There’s never a dull moment on the blockchain. Here’s what you need to know this week:

Bitcoin

$63,654.66

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0.38%

Ethereum

$3,135.13

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0.18%

Tether

$1.00



0.02%

Solana

$145.67

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1.40%

USDC

$1.00



0.00%

XRP

$0.53

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1.17%

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MARKET BYTES

Bitcoin has seesawed since the halving. What’s next?

After months of anticipation, the Bitcoin network completed its fourth-ever halving on Friday.

Prices fell from more than $70,000 in the days before the event to below $60,000 over the weekend as some traders seemingly took advantage of a “sell the news” strategy — much as they did after spot BTC ETFs began trading in January. At the beginning of this week, BTC briefly climbed back to $67,000, but fell near $64,000 by Wednesday morning.

Here are other headlines to know this week.

Where prices could go post-halving 

In the months following each of the previous halvings, crypto markets have seen gains — although the scale of those gains moderated after the first halving. 

JPMorgan has predicted that prices could fall in the wake of the halving, and some even seemed surprised that BTC prices jumped in the days immediately following the event.

Meanwhile, billionaire investor Mark Cuban declined to predict what impact the halving could have on prices, but suggested that the loss in revenue for miners could drive some to pivot to AI.

Generally, analysts say that the halving effect will fully emerge over the coming weeks and months. 

Keep in mind… Short-term swings are expected by many crypto traders, which is why BTC HODLers take a longer view. As MicroStrategy CEO Michael Saylor — whose firm owns more than $14 billion in BTC —  recently put it, “If you're going to invest in bitcoin, a short time horizon is four years … no one has ever lost money holding bitcoin for four years.”

Senators propose new stablecoin rules

Last week, senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY), introduced a bill that would regulate firms that issue stablecoins. (Stablecoins are cryptocurrencies that are designed to avoid volatility by having their value pegged to a reserve asset, most commonly the U.S. dollar.)

Among other stipulations, the bill would require stablecoin issuers to maintain 1:1 reserve ratios (by essentially holding a dollar for every stablecoin issued) and would prohibit “algorithmic” stablecoins, which use smart contracts to automatically make trades designed to keep the value of the token consistent. 

Reading between the lines… Per the sponsors, the bill is designed to kickstart conversations on Capitol Hill. “We're glad we went ahead and put it out just to get some good feedback,” Lummis said. “We're happy to adjust it.”

A key BTC metric approaches all-time high

One indicator that professional crypto traders use to predict how markets might behave in the future is the 200-day simple moving average (SMA), which is considered a way of gauging longer-term trends. 

As of Tuesday, it was approaching $48,000 — just short of the all-time high of $49,452 set in February 2022. 

Why that might be important… “Past data show the most intense phase of the bull cycle unfolds after this average surpasses its previous peak,” according to CoinDesk.   

About six months after the last halving, for instance, the 200-day SMA hit a new peak above $10,300, and five or so months later BTC prices had climbed all the way to $64,000. (Always remember that past performance is no guarantee of future results.)

BIT SIGNAL

Meet the new projects that are transforming Bitcoin

Friday’s BTC halving may have sharply reduced the amount of new crypto that miners earn, but in a surprising twist, their other main income stream ramped up in a major way over the weekend: Network fees reached an average high of $127.97 on Friday, compared to just $3.35 for the month of March. 

What happened? A huge spike in transactions that were mostly related to a new protocol called Runes, which allows users to create “memecoins” on the BTC network. 

It’s just one of an increasing number of projects aimed at allowing the original cryptocurrency to function more like a flexible Ethereum-style platform. 

Here’s what you need to know. 

What are Runes? 

Runes Protocol is a project that allows for the creation of tokens on top of the Bitcoin blockchain — a common practice on networks like Ethereum, Base, and Solana. 

It’s the creation of Casey Rodarmor, the developer behind the similar Bitcoin Ordinals NFT project, which makes it possible to “inscribe” data on the smallest units of bitcoin.

Unlike the non-fungible (or unique) tokens created by Ordinals, Runes users are able to “etch” data onto the blockchain and mint regular interchangeable tokens. 

Besides helping send bitcoin transaction fees to a record high, Runes tokens are catching on with traders. Four days after launching, the most popular Rune had nearly 20,000 holders and a market cap around $227 million. 

DeFi is on the horizon for bitcoin

Unlike Ethereum, Bitcoin’s code was never designed to run smart contracts. But now that projects like Ordinals and Runes have illuminated possibilities for BTC beyond its traditional “store of value” role, developers are racing to build ways for users to bridge their bitcoin into protocols that are smart-contract compatible. 

Startups including Stacks (see the next item), CoreDao, Lorenzo Protocol, and LeverFi are building solutions that would allow users to stake their bitcoin on other blockchains or use bitcoin in DeFi protocols. 

One of the biggest Bitcoin layer 2 networks is making major changes

Because of the way it was designed, Bitcoin has much slower transaction speeds than many newer cryptocurrencies. In an effort to speed things up, a variety of “layer 2” blockchains like Stacks and the Lightning Network have been developed to move some of the traffic off of the main network and onto speedier parallel chains. 

Currently, Stacks transactions can only be settled when miners add a new block to the Bitcoin blockchain — approximately every ten minutes — which is way too slow for fast-moving applications like DeFi. 

But the new “Nakamoto” upgrade, which is being rolled out over the next month, will introduce parallel transaction processing, allowing Stacks miners to produce multiple Stacks blocks in between each Bitcoin block. In addition to faster transactions, users will be able to bridge their BTC to Stacks and receive a new token, stBTC, that’s compatible with smart contracts. 

“What I'm feeling the most proud of is this may be a massive improvement to Bitcoin UX for normal people,” said Stacks creator Muneeb Ali. “People want a way to use their BTC.”

​​The bottom line… 

For years now, the prevailing bitcoin narrative has centered around how well it functions as “digital gold,” or a secure, inflation-resistant store of value. And while more people than ever have access to BTC via innovations like ETFs, developers are increasingly finding ways to innovate on the original cryptocurrency. 

In fact, in the days since the halving, bitcoin scaling solutions have outpaced bitcoin, with Stacks’ STX token up roughly 10% since Friday.

NUMBERS TO KNOW

$8,450

Approximate cost of a “phygital” Louis Vuitton leather varsity jacket designed by Pharrell Williams, the fashion house’s creative director. The jacket is being sold as physical apparel and an accompanying NFT that will enable holders to buy the garment on a “token-gated” website.

71

Consecutive number of days that BlackRock’s spot bitcoin ETF recorded net inflows, as of Tuesday. That run places the firm’s IBIT fund in the top 10 of exchange-traded funds with the longest inflow streaks. At the top of that list is the JPMorgan Equity Premium Income ETF (JEPI), with 160 straight days of inflows.

2.5%

Percentage of NFT holders “responsible for 50 percent of all transactions in secondary NFT markets” between March 2021 and 2022, according to a new report published by the University of Chicago’s Booth business school. These power traders typically “target[ed] collections that were likely to succeed by entering new mints relatively late, and only when the collection had already picked up substantial sales momentum.”

0.15%

The planned fee for the Bitcoin Mini Trust, a new BTC ETF product from Grayscale. Grayscale also currently offers the Grayscale Bitcoin Trust (GBTC), a spot bitcoin ETF, with a fee of 1.5%, which is the highest among the BTC ETFs that launched this year. The new ETF’s 0.15% fee would, by contrast, be the lowest, reports CoinDesk.

TOKEN TRIVIA

When is the next Bitcoin halving?

Find the answer below.

Trivia Answer