they care most about. Jim&#8217;s passion for building extends to the broader startup community via his developer event series, Stack Dive, and as an angel investor to several local Boston-area startups, including AdHawk and LinkSquares. In a previous life, Jim developed advanced models to quantify risk and abnormal returns in the market for Financial Transmission Rights, a type of energy derivative.</div>


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Bitcoin’s most promising, least dramatic halving is almost here

BlackRock continues to attract assets to its bitcoin ETF daily, even as its competitors see inflows into similar funds stall.&nbsp;&nbsp;&nbsp;



The asset management giant’s iShares Bitcoin Trust (IBIT) has been a flow-gathering standout since US spot bitcoin ETFs launched on Jan. 11.&nbsp;



It so far has tallied more than $15.3 billion of net inflows — ahead of the $8 billion or so notched by the next-best Fidelity Wise Origin Bitcoin Fund (FBTC).



Read more: <a href="https://blockworks.co/news/blackrock-q1-earnings-bitcoin-fund-inflows">BlackRock bitcoin fund accounts for 20% of the firm’s Q1 ETF net inflows</a>&nbsp;



Grayscale Investments’ Bitcoin Trust ETF (<a href="https://blockworks.co/tag/gbtc">GBTC</a>) has kept a slight assets under management edge over IBIT for now — at about $19.4 billion to $17.1 billion, respectively, as of Tuesday. However, GBTC started with about $28 billion in assets upon converting to an ETF in January and has endured nearly $16.5 billion of net outflows.&nbsp;



Youwei Yang, chief economist at BIT Mining said <a href="https://blockworks.co/tag/blackrock">BlackRock</a>’s strong brand, competitive fee structure and extensive distribution helps the firm’s bitcoin ETF appeal to <a href="https://twitter.com/EricBalchunas/status/1780249379091198042">institutional</a> investors.



Given the growing institutional interest in crypto, IBIT is well-positioned to surpass GBTC in AUM and “potentially maintain long-term leadership in the digital asset management space,” he added.



“This is the ‘winners take all’ scenario where it’s a positive spiral — the more inflows the more liquidity, and thus less fees and then more inflows,&#8221; Yang told Blockworks.&nbsp;



While IBIT quickly proved to be a leader in the space, its consistent net inflows — particularly of late — have once again highlighted its unique status compared to competitors.



Read more: <a href="https://blockworks.co/news/blackrock-bitcoin-etf-battle">Is it too soon to name BlackRock the bitcoin ETF segment winner?</a>



Nine US spot bitcoin ETFs saw zero inflows on both April 12 and April 15, according to Farside Investors <a href="https://farside.co.uk/?p=997">data</a>. IBIT’s net inflows amounted to $111 million and $73 million on those days, respectively.&nbsp;&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Okay too many questions about <a href="https://twitter.com/hashtag/Bitcoin?src=hash&amp;ref_src=twsrc%5Etfw">#Bitcoin</a> ETFs and zero flows &#8212; a few quick thoughts: 1. On any given day, the vast majority of ETFs will have a flow number of ZERO &#8212; this is very normal. There are ~3,500 ETFs in the US. Yesterday 2,903 of them had a flow of exactly zero&mdash; James Seyffart (@JSeyff) <a href="https://twitter.com/JSeyff/status/1780243642851995735?ref_src=twsrc%5Etfw">April 16, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



ETF.com analyst Sumit Roy in January called the BTC fund asset race between BlackRock and Fidelity <a href="https://blockworks.co/news/blackrock-fidelity-etf-flows-race">“a heavyweight fight that could go either way.”</a> Fast forward more than two months, and IBIT’s net inflows stand at nearly double those of FBTC.&nbsp;



The lack of inflows for Fidelity Investments’ bitcoin fund on April 12 snapped a 63-day streak for the offering.&nbsp;



Meanwhile, IBIT’s run of days with net inflows continues, standing at 66 days after welcoming $26 million of investor assets on Tuesday.&nbsp;



The streak is unprecedented for a new ETF and very rare for such a fund of any age.&nbsp;



The BlackRock bitcoin ETF passed the 65-day inflow streak set by iShares MSCI USA Min Vol Factor ETF (USMV), according to <a href="https://twitter.com/EricBalchunas/status/1779841828239323330">data</a> posted by Bloomberg Intelligence analyst Eric Balchunas. IBIT could tie a 67-day run set by the Vanguard FTSE Developed Markets ETF (VEA) if it sees net inflows Wednesday.



BlackRock likely “ticks the most investor due diligence boxes” of the spot <a href="https://blockworks.co/tag/bitcoin-etf">bitcoin ETFs</a> given its competitive fee, large asset base, liquidity and <a href="https://blockworks.co/news/wealth-manager-bitcoin-etfs-allocators">availability on platforms</a>, according to CoinShares research head James Butterfill.



IBIT is positioned to be the long-term asset leader in the bitcoin ETF space, he added.&nbsp;



“Being issued by the largest asset manager in the world gives it a lot of credibility in the eyes of investors,” Butterfill told Blockworks. “It has been very successful in other markets in the same way too.”



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BlackRock extends bitcoin ETF inflows lead as category demand slows

The price of bitcoin dipped below $60,000 during Wednesday’s afternoon trade as the crypto market continued to showcase its trademark volatility.&nbsp;



BTC’s price has hit a local low of $59,658, TradingView data shows, though the price has recovered somewhat to trade around $60,600.&nbsp;



<figure class="wp-block-image size-large is-resized"><img loading="lazy" decoding="async" width="1630" height="1192" src="https://blockworks-co.imgix.net/wp-content/uploads/2024/04/BTCUSD_2024-04-17_12-31-35.png?w=1024&amp;h=1024" alt="" class="wp-image-84376" style="width:702px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2024/04/BTCUSD_2024-04-17_12-31-35.png?w=1630 1630w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/BTCUSD_2024-04-17_12-31-35.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/BTCUSD_2024-04-17_12-31-35.png?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/BTCUSD_2024-04-17_12-31-35.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/BTCUSD_2024-04-17_12-31-35.png?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/BTCUSD_2024-04-17_12-31-35.png?w=351 351w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/BTCUSD_2024-04-17_12-31-35.png?w=357 357w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/BTCUSD_2024-04-17_12-31-35.png?w=299 299w, https://blockworks-co.imgix.net/wp-content/uploads/2024/04/BTCUSD_2024-04-17_12-31-35.png?w=80 80w" sizes="(max-width: 1630px) 100vw, 1630px" /></figure>



Bitcoin (<a href="https://blockworks.co/price/btc">BTC</a>) last traded below $60,000 on March 5, an event which occurred before the cryptocurrency surged to new all-time highs in the following days. BTC hit an all-time high of $73,780 on March 13 and has seen continued volatility since that time.



Read more: <a href="https://blockworks.co/news/bitcoin-all-time-high">Bitcoin price surges past $69K to hit new all-time high</a>



Some market-watchers have <a href="https://blockworks.co/news/empire-newsletter-start-to-bitcoin-halving-week">pointed to macroeconomic factors</a> for the volatility around bitcoin, like persistent inflation in the United States. Traditional equities, too, are in the red today, <a href="https://www.marketwatch.com/market-data">according</a> to MarketWatch, with the S&amp;P, Dow and Nasdaq trading down as of 12:25 pm ET.&nbsp;



As Blockworks’ Casey Wagner reported in today’s <a href="https://blockworks.co/newsletter/empire">Empire newsletter</a>, the macro picture is a complicated one —&nbsp;and will likely remain so given that Fed Chair Jerome Powell has indicated that long-signaled rate cuts will take longer than anticipated.&nbsp;



“The recent data have clearly not given us greater confidence, and instead indicate that it’s likely to take longer than expected to achieve that confidence,” Powell said Tuesday during a press conference.



Read more: <a href="https://blockworks.co/news/bitcoin-slip-powell-delay-rate-cuts">Cryptos slip as Powell doubles-down on delaying rate cuts</a>



The timing of today’s price decline is also notable because bitcoin is set to undergo a transaction reward <a href="https://blockworks.co/news/bitcoin-halving-grayscale-interview">halving</a> this weekend. The number of new bitcoins produced per block will fall from 6.25 BTC to 3.125 BTC. The halving is expected to occur late Friday or early Saturday ET, according to estimates. 



Ethereum’s native asset (<a href="https://blockworks.co/price/eth">ETH</a>) accompanied bitcoin in its own brief dip below a key level. According to TradingView, ETH dropped to a local low of $2,914 before recovering somewhat. At the time of writing, ETH is trading at around $2,965.



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