Introduction

This month, the BTC halving market did not arrive as people expected; instead, it has shown a trend of fluctuating downward since the beginning of the month. Additionally, the delay in the expectation of interest rate cuts in the U.S. and the continuous outflow of BTC spot ETFs have led to more negative sentiment regarding the future market performance. The market capitalization and trading volume of crypto assets have both seen significant declines. Meanwhile, the impact of reduced BTC miner income began to show at the end of the month, with the stock prices of listed mining companies experiencing varying degrees of decline. Some mining machines are nearing their shutdown price, further weakening the momentum for a rebound in future market performance, with expectations pushed back.

1. Macroeconomic Perspective

1.1 Delay in U.S. Interest Rate Cut Expectations Affects Crypto Market

On April 10, 2024, the U.S. CPI data was released, showing that the core CPI had exceeded expectations for three consecutive months, both year-on-year and month-on-month:

• March unadjusted CPI year-on-year 3.5% (previous value 3.2%, forecast 3.4%), March adjusted CPI month-on-month 0.4% (previous value 0.4%, forecast 0.3%);
• March unadjusted core CPI year-on-year 3.8% (previous value 3.8%, forecast 3.7%), March core CPI month-on-month 0.4% (previous value 0.4%, forecast 0.3%);

After the data was released, the three major U.S. stock index futures fell, and the dollar index rose sharply. The CPI data is an important reference for when the Federal Reserve will cut interest rates this year. From the end of last year to the beginning of this year, the market had been optimistic about the Fed cutting rates earlier this year, but the continued stability and strengthening of the U.S. economy have repeatedly dashed analysts' rate cut predictions.

At the beginning of the year, some believed that the four BTC halvings, combined with the BTC spot ETF and expectations of Fed rate cuts, would likely create a new bull market cycle in the crypto market. However, the "stubbornness" of U.S. economic inflation has somewhat calmed the entire market. With the release of the U.S. April CPI data, the crypto market has lost hope for a rate cut in May, which has also become an indirect factor for the continued downward trend in April.

1.2 Approval of Hong Kong ETFs, Physical Redemption May Become Competitive Advantage

On April 15, Huaxia Fund (Hong Kong), Bosera Fund (International) Co., Ltd., and Harvest Fund announced that they had received conditional approval from the Hong Kong Securities and Futures Commission (SFC) to issue Bitcoin and Ethereum spot ETFs. Thus, Hong Kong has become the second region after the U.S. to approve Bitcoin spot ETFs and the first to approve Ethereum spot ETFs.

Hong Kong's clear regulatory framework has made it possible to quickly approve BTC and ETH ETFs, which is an advantage of Hong Kong over the U.S. in regulatory policies. More importantly, the attitude and actions of the Hong Kong SFC reflect its determination and capability to make significant strides in the crypto market, providing important support for Hong Kong to regain global capital confidence.

Although the data on the first day of listing for the six ETFs in Hong Kong shows a significant gap compared to the first-day trading volume of U.S. Bitcoin spot ETFs, the market remains optimistic, believing that ETFs will serve as a new channel for traditional institutional investors to enter the market. Additionally, the support for physical redemption of Bitcoin and Ethereum spot ETFs in Hong Kong will also promote overall market growth, potentially achieving unexpected breakthroughs.

1.3 Significant Decline in BTC Miner Income, Impact Begins to Show

According to the latest report from CoinShares: After the BTC halving, miners face a significant increase in costs, with electricity and overall costs nearly doubling. Based on a calculation of $0.06 per kWh, the Antminer S19, T19, and other lower-efficiency mining machines are already close to their shutdown prices, with the average production cost of BTC expected to be around $53,000.

Additionally, according to Glassnode data, although the Runic transactions generated approximately $117 million in Bitcoin network fee revenue after the halving, Bitcoin fee revenue has significantly declined over time, with Runic transaction fees at $1.03 million on April 28. As the popularity of Runic decreases, miner earnings are reduced, and the electricity cost share of the highest-grade Bitcoin mining machines has also exceeded 50%.

To cope with the decline in income after the reduction:

• Bitfarms announced an investment of $240 million to upgrade its Bitcoin mining equipment, aiming to remain profitable after the 2024 Bitcoin halving;
• Bitmain tweeted that the Antminer L9 will be released in May, supporting LTC, DOGE, and BEL mining, with a power consumption ratio of 0.21 J/M;
• Hut 8's new CEO Asher Genoot stated that Hut 8's strategic cornerstone is based on diversified revenue sources and a large Bitcoin holding, preparing to acquire distressed miners;
• Mining companies are beginning to pivot to the AI sector, trying to reduce costs through optimized energy costs and mining efficiency. Companies like BitDigital, Hive, and Hut 8 have already generated revenue from the AI sector;

From the performance of mining companies, they remain optimistic about the market and are actively responding by improving profitability through cost control, more efficient equipment, and expanding asset categories. Although the impact of the halving has not dissipated, it is being hedged and absorbed.

2. Industry Data

2.1 Market Capitalization & Ranking Data

In this month's fluctuating market, the market capitalization of the TOP10 tokens has declined to varying degrees, and some rankings have changed. USDC has surpassed STETH and XRP to rise to 6th place, while TON has jumped to 10th place. In terms of 30-day price changes, DOGE has fallen by 37.6%, the largest decline, followed by SOL at 36.6% and XRP at 21.6%. BTC ranks 6th with a decline of 14.1%.

The downward trend this month began at the beginning of the month, with occasional rebounds (approximately every 5 days). The overall market trend has been driven down primarily by BTC, especially after the announcement of the delay in U.S. interest rate cut expectations, which has significantly increased the slope and speed of the decline. Although TON has seen some decline, it has performed the best among the Top10 tokens, aside from USDT and USDC, due to frequent positive developments in the TON ecosystem, garnering market optimism.

Among the top 100 tokens by market capitalization, the tokens with the highest gains in March were XT (+33.1%), WBT (+19.7%), and BGB (+7.3%). ZT, WBT, and BGB are all CEX platform tokens, with ZT and WBT maintaining an upward trend, particularly WBT showing strong momentum, while BGB is showing a downward trend, and its growth and trajectory are expected to align more closely with the overall market trend in May.

In terms of overall price changes among the top 100 tokens by market capitalization, APT has the largest decline at 50.8%. This is mainly due to the unlocking of approximately $330 million worth of tokens in April, leading to a decline in coin prices and TVL since the beginning of the month, with a price of $8.22 as of April 30, and the rebound strength being negligible. Investors are advised to pay close attention to token unlocking dynamics, as large unlocks in a fluctuating and declining market may lead to significant short-term losses, requiring caution.

2.2 Stablecoin Inflows and Outflows

In April, the total amount of stablecoins approached $160 billion, an increase of about $10 billion compared to March. From the curve slope, this growth is gradually slowing down. Considering the current market trading activity, there is a lack of momentum for growth in the short to medium term. If there is no particularly favorable news, the trend of weak growth is expected to continue, and negative growth in May cannot be ruled out.

Among the top 10 stablecoins by market capitalization, the fastest-growing stablecoin this month is FDUSD, with an increase of 73.00%; followed by USDe, which increased by 51.87%. After a slight decline last month, FDUSD regained the top spot in growth this month, while USDe continued its strong performance from last month. Additionally, PYUSD, a stablecoin launched by traditional payment institution PayPal, is currently ranked 12th. With the support of PayPal's cross-border remittance services, PYUSD's issuance has been steadily increasing and is expected to enter the top 10 stablecoins by market capitalization in May.

According to PayPal's official website: its cross-border remittance service Xoom now allows U.S. Xoom users to convert their PayPal stablecoin PYUSD into U.S. dollars and use it as a funding source to remit to recipients in approximately 160 countries/regions worldwide.

In terms of USD inflows, the trend is similar to the overall stablecoin growth trend, with the highest single-day net inflow being $3.24 billion on April 18. Notably, from April 17 to 21, the changes in inflows and outflows were particularly pronounced, coinciding with the periods around the four BTC halvings, reflecting the market's shifting bullish and bearish forces. However, the amount and frequency of net outflows remain lower than net inflows. Additionally, from a news perspective, the continuous outflow of U.S. BTC spot ETFs is impacting USD inflows, and the direction and intensity of USD flows may reverse.

2.3 On-chain TVL Rankings

Overall on-chain TVL showed significant fluctuations in April, particularly with a sharp decline from April 12 to 14, followed by a slow recovery. The third week saw a gradual rebound, but the trend remains volatile, and the recovery strength is insufficient. In the current fluctuating market, on-chain activity has significantly decreased compared to last month, affecting the development of various ecosystems. It is expected that on-chain TVL in May will be closely related to market trends, but the growth trend of coin-based assets will slowly rise with ecosystem development.

This month, the most notable project is Renzo, which, despite facing community skepticism regarding its token model and the price of ezETH becoming unanchored from the market, still achieved the highest TVL growth rate (37.8%), leading other projects in the top 10 TVL rankings and significantly surpassing EigenLayer's 19.25% growth. EigenLayer's growth has begun to stabilize, and there has been a significant withdrawal of staked assets, which will require close monitoring.

According to DeFiLlama data: As of April 30, the TVL of ETH liquidity restaking protocols reached $26.91 billion, with EigenLayer ranking first with nearly $15 billion in TVL; followed by ether.fi with over $3.7 billion in TVL; and Renzo with over $3 billion in TVL.

Among the 138 projects with a TVL above $100 million this month (down from 142 last month), the project with the highest TVL growth was SubseaProtocol (+1,071,352%), followed by HiveSwap (+2,562%) and Connext (+1,339%). SubseaProtocol's TVL suddenly surged on April 8, and currently, there is no public information indicating any actions from SubseaProtocol, which may be an anomaly. We are monitoring and tracking this.

Subsea is a risk management market for digital assets that has pioneered a fully automated, transparent, and fair anomaly detection mechanism to protect users from digital asset risks, hacks, and attacks.

Hiveswap is a SWAP in the BTC ecosystem that provides liquidity services for assets in the Bitcoin ecosystem using the interoperable Bitcoin layer MAP protocol, including assets on BTC L1, the MAP protocol interoperability layer, and various Bitcoin L2 assets.

Connext is a trust-minimized cross-chain communication protocol that enables blockchain composability. Developers can use Connext to build cross-chain applications. Connext is a leading protocol for fast, fully non-custodial transfers and contract calls between EVM-compatible chains. Anyone can use Connext to send value transactions or call data across chains.

In terms of DeFi categories, the total TVL ranking of the top 10 tracks this month shows that LSD remains in first place with $45.329 billion, a significant decrease from last month ($51.44 billion). Considering the overall market downturn, this is essentially a contraction of the gold standard scale, but the total amount is still growing.

Additionally, among other tracks, only Restaking and RWA are showing positive growth, with Restaking growing by approximately $3.5 billion, indicating that the current market is entering a cooling period. Aside from Restaking, there is no clearer investment direction, which also reflects further recognition of Restaking. However, Restaking is an emerging product, and unknown risks remain significant, leading many users to adopt a cautious approach.

In terms of chain categories, the BTC ecosystem's TVL growth in April was the most impressive, with Merlin's TVL growth reaching 1,012%, while Bitcoin's TVL growth also reached 45.33%. Base followed with a growth of 21.15% (down from 116% last month), while other public chains showed negative growth (Solana's growth also could not be maintained).

In the current market, the high growth of Merlin and the continuous increase of Bitcoin's TVL are primarily due to the market's focus and investment in the BTC ecosystem, especially L2, following the four BTC halvings. As more projects are launched, the BTC ecosystem is becoming more active. If there is no significant improvement in market conditions and enthusiasm in May, the performance of the BTC ecosystem is still likely to exceed that of other public chains, while Base's growth momentum will further weaken.

2.4 Mining Pool Data

BTC:

Currently, the total POW hash rate of the entire network has reached 617.86 EH/s, an increase of about 3.52% compared to last month (596.81 EH/s), with a slight decrease in growth rate (3.78%) but not significant. Following the four BTC halvings, miner income per TH/s of hash rate has decreased by about 50% after 10 days, consistent with post-halving output.

The significant reduction in miner income has led to a corresponding shrinkage in the daily inflow of BTC into the market, and the decline in BTC prices may drive more BTC from miners into the market. Once BTC reaches the shutdown price for some small and medium miners (unable to bear the cost pressure), there may be a mass exit, triggering a chain reaction in the market and potentially a new round of reshuffling.

The top three mining pools remain Foundry USA, AntPool, and ViaBTC, while F2Pool has dropped to fourth place, lagging behind ViaBTC by about 140 EH/s. In terms of growth, Foundry USA continues to show the most stable performance.

ETH:

The supply trend of ETH remains stable, with no significant fluctuations since June 2022, maintaining around 122 million, indicating that the POS mechanism has played a very positive role in stabilizing the ETH ecosystem, with ETH's market value closely related to its ecological value.

We see that ETH, as the largest ecosystem in the industry, is focusing on building and expanding its internal ecosystem and promoting continuous exploration of underlying infrastructure and services across the industry. This steady progress is accumulating its momentum, waiting for new opportunities to emerge.

At the same time, the total staked ETH in the POS system continues to rise. As of April 30, there are 1,000,766 active validators, with a total of 32,024,157 ETH staked, accounting for 26.28% of the total ETH supply. Among them, 692.898 ETH were newly staked in April, with the liquid staking protocol Lido's share accounting for 29.15%, down from 30.11% last month.

On April 27, Lido tweeted that the SSV Simple DVT testnet has ended and the mainnet will be launched soon. In the coming weeks, selected participants will use SSV technology to join the Lido Simple DVT module on the mainnet. While this will not make Lido's absolute share more decentralized, it will further enhance the security of stakers and allow more service providers to participate.

3. Market Trends

3.1 BTC Price Fluctuates Downward

https://www.binance.com/en/trade/BTCUSDT?from=markets\&type=spot

After experiencing a 16.6% increase in March, BTC prices began to correct and show a downward trend in April. According to Binance data, as of April 30, 11:00 (UTC+8), the highest price of BTC in April was $72,797.99, and the lowest was $59,600.01, with a price drop of 10.51% on the 30th.

Regarding the downward trend of BTC in April, the mainstream view in the market suggests three possible reasons:

• Profit-taking and selling pressure after BTC prices reached new highs. Binance trading data shows that BTC prices hit an all-time high of $73,777 on March 14, 2024. Considering the achievement of BTC's phased targets, many investors in the market took profits, leading to a price decline.
• The conflict between Iran and Israel triggered panic in the crypto market. On April 13, Iran used drones to attack Israel, directly affecting BTC price movements. Binance trading data shows that on April 13, Bitcoin prices experienced a sharp drop, reaching a low of $60,660.57. The uncertainty of regional conflicts has intensified the downward pressure on the prices of crypto assets, including Bitcoin.
• The net outflow of BTC spot ETFs has also affected BTC price movements. According to sosovalue data, from April 1 to April 26, the net outflow of BTC spot ETFs was $83.61 million, which also triggered a decline in BTC prices.

Regarding BTC prices: Since September 1, 2023, Bitcoin has experienced a seven-month consecutive increase. The increase in February 2024 was approximately 43.57%, and in March, it was about 16.6%; In April, the most significant event was the fourth Bitcoin halving. Based on historical experiences of price corrections before and after BTC halvings, the overall decline of 10.51% in BTC this month is within expectations.

3.2 Significant Declines Across Sectors

https://sosovalue.xyz/assets/cryptoIndex

Along with the downward fluctuation of BTC prices, other sectors in the crypto industry have also shown signs of widespread declines. According to tracking data from sosovalue, the ROI of Layer2, DeFi, NFT, and GameFi sectors has seen the largest drops.

In addition to these four sectors, the recently popular MemeCoin and AI sectors have also experienced significant corrections:

• The MemeCoin sector saw Doge drop by 32.71% over 30 days, and Shib drop by 21.25% (CoinMarketCap data);
• In the AI sector, except for Near Protocol, representative projects like RNDR, TAO, and GRT have all experienced declines of over 20%;

Considering the previous widespread increase in crypto assets combined with profit-taking due to the BTC halving, the current downward fluctuations and widespread declines in other sectors are likely part of a normal market adjustment.

4. Investment and Financing Observation

4.1 Investment and Financing Overview

In April 2024, the crypto market completed a total of $1.004 billion in financing, a decrease of 7.55% month-on-month. The public data is as follows:

• 158 financing events, a decrease of 12.15% month-on-month;
• 4 acquisition events, an increase of 33.33% month-on-month;
• The average financing amount was $8.8092 million, a decrease of 8.37% month-on-month;
• The median financing amount was $3.35 million, a decrease of 33% month-on-month.

Seed round financing events remain the most common, followed by strategic financing and other types of financing, with pre-seed round financing events growing rapidly:

• Seed rounds: 44 events (down 6.3% from last month);
• Strategic financing: 15 events (down 50% from last month);
• Series A: 0 events (down 100% from last month);
• Pre-seed rounds: 12 events (up 120% from last month);
• Other types: 13 events (up 23.5% from last month);

Although acquisition events have increased, financing events, average financing amounts, and median financing amounts have all significantly declined, indicating a short-term negative sentiment in the market and a slowdown in the influx of hot money. This suggests that the market trends in April have had a noticeable impact on investment and financing, with investment institutions becoming more cautious and slowing their pace. However, acquisitions and mergers are becoming a trend in competitive sectors, and in the future, the competitive landscape among leading players will become increasingly clear.

Although acquisition events have increased, financing events, average financing amounts, and median financing amounts have all significantly declined, indicating a short-term negative sentiment in the market and a slowdown in the influx of hot money.

The five largest financing rounds in April:

• Monad completed $225 million in financing, valuation undisclosed;
• Berachain completed $100 million in Series B financing, valuation $1.5 billion;
• Auradine completed $80 million in Series B financing, valuation undisclosed;
• Movement completed $38 million in Series A financing, valuation undisclosed;
• Burnt (XION) completed $25 million in financing, valuation undisclosed.

4.2 Analysis of Investment and Financing Institutions

From the perspective of VC institutions: Animoca Brands has been active in investing in the GameFi sector, followed by OKX, Big Brain, and Polychain, which have made numerous investments in infrastructure and GameFi. Other VC firms have focused their investments on infrastructure and DeFi.

This reflects the current distribution and pattern of industry construction and application, with infrastructure still being the focus of current development, while GameFi's share on the application side is becoming increasingly significant. The market is positioning GameFi as a new application focus after DeFi, and investors are advised to pay close attention.

4.3 Investment and Financing Trend Judgment

With the reduction of block rewards after the Bitcoin halving, miners face greater downward pressure on income and hash rates. Coupled with the market's expectation of only one interest rate cut from the Federal Reserve this year, VC institutions and TradFi funds may become more cautious. It is expected that investment institutions will adopt a more cautious approach in May.

However, during times of market fear, one should often be "greedy" and move forward, as this presents the best investment opportunities for undervalued assets. With the continuous innovation and development of the Bitcoin ecosystem, long-term narratives around AI, GameFi chain games, and parallel EVMs, it is expected that the investment and financing market in May will seek steady progress, continuing to focus on infrastructure and GameFi. Based on current on-chain data, the BTC ecosystem is expected to perform better.

About Movement

At the end of April, the modular blockchain Movement announced the completion of $38 million in Series A financing, becoming the fourth largest financing project in April. This financing was led by Polychain Capital, with participation from Hack VC, Foresight Ventures, Placeholder, Archetype, Maven 11, Robot Ventures, Figment Capital, Nomad Capital, Bankless Ventures, OKX Ventures, dao5, and Aptos Labs. This funding will support Movement in bringing Facebook's Move virtual machine to Ethereum to address smart contract vulnerabilities and improve transaction throughput.

Movement is a modular framework that can be used to build and deploy Move-based infrastructure, applications, and blockchains in any distributed environment. The framework is compatible with Solidity, connects EVM and Move liquidity, and allows builders to customize modular and interoperable application chains with different user bases and liquidity out of the box.

5. Conclusion

The data and market dynamics of April 2024 reveal several important trends:

• The delay in U.S. interest rate cut expectations, combined with the crypto market's pullback after reaching new highs, remains within expected ranges, and a rebound in the future market is still anticipated;
• After the BTC halving, as the popularity of Runic wanes, miners and mining companies are actively taking action to expand their business and revenue portfolios;
• The growth trend of stablecoins is beginning to slow, but this has not affected whale trading purchases, and the accumulation data from whales has led to more expectations regarding market direction;
• On-chain TVL is declining with the market, but Restaking and the BTC ecosystem continue to show growth, and this trend is expected to persist into June;
• The rapid growth of pre-seed round investment events, particularly in GameFi, indicates that while VC layouts are affected by market conditions, they are still seeking steady progress;

Although the market continues to fluctuate downward with significant volatility, the main narrative remains traditional capital and ETFs. Amid the widespread declines across sectors, Restaking and the BTC ecosystem stand out, demonstrating strong counter-cyclical capabilities and future potential. Once the market adjustment is complete and begins to rebound, Restaking and the BTC ecosystem may become the core narrative of this cycle.

Additionally, the modular and GameFi sectors are beginning to show strong momentum in terms of investment and implementation progress, especially with GameFi's advantageous share in investment projects and the upcoming mainnet launch of Avail, making them potential key variables influencing the industry and market. We will continue to monitor closely.

Note: All opinions expressed above are for reference only and do not constitute investment advice. If there are any disagreements, please feel free to contact us for corrections.

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