Tether’s Bitcoin holdings surpass $5 billion as Bitcoin sits mid-cycle

Weekly Market Update #33

Major developments for the week:

• Bitcoin ETF products saw net inflows of $845 million last week

• Hong Kong plans to permit in-kind contributions for spot Bitcoin ETFs

• Tether's Bitcoin assets surpass $5 billion following a $627 million acquisition in the first quarter

• Tether broadens its emphasis on AI, recruiting leading experts to drive innovation

• Optimism allocates $3 billion for grants to its blockchain developers

• Figment aids Fireblocks in introducing pioneering ETH restaking services to its clientele via EigenLayer

• Ethena announces $ENA token and airdrop

• Ondo Finance to transfer $95 million to BlackRock's tokenized fund for immediate settlements of its T-Bill token

• Wormhole has declared the token generation event for $W is scheduled for 11:30 AM UTC on April 3rd

• Synthetix will be coming to Arbitrum, Solana and Sui

• 1inch launched phase two of its community builder program

• USDC will launch on zkSync

• Lido's staked ETH is now bridgeable to Scroll

• Sui is set to unlock 2.67% of its supply on April 3rd, a $65.08 million equivalent

Bitcoin ETF products saw net inflows of $845 million last week

Last week, Bitcoin ETF products experienced a net inflow of $845 million, marking a substantial rise from the previous week's net outflow of $887.6 million. Recently, Tether made a significant move by acquiring Bitcoin worth $627 million in the first quarter, increasing their total Bitcoin holdings to 75,354. These holdings are valued at $5.24 billion at the current market price. Arkham Intelligence has provided a breakdown of their top 3 holdings, as detailed below:

Their total holdings as identified by Arkham sit at $7.5 billion

In other Tether related news, the company addressed concerns about AI technology monopolization by large tech companies.  As a result, Tether data is advancing transparency and privacy in AI model development. This effort is part of a broader initiative to enhance its AI focus, aiming to establish new industry standards through the development of open-source, multimodal AI models. Additionally, Tether data plans to foster collaborations that integrate AI into market-responsive products and engage actively in the AI community to promote open AI technologies. Furthermore, Tether data is initiating a global search for top talent for its growing AI division, inviting individuals interested in AI to explore career opportunities on its website.

State of Bitcoin Market Cycle

One of the most important questions many Bitcoin/crypto investors may be asking with the halving just two weeks is: Where do we stand in Bitcoin’s broader market cycle?

One of the best valuation methodologies for Bitcoin is MVRV z-score. This compares Bitcoin’s realized price, or the cost basis of the network in aggregate, to the current marginal trading price for Bitcoin. This serves as a proxy for the amount of unrealized profits/losses the market is currently sitting in. During bear markets, buying below an MVRV reading of one has historically been a good time to allocate to BTC; as by definition the market is underwater in aggregate. Inversely, during bull markets, distributing during high readings of MVRV have proven to be prudent times to scale out of holdings as the market sits in a high state of unrealized profits and there is a strong incentive for selling.

Another metric to follow is stablecoin flows, serving as a proxy for liquidity coming into the market and general appetite to be involved in crypto markets. Stablecoin supplies continue to rise, now up over $20 billion from their lows to over $140 billion in circulation. As this continues to trend up, this shows that capital continues to flow into crypto markets.

Comparing Bitcoin’s price performance to its prior price performance after all-time highs, we also get a similar picture of being somewhere mid-cycle.

Optimism allocates $3 billion for grants to its blockchain developers

Another interesting development last week came from Optimism which has allocated $3.3 billion in OP tokens to support its community and fund projects or individuals contributing significantly to its ecosystem. A total of 850 million OP tokens have been earmarked for this purpose, as announced by the Optimism Collective, the network's governance and community branch, on March 26th. These tokens, representing 20% of the initial OP token supply, will be distributed over four categorized funding rounds starting in May and extending into 2024. According to the COO of the Optimism Foundation, 40 million OP have already been distributed in three previous rounds.

The upcoming fourth round will focus on retroactive public goods funding, encouraging community votes on projects that have demonstrated value to receive token grants. Subsequent rounds, five through seven, aim to reward contributions to infrastructure, governance and development tools, with eligibility extended to anyone working to improve Optimism. The final round is scheduled to conclude in mid-November. This initiative underlines Optimism's commitment to supporting public goods and services that contribute freely to the blockchain or crypto community, rewarding them for their demonstrated contributions. Below is an overview of current bridge activity amongst each respective Layer 2 solution:

It will be intriguing to observe the developments in the coming weeks and months to determine the concrete impact of the grant program on the network activity of Optimism.

Sui is set to unlock 2.67% of its supply on April 3rd, a $65.08 million equivalent

Lastly, the primary unlock event this week features SUI. Scheduled for April 3rd, 2024, $SUI plans to release 2.67% of its circulating supply. This comprises $65.08 million for the community access program. $SUI’s vesting schedule is estimated to reach completion by August 31st, 2030.

Note: The content in this weekly report has also been utilized in our weekly collaborative series with stock/crypto trading platform eToro.

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