Summary
· Last week, cryptocurrencies and traditional risk markets were flat as participants focused on tariffs taking effect on April 2.
· Regulatory tailwinds for US cryptocurrencies remain strong. President Trump emphasized focus on US leadership at the digital assets summit, and the SEC hosted the first of five crypto special working group roundtables on March 21.
· This week was significant for stablecoins. The House released a draft Stablecoin Bill, World Liberty Financial plans to launch a US Treasury-backed stablecoin, Fidelity Investments is testing a USD-pegged stablecoin, and Wyoming's multi-chain WYST entered the testnet.
Last week, cryptocurrency and traditional risk market trading was subdued as participants awaited tariffs effective April 2. Nevertheless, market anxiety increased on March 27 when President Trump announced 25% tariffs on all imported cars and reciprocal tariffs on trade partners. Despite this, market performance remained relatively good, which we believe was primarily due to short covering rather than fundamental trading. Global centralized exchange BTC, ETH, and SOL spot and futures volumes remained low, despite this typically being a time when we would see increased liquidity from month-end portfolio rebalancing.
Another technical factor driving broader market activity was GameStop's announcement of issuing $1.3 billion convertible preferred bonds (0% interest, maturing in 2030) for potential future Bitcoin purchases for its treasury. In recent months, several publicly traded companies (besides Strategy, formerly MicroStrategy) have announced Bitcoin acquisitions, including Metaplanet, Solidion Technology, and Semler Scientific.
Meanwhile, cryptocurrency regulatory tailwinds remain strong—especially in the US, as symbolized by President Trump's speech at the digital assets summit last week, emphasizing focus on US leadership in the field and drawing attention to ongoing work on stablecoin and market structure legislation.
Relatedly, the US Securities and Exchange Commission (SEC) hosted the first of five crypto working group roundtables on March 21, focusing on conditions for defining certain digital assets as securities. These discussions may form the framework for crypto market structure legislation and will involve further discussions on topics like custody, tokenization, and DeFi before June 2025. The Senate recently also passed a resolution (with 70 votes) to rescind the IRS's DeFi reporting rules, currently awaiting President Trump's approval.
Stablecoins and Multi-Chain
Regarding stablecoins, the House released the full text of the Stablecoin Transparency and Accountability to Promote a Better Ledger Economy (STABLE) Act on March 26, outlining the preliminary direction of upcoming legislation. Notably, the bill prohibits paying interest or yields to stablecoin holders and creating new collateralized stablecoins (i.e., algorithmic stablecoins) within two years. The bill also outlines reserve and transparency requirements for issuers and creates an approval process for entities seeking to issue new tokens.
Simultaneously, many other new stablecoins have made progress. World Liberty Financial announced plans to launch its own Treasury-backed stablecoin. Fidelity Investments is testing a stablecoin (though launch plans remain unconfirmed), and Wyoming is entering the testnet phase for its Wyoming Stablecoin (WYST). We find Wyoming's stablecoin launch strategy particularly interesting, as it more strongly indicates that tokenization may be a multi-chain phenomenon in the long term.
Wyoming is collaborating with LayerZero as its token issuance partner, launching WYST contracts on Avalanche, Solana, Ethereum, Arbitrum, Optimism, Polygon, and Base testnets. Similarly, BlackRock has expanded its on-chain treasury fund BUIDL to the Solana blockchain—joining Aptos, Arbitrum, Avalanche, Ethereum, Optimism, and Polygon as networks where investors can access its products.
Interest in tokenized treasury funds has been accelerating, with BUIDL's AUM increasing by $1.3 billion this month to a total of $1.9 billion. Although current investor interest and liquidity are mostly concentrated on Ethereum (90% of BUIDL's total supply is on Ethereum), proactively branching into different blockchain networks suggests issuers might be willing to follow users and liquidity if adoption patterns change.
Crypto and Traditional Asset Overview
Coinbase Exchange and CES Insights
The cryptocurrency market experienced a rebound. It has remained consistent with the US stock market, and we saw BTC recover its key 200-day moving average. The Coin 50 index also rose but remains in a downward trend, reflecting relative weakness in other cryptocurrencies. Unless unexpected economic data is released, we anticipate range-bound movement at least until April 2, the deadline for President Trump's tariffs.
Single-digit perpetual funding, recent high stablecoin AUM, and short-term future basis suggest low positioning as traders patiently await further data before increasing meaningful risk. Historically, April, May, and June are seasonally challenging months for crypto assets, so maintaining lower positions may prove to be a prudent strategy.
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