The Breakdown First Five - Monday, May 6, 2024

Welcome back to The Breakdown First Five — the 5 most interesting and/or important stories in bitcoin, crypto, and markets to start your day.

5. One Billion Transactions

The Bitcoin network has now processed one billion transactions with no intermediary in sight. We’re now 15 years into this bold experiment in cryptographically secure money and the results are pretty astounding. The network now processes around 500,000 transactions per day and has been operating for 800 weeks with only a few minor hiccups. Over one trillion dollars stored on a decentralized ledger secured by code.

4. Hayes Bullish

Bitmex cofounder Arthur Hayes has flipped bullish, pointing out that liquidity is trickling back into markets. Arthur has been warning of downside risk over recent months but thinks that macro overhangs are now cleared. He pointed to Fed dovishness, a winding back of QT and the start of Treasury buybacks as additional liquidity. Hayes wrote, “Are the recent Fed and Treasury policy announcements stealth forms of money printing? Yes.”

3. M2 Ticks Up

After almost 18 months of contraction, the money supply is headed back up. M2 money supply has been contracting in the US since November 2022, but the data has now turned positive on a 12 month basis. Although M2 is a pretty rough way of measuring the money supply, this contraction was the worst since the great depression. Could be nothing. Could be a return to money printing. 

2. GBTC Inflows

That’s not an error, Grayscale recorded its first day of inflows since converting to an ETF. GBTC saw $63M worth of inflows while the Bitcoin ETFs added $378M overall. This breaks a 7 day losing streak which saw over $1.2B redeemed from the funds. While a sentiment shift is the cleanest narrative, the explanation could be simple market mechanics as the ETFs began Friday trading at a pretty steep discount. 

1. Whales Bought the Dip

Bitcoin shot above $64,000 over the weekend, spurred on by a weak jobs report which validated dovish Fed posturing. Ahead of Friday’s price move, whales piled in, buying over 47,000 Bitcoin worth more than $2.9B. This cohort is largely custodial accounts and exchange wallets, but still buying is buying and exchange wallets are a proxy for retail demand. It’s too early to call the bottom, but sentiment seems to be turning positive.