April 2024 Cryptocurrency Market Review

Market Overview

In April 2024, the cryptocurrency market experienced significant fluctuations. After Bitcoin reached an all-time high in March, it saw intense volatility, dropping below $66,000 at the beginning of the month and fluctuating between $60,000 and $73,000 throughout the month. This volatility was primarily influenced by macroeconomic factors and changes in market sentiment, highlighting Bitcoin's sensitivity to global economic trends.

The derivatives market indicates this adjustment, as the funding rate for Bitcoin perpetual contracts has decreased, signaling an upcoming correction. The change in market sentiment makes this adjustment seem inevitable, and a significant liquidation event occurred during non-U.S. trading hours.

Changes in U.S. interest rate expectations may be another factor influencing shifts in Bitcoin sentiment. This serves as a reminder that despite Bitcoin being viewed as a "store of value", it remains sensitive to macroeconomic changes.

The unexpected decline in the US Dollar Index (DXY) also affected the price of Bitcoin. The weakening of the dollar made Bitcoin more attractive, supporting its price.

Investor expectations for the Bitcoin halving event may lead to expectations of a price increase, but these expectations did not materialize. Despite the slowdown, ETF inflows continue to support the market.

At the end of the month, Bitcoin is at the lower end of the price range, showing a clear market weakness.

Encryption Investment Product Innovation

An institutional-grade digital liquidity fund launched by a large asset management company is an important development this month. The fund is represented by tokens on Ethereum and is open only to high-net-worth investors. It primarily invests in safe income-generating assets, such as U.S. Treasury bonds and repurchase agreements.

The fund manages assets of over $375 million from 10 holders, demonstrating a significant advancement in integrating traditional financial assets with blockchain technology.

By collaborating with multiple institutions, the token is connected to the USDC smart contract pool, enabling direct redemption and continuous liquidity. This provides companies with a seamless way to quickly access funds, marking a significant advancement in liquidity management in the financial sector.

Regulatory Trends

In April, regulatory actions were significant, especially as the Hong Kong Monetary Authority approved Bitcoin and Ethereum spot ETFs. This is a major change for the Asian market, particularly the Hong Kong market, although access for mainland Chinese investors remains heavily restricted.

In Europe, one of Germany's largest banks announced its readiness to provide encryption trading and custody services, reflecting a shift in traditional financial institutions' attitudes towards cryptocurrency.

Ethereum Development

The trend of Ethereum is similar to that of Bitcoin, but it faces more regulatory scrutiny. The SEC's delay in approving the Ethereum spot ETF application indicates that there is still uncertainty in the regulatory environment.

It is worth noting that the Ethereum Foundation has sued the SEC, challenging the decision to classify ETH as a security. This lawsuit may clarify Ethereum's regulatory status and impact other encryptions.

Bitcoin Halving

The Bitcoin halving event has occurred as scheduled, reducing the block reward for miners by half. Although it has not had a direct impact on the price, it may lead to an increase in transaction fees in the long run, as miners become more reliant on Gas fees to maintain profitability. This is important for the future of Bitcoin as a transaction network, as higher fees could diminish its appeal for small transactions.

Macroeconomic Environment

Gold Market

Gold prices continued to rise in April, despite the decline in holdings of the largest gold ETF in the United States. Gold ETFs in the Asian region saw net inflows, contrasting with North America and Europe. Central banks continue to purchase gold primarily for diversification and crisis hedging purposes.

interest rate expectations

Strong U.S. economic data has suppressed expectations for interest rate cuts in 2024. Employment data shows a slight softening in the labor market, with the unemployment rate remaining at 3.8%. The FOMC meeting discussed ongoing inflation issues and interest rate strategies.

government bond market

The quarterly report from the Ministry of Finance revealed the bond issuance plan and fiscal adjustments, directly impacting market liquidity. Liquidity in the national bond market has decreased and volatility has increased since the end of 2021. The borrowing expectation for the second quarter has been raised to $243 billion.

Global Perspective

Japan may intervene in the currency market to support the yen. South Africa is taking steps to regulate encryption. Venezuela faces difficulties using USDT in oil transactions.

Highlights of this Month

• The former CEO of a trading platform was sentenced to four months in prison for anti-money laundering violations.
• Hong Kong launches 6 Bitcoin and Ethereum spot ETFs
• A certain company increased its holdings of Bitcoin to 214,400 coins.
• Australia plans to launch its first spot Bitcoin ETF by the end of the year.
• A stablecoin launched on the TON blockchain.
• The South Korean won surpassed the US dollar to become the most used currency in Q1 cryptocurrency trading.
• The price of a certain NFT project has plummeted.
• A Bitcoin miner moved $3 million worth of long-dormant Bitcoin.
• A certain company's Bitcoin ETF has attracted 15 billion USD in three months.
• Solana developers are working to address network congestion issues.
• A certain payment company has launched PYUSD stablecoin international remittance services.
• Sony Bank launches stablecoin experiment on Polygon

On-chain Analysis

• Overall encryption currency interest is low, especially for altcoins.

• Major Bitcoin miners have not significantly exited, but retail miners are facing challenges.

• The number of encryption currency projects has surged to approximately 2.5 million.

• The "Bitcoin frenzy phase" is cooling down, and the market may be approaching the bottom.

• A certain L2 platform attracts 50,000 to 100,000 new users daily, with a total of nearly 9 million users.

• Short-term holders sell at a loss, the market may be close to the local bottom.

• On-chain activities remain calm, with trading volume showing a downward trend.

Conclusion

April highlighted the delicate balance of the global economy, with central banks responding to inflation and growth challenges, and markets adapting to regulatory changes and geopolitical uncertainties. While Bitcoin prices have stabilized, they remain sensitive to economic indicators and investor sentiment. Hong Kong's launch of ETFs aims to broaden market access.

Potential driving factors for the positive trend in the encryption market include:

• SEC regulations easing may expand US banks' encryption services
• Sovereign funds invest in encryption currency
• More institutions will incorporate Bitcoin into their financial reserves.