To investors,

Today we have a guest post from Juan Leon, a senior crypto research analyst at Bitwise Asset Management. Juan put together an overview of Bitwise’s Q1 2024 Crypto Market Overview report (download full report here). Enjoy Juan’s write-up below.

It’s no secret that the first quarter of 2024 was momentous for crypto. Among other breakthroughs, Bitcoin had its “IPO moment,” with the record-setting launch of spot bitcoin ETFs. These ETFs gathered $12.1 billion of inflows, becoming collectively the most successful ETF launch of all time. On the back of this interest, bitcoin surged 67% to new all-time highs above $73,000.

But strength was prevalent throughout the crypto ecosystem, not just in bitcoin. Trading volume on centralized exchanges surged 80% over the quarter as rising crypto asset prices encouraged a rising tide of trading activity. Another telling metric, CME bitcoin futures open interest, averaged over $7 billion for the quarter, a new all-time high that reflected increased interest from institutional investors. 

One of the most impressive statistics from the quarter: The Ethereum ecosystem saw daily active users jump 56% to new all-time highs as users flocked to DeFi applications and new use cases gained traction. The network saw the successful implementation of the Dencun upgrade on March 13, a technical milestone that decreased fees on L2 scaling solutions such as Arbitrum and Base by an order of magnitude, to just a few cents per transaction. 

Average Daily Active Users: Ethereum Ecosystem

DeFi activity saw a marked resurgence, with staking, lending and trading applications rising significantly. Uniswap’s trading volume, for example, jumped 50% to almost $185 billion, while the market cap of stablecoins surpassed $150 billion. All told, the total value locked in DeFi grew by 70% during the quarter. 

Institutions continued to stake a claim. In a groundbreaking move that married traditional finance with the cutting edge of blockchain technology, BlackRock introduced its first tokenized fund, BUIDL. The pioneering initiative leverages the Ethereum blockchain to offer a new avenue for gaining exposure to U.S. dollar yields. Other major institutions that unveiled crypto initiatives this quarter included Citi, HSBC and Deutsche Börse.

Lastly, as we approach the next bitcoin halving—on tap for April 19—investors have been understandably reluctant about bitcoin miners. After all, historically, in the month following halvings miner revenue has dropped by an average of 46%. But if you widen the lens a little on the historical record, a different narrative emerges: In the year following past havings miners grew their revenues by more than 100% on average, thanks to rising bitcoin prices and more efficient hardware. If history repeats, this could present an interesting opportunity.

As a reminder, this was a guest post from Juan Leon, a senior crypto research analyst at Bitwise Asset Management. You can download the full report here. Hope everyone has a great day and I’ll talk to you tomorrow.

-Anthony Pompliano

Darius Dale is the Founder & CEO of 42Macro.

In this conversation, we talk about the probability of different economic outcomes, why "no landing" might happen, what that means, inflation, optimism index, small business survey, and outlook on asset prices.

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