Can Ethereum replace bonds? Bitcoin looks ready to move, and the Queen of England could soon be trading NFTs thanks to emerging UK legislation.
All that and more!
TL;DR
- Ethereum: A Replacement for bonds.
- Bitcoin is ready to pounce.
- New UK crypto asset regulation
- NFT Q2 outlook.
Ethereum, a Replacement for Bonds
You’ve probably heard Bitcoin be described as digital gold, right?
The original purpose of Bitcoin (as envisioned by Satoshi Nakomoto) was as currency, or ‘peer-to-peer digital cash’. However, developers in the 2010s realized it needed an updated direction because of its slow transaction speeds. The developers agreed to increase the block sizes, foreshadowing the emergence of the gold 2.0 narrative. It caused quite the controversy, and is the reason Bitcoin Cash (BCH) exists.
As for Ethereum? A new narrative to capture the collective imagination of the cryptoverse compares Ethereum to US Treasury bonds. The narrative centers around the Ethereum merge, when the chain updates into a Proof-of-Stake (PoS) consensus mechanism, rewarding stakers for securing the network.
The narrative took traction when BitMEX founder and respected crypto-brain Arthur Hayes released “Five Ducking Digits” on March 30. He compares Ethereuem’s post-merge staking APYs with yields of US treasury bonds. Bankless then released a newsletter that dug deeper into the macro end of the same conversation. The two articles combined for some interesting information:
- Russian Sanctions, inflation, and staggering ATH debt in the Federal Reserve account for a growing mistrust of the US Dollar.
- The yield curve inversion signals that investors are losing tolerance for holding US treasuries long-term.
- Ethereum could fill the void with staking APYs estimated to be 8-11% post-merge.
- Staked ETH could realize large drawdowns in price and still outperform current bond yields. For example, ETH could lose -38% in price and perform similar to a 10-year bond. Chart Below.
Source: “Five Ducking Digits” by Arthur Hayes
- Hayes calculates ETH as a $US10,000 asset.
- Post merge, Ethereum will be ESG friendly.
Arthur Hayes does an excellent service in presenting the article in TradFi terminology. The comparison between ETH and bonds will seem familiar to traditional investors who constantly thirst for low-risk returns. If the narrative takes traction, even partially, the crypto market will undoubtedly see a staggering amount of mind-blowing inflows considering the bond markets are worth US$15T.
Market update 🌍
US traders saw Bitcoin (BTC) in a downward trend throughout the day until the price reversed at the significant US$45,000 support level that subsequently also marks the 200 EMA discussed on Friday. Buyers are making a strong stand at this level. Additionally, the BTC price looks to be consolidating, which often signals a strong breakout in either direction. While BTC is in an uptrend, a continuation of the trend remains at higher odds than a fall. But there are no guarantees.BTC ended the US session up 0.37% to US$46,500.
Source: Trading View
| US markets close | Gain |
| S&P 500 | +0.63% |
| Nasdaq | +0.81% |
| Dow | -0.26% |
| VIX | -5.30% |
| Protocol (Coin) | Price ($) | Gain (%) |
| Celo (CELO) | 4.45 | +16 |
| Mina Protocol (MINA) | 3.12 | +13 |
| Near Protocol (NEAR) | 17.54 | +6 |
| Audius (AUDIO) | 1.71 | +18 |
| Small Love Potion (SLP) | 0.0026 | +13 |
| Acala (ACA) | 1.82 | +9 |
| Astar (ASTAR) | .23 | +7 |
| Mirror Protocal | 1.96 | +16 |
| Bitcoin Fear and Greed Index | 52 Neutral (+4) |
| “Crypto” Google Trends | 38 (-5) |
| “Bitcoin” Google Trends | 38 (+1) |
Newswatch 📰
The UK government commits to crypto. The UK government plans to transform the region into a “global crypto asset technology hub” via a public announcement on the government website. The measures include:
- Stablecoins to be recognized as valid payment.
- Legislating for a “financial market infrastructure sandbox” to promote innovation.
- Establishing a Cryptoasset Engagement Group to work closely with the industry.
- Exploring ways of enhancing the competitiveness of the UK in the crypto asset space.
- Releasing a Non-Fungible Token (NFT) through the Royal Mint as an emblem of the forward-looking initiatives.
Coinbase Invest in India. Despite newly implemented increased crypto tax rates in India, Coinbase announced a $150 million investment into web3 initiatives in the country. In addition, Coinbase set up an Indian tech hub and hired 300 full-time employees from various regions.
Georgia in da house. Georgia’s central bank works to create a regulatory framework for bitcoin and crypto.
Intel bitcoin miner. After years of research and development, Intel releases the second-generation “Blockscale ASIC” chip that offers top-notch efficiency to miners. The chip will be available for purchase later this year.
On-chain ⛓
Non-mellow Celo. The Celo blockchain had two major announcements recently. First, the Celo Foundation plans to launch a $20m campaign to incentivize the development and deployment of Celo on-and-off ramps. Second, Celo Organization introduced a proposal to rearchitect the chain into a sovereign layer-2 rollup on Celestia. Celo, whose primary focus revolves around mobile Dapps, would benefit from the increased speeds of an L2 framework.
Institutional Interest. According to Coinshare’s Asset Fund Flows Weekly, TradeFI digital asset funds saw strong positive inflows for the second straight week. 99% of the 180m came from European investors, while American investors remained hesitant. Ethereum and Solana saw US$23m and US$8.2m of positive inflows. Most institutional interest remains focused on bitcoin, which saw $US144m worth of inflows this week. Despite the small size of investment inflows, the report captures a snapshot of institutional interest in the crypto space.
Source: CoinShares
NFT & metaverse update 🐵
NFTs are hotter than ever in terms of adoption, and @greatmando_nft Twitter posts “Things to watch out for in Q2 (rumors included)” for the NFT space. Read it, it’s well worth your while.
Notable Mints:
| Project | Community score | Mint price | Date of mint | Time (UTC) |
| Chill Bear Club | 80 | 0.06 ETH | April 5 | 10:00 |
| Skyverse | 81 | 0.1 ETH | April 5 | 10:00 |
| Shinsekai | 80 | 0.15 ETH | April 7 | 03:00 |
Banter’s take
Imagine owning a centralized cryptocurrency whose caretakers increase supply at will and pay the stakers 2-3% a year. That’s the basic structure of the US treasury bond. Not exciting and not very profitable. Quite the shitcoin.
Bonds, backed by indebted money-hunger governments, might be the next legacy system that investors pass up. And perhaps Arthur Hayes unleashed the case for Ethereum as the alternative. So keep your eyes peeled and your ETH staked. Like the Bob Dylan song said, “the times are a-changin’.”
–Gabri
