原文标题：Weekly: Suspended Animation
Original Author: David Han (Institutional Research Analyst)
Original source: Coinbase
编译： DAOSquare
Key takeaways:
- As the Fed continues to be cautious about cutting interest rates against the backdrop of reflation risks, the crypto market, like equities and other risk assets, is showing a downward trend.
- Gold has been the biggest winner in this market environment, hitting new highs amid increased central bank purchases, heightened geopolitical risks, and concerns about reflation.
- The launch of Endgame and the recent governance changes to increase revenue have drawn a lot of attention to Maker in the market, although these seemingly rapid changes are also considered high-risk by other protocols such as Aave.
Market Perspectives
The crypto market has moved sharply lower after Federal Reserve Chair Jerome Powell said he was cautious about cutting interest rates during talks on March 29 and April 3. The uncertainty about the direction of the market is not only reflected in the cryptocurrency market, but also in the performance of stocks and other risky assets over the past week. Coupled with concerns about reflation, the implied magnitude of a rate cut by the end of the year (based on Fed Funds futures) has even become more hawkish than the Fed for the first time in 2024. As of April 4, the market is pricing in a year-end rate of 4.631, well above the 3.825 forecast in early January (and also above the Fed's median dot plot target of 4.625).
Gold has been the biggest winner in this environment, hitting new highs amid increased central bank purchases, heightened geopolitical risks, and concerns about reflation. It is important to note that the appreciation of gold is usually associated with a Fed rate cut and an increase in inflation. Given the market's recent hawkish view on rate cuts, we believe gold's performance sends a signal that gold prices are too volatile relative to the Fed's interest rate changes, and it also conveys a general market expectation that a definitive inflation rise may be more problematic than expected.
In our view, the growing acceptance of Bitcoin as a "digital gold" may create demand for a new subset of investors in this market regime. As a result, we believe that there will be more aggressive buying in a downtrend compared to previous cycles, even if volatility persists during price discovery. In our view, the fact that Bitcoin has gained a wider range of funding channels due to the launch of the US spot Bitcoin ETF may also help dampen volatility (relative to previous cycles).
The impact of these ETFs and the inflow of greater institutional demand can be seen in the open interest in Bitcoin futures, which can be used as hedging instruments. CME Bitcoin futures open interest of $9.9 billion has surpassed any single centralized exchange (CEX) and accounts for more than one-third of the total Bitcoin futures market, including perpetual contracts and fixed futures. In our view, the capital released by ETFs may represent the most fundamental shift in market structure from the 2020-2021 cycle to the present. The release of this capital, coupled with the upcoming Bitcoin halving (expected to occur on April 20-21, depending on changes in the network's hash rate) and other positive catalysts, makes us believe that the market performance throughout the second quarter remains constructive.
On-chain: The Endgame Feast
Maker has been doing well over the past few weeks, thanks to its Endgame announcement on March 13th. The announcement details a series of changes in four main phases. Phase 1 revolves around the rebranding of DAI and MKR tokens (including repricing MKR at a ratio of 1:24,000 to a new governance token), updating governance protocol incentives, building a new asset bridge, and launching the Spark subDAO. Phase 2 involves scaling subDAOs, asset bridges, and governance responsibilities. Phase 3 outlines plans to move Maker to an independent chain over the next few years. Phase 4 is to make all the underlying governance contracts immutable.
As more details surfaced, particularly regarding the future subDAO governance token, airdrop speculation around MKR holders and DAI stakers increased. Given the industry's widespread focus on airdrops, we believe that part of the increase in token valuation is driven by the value of future airdrop tokens (in addition to other governance proposals that have recently increased their protocol's revenue). In our view, Maker's changes are a continuation of its DeFi protocol movement, aiming to more specifically implement initiatives that have been mentioned for years (such as Uniswap's fee conversion). In our view, these long-running DeFi protocols may be considered somewhat stagnant at the moment, but their brands and market share can leverage innovation more powerfully due to the network effects of their protocol liquidity.
While there has been a lot of focus on the launch of Maker's Endgame, recent governance changes to Maker have caused some controversy in the DeFi community. Maker has quickly passed a number of change proposals, including integrations with Morpho and USDe, and is considering significantly expanding these businesses by increasing collateral limits. While these changes will significantly increase Maker's revenue, some argue that the pace of change greatly increases the level of risk. In light of this, the Aave community has been seriously discussing the ability to cancel DAI as collateral. These discussions were supported by key Aave leaders, including its founder, Stani Kulechov, who was "fully in favor of removing DAI from all Aave marketplaces."
We believe this conflict could herald a shift in the decentralized stablecoin market. Relative to DAI, Ethena's USDe has gained rapid market share due to its higher yields and airdrop incentives. Both of these assets have inherent limitations in their ability to issue (compared to centralized stablecoins). The DAI supply is overcollateralized and therefore subject to the lender's collateral. At the same time, the US dollar is constrained by the open interest market in futures, which will become unaffordable if its short interest is too large.
Creating and scaling new decentralized stablecoins remains challenging due to the network effects of liquidity. DefiLlama tracks more than 160 stablecoins, most of which are used very little outside of their original protocol. Although the number and market capitalization of decentralized stablecoins are increasing, they are not growing as fast as centralized stablecoins. The market share of the USDC and USDT stablecoins has grown to 90%. With the benefits of cross-chain native stablecoin issuance, and the user experience improvements of asset bridges powered by technologies such as the Circle cross-chain transfer protocol, we believe that the adoption of decentralized stablecoins over centralized stablecoins is likely to continue to face challenges.
Crypto and traditional finance
(As of April 4, 4 p.m. ET)
Source: Bloomberg
Coinbase Exchange and CES Insights
Over the past week, the market has calmed down. BTC is fluctuating in a tight range of $2,000, and inflows into US spot Bitcoin ETFs, while positive, have slowed. Overall, crypto trading volumes also continue to slow as the market tries to find the next narrative that could drive its upside. Bullish traders received some confidence and the risk of their long positions calmed down a lot. Funding rates for BTC, ETH, and various altcoins are currently near their lowest levels of the year. The BTC halving, which is expected to take place on April 20 or 21, could be a catalyst for price increases, but it will have to deal with the period of weakness that has been common for crypto markets and other risky assets.
Coinbase Platform Trading Volume (USD)
Coinbase Platform Trading Volume (Asset Ratio)
Funding rate
Notable Crypto news
institution
- Spot Bitcoin ETF Monthly Trading Volume Nearly Tripled to $111 Billion in March (The Block)
Supervision
- TRON Foundation and Justin Sun Ask U.S. Court to Dismiss SEC's Lawsuit (Coindesk)
routine
- Ethena's token will be listed on the exchange today and airdropped to claim (The Block)
- Vitalik Buterin 和 Arthur Hayes 对 Meme 币狂热发表看法(The Defiant)
Coinbase
- The Future of AI-Powered Content at Coinbase: Expanding Horizons and Enhancing User Experience (Coinbase Blog)
Global perspective
Europe
- Russia discusses testing digital rubles for budget payments (bitcoin.com)
- 21Shares Launches Toncoin Staking ETP (The Block) on the SIX Swiss Exchange
- The U.S. and U.K. are investigating whether a $20 billion cryptocurrency transaction violated the Russian sanctions bill (Bloomberg)
Asia
- Hong Kong-based financial firm VSFG plans to launch spot bitcoin ETF (The Block) as early as May
- HSBC Launches Tokenised Gold to Hong Kong Retail Investors (CryptoNews)
- Singapore Expands Cryptocurrency Regulation, Introduces Enhanced User Protection Requirements (The Block)
- Indonesia Implements Sandbox for Crypto Firm Ahead of OJK Supervision (Finance Magnates)
- Taiwan's Crypto Industry Receives Government Approval to Establish Industry Association (The Block)