Bitcoin’s rally past $50K
Bitcoin is off to a hot start in 2024, revisiting $50K for the first time since 2021. [Sean Gladwell via Getty Images]
There’s never a dull moment on the blockchain. Here’s what you need to know this week:
Bitcoin rallied past $50K. The cryptocurrency is revisiting levels last seen in 2021.
How blockchains can build a better internet. A closer look at a16z crypto founder Chris Dixon’s new book, “Read Write Own.”
This week in numbers. The money blockchains could have saved Americans in 2022, the floor price of Pudgy Penguins NFTs, and other key stats to know.
MARKET UPDATE
Bitcoin roars back above $50,000 as investors flock to ETFs
For the first time in two years, bitcoin broke the $50,000 mark on Monday as it recovered from last month’s dip, which came as some traders sold after the new spot BTC exchange-traded funds (ETFs) launched on January 11.
Since the ETFs launched, a flood of capital has flowed into the new investment class, helping drive crypto prices up. And even as worse-than-expected inflation numbers briefly cooled markets on Tuesday, BTC quickly bounced back on Wednesday to cross $51,000. With bitcoin's total market cap back above $1 trillion, all eyes are on crypto's next moves.
Here’s what you need to know.
Bitcoin’s post-ETF selloff appears to be over.
On Monday, the leading cryptocurrency by market capitalization hit its highest price since December 2021 — and is up roughly 30% in the three weeks since it fell below $39,000 on January 23.
The selloff that followed the start of spot BTC ETFs trading in the U.S. appears to be over, and investors both big and small have been heavily accumulating bitcoin ever since.
The BTC ETFs are a historic hit.
In their first month of trading, the two leading spot BTC ETFs — from BlackRock and Fidelity — have had the biggest ETF debuts in history by far. Out of more than 5,500 ETF launches in the last 30 years, they’re the only ones to surpass $3 billion in assets under management within their first month, according to Bloomberg analyst Eric Balchunas.
As a category, spot BTC ETFs have now purchased a collective 200,000 BTC, worth nearly $9.5 billion. Last week saw $1.1 billion of new inflows to the spot BTC ETFs, marking their biggest week yet.
Ethereum is gaining momentum ahead of a looming ETF decision.
ETH has also rallied in recent weeks, with the token up more than 20% since January lows and breaking past the $2,700 price level on Wednesday for the first time since May 2022.
In the same way that hopes of spot BTC ETF approval buoyed bitcoin’s price action for much of 2023, rumors of an ETH ETF could boost Ethereum in the first half of 2024.
Franklin Templeton, the finance giant with more than $1 trillion in assets under management, just filed an application for a spot ETH ETF with the SEC, which is already reviewing applications from firms like BlackRock, Ark Invest, and Invesco. The agency is obligated to make a final decision on the first wave of applications by May 23.
Ethereum is also seeing rising onchain activity, with the seven-day moving average of daily transaction volume up 15% since the start of this month, to $3.58 billion. Trade volume of NFTs on the Ethereum blockchain has also hit the highest point in almost a year.
Altcoins could be poised for a breakout.
Typically, when BTC and ETH go up, altcoins tend to follow. And the altcoin rally appears to be right on schedule.
As of Wednesday, TOTAL3 (an index which represents the market cap of all cryptocurrencies other than stablecoins, BTC, and ETH) was up nearly 10% for the week and up 18% since its January low.
Solana (SOL) and Chainlink (LINK) have helped boost the altcoin market, with SOL up 20% and LINK up nearly 10% in the past week.
How does the current altcoin market compare to its 2021 peak? TOTAL3 currently sits at around $520 billion, compared to more than $1 trillion in November 2021.
The bottom line…
As crypto markets rally in the early months of 2024, several narratives could continue to bolster BTC throughout the year. Industry watchers expect wealth managers to start allocating more funds into the new ETFs; Bitcoin’s next halving is currently set for April; and innovations like Bitcoin Ordinals are boosting onchain activity.
As Grayscale analyst Michael Zhao put it this week, “While [BTC] has long been heralded as digital gold, recent developments suggest that bitcoin is evolving into something even more significant. ”
BOOK REPORT
How blockchains can save the internet, according to a16z crypto founder Chris Dixon
What would the internet look like if it were owned and controlled by users, as opposed to a handful of Big Tech giants?
In his new book, “Read Write Own: Building the Next Era of the Internet,” a16z crypto founder Chris Dixon explores how a once-freewheeling internet became increasingly centralized, and why blockchains can help us build a better, fairer, and more open digital future. (a16z is an investor in Coinbase.)
Here’s a look at some of the ideas he discusses.
The three eras of the internet.
Dixon organizes his history of the internet into three distinct periods:
The “read era” (approx. 1990 to 2005): “Early internet protocol networks democratized information. Anyone could type a few words into a web browser and read about almost any topic through websites.”
The “read-write era” (around 2006-2020): “Corporate networks democratized publishing. Anyone could write and publish to mass audiences through posts on social networks and other services.”
The “read-write-own era” (just beginning): “Anyone can become a network stakeholder — gaining power and economic upside previously enjoyed by only a small number of corporate affiliates, like stockholders and employees.”
Where the internet went wrong.
The internet was designed to be, Dixon notes, “permissionless and democratically governed.” And it was this “freedom and sense of ownership” that ushered in what he calls a “golden period of creativity and innovation” that gave us “countless applications that have transformed our world.”
But at some point these conditions changed, for the worse. Dixon places this transformation in the mid-2000s, “when a small group of companies wrenched control away,” and the internet went from “permissionless to permissioned.”
The upside: People all around the world got access to amazing technologies, often for free. The downside: An internet controlled by “big, centralized networks” ultimately stifles innovation and harms consumers by limiting their options.
“Centralized networks,” says Dixon, “restrict and constrain startups, impose high rents on creators, and disenfranchise users.”
How blockchains can address this problem.
Blockchain networks are owned and controlled by their users — as opposed to an individual or corporation — and the rules they establish can’t be easily changed.
“Blockchains are computers that can, for the first time ever, establish inviolable rules in software,” Dixon writes. They are a “new construction material for building a better internet.”
With blockchain networks, says Dixon, it is possible to:
“Connect people in social networks while empowering users over corporate interests.”
“Enable new forms of monetizable media, and interoperable and immersive digital worlds.”
“Allow artificial intelligence products to compensate — rather than cannibalize — creators and communities.”
At the same time, blockchain networks make it so that “software developers get open access, creators get direct relationships with their audiences, [...] and users get valuable economic and governance rights.”
“People can read and write on the internet,” says Dixon, but with blockchains “they can also now own.”
Examples of the burgeoning “read-write-own” internet.
Some of the “promising applications” Dixon points to include social-networking clients, web3 games, and NFT collectibles.
Decentralized social protocols (see last week’s Bytes story about Farcaster) allow for communities to form around “deep and narrow” niches while prioritizing consumer choice: “Don’t like the way a client ranks posts, filters spam, or tracks your personal data? Switch. Nothing’s holding you back, and you won’t lose your connections.”
Games powered by blockchains make it possible to truly own the items you purchase or win for your avatar: “Fungible tokens representing virtual currencies and NFTs representing virtual goods would flow freely through the network.”
NFTs allow creators to make money in “an era of abundance” — without resorting to heavy-handed restrictions like paywalls: “Why would people pay for digital ownership? There are many reasons, but one is the same reason people buy art, collectible toys, and vintage handbags: an emotional connection to the ideas and stories behind the goods.”
The big picture…
In Dixon’s view, blockchain networks could ultimately enable us to “secure property rights for creators; reclaim user ownership and control; and break the stranglehold big, centralized companies have on our lives.”
They give us, he says, “a chance to create the internet we want, not the internet we inherited.”
NUMBERS TO KNOW
$74 billion
Minimum amount of credit-card fees Americans could have saved in 2022 if they had used blockchain payment technology instead, according to Coinbase’s latest State of Crypto Report. The report also notes that at least three in five Americans said they want updates to the current financial system to make it cheaper, faster, and easier to access.
$200 million
Amount that tech billionaire Peter Thiel’s venture capital firm, Founders Fund, reportedly invested in BTC and ETH between the summer of 2022 and early 2023. At the time of the purchases, bitcoin’s price was less than $30,000.
$16 million
Amount of funding raised by web3 platform Analog, which, as The Block notes, is building tools for interoperability across multiple blockchain networks. (Blockchain interoperability is often cited as technically complex, but key to the growth of a multi-chain web3 landscape.) This latest funding round, led by Tribe Capital, brings Analog’s valuation to $120 million.
$51,730
Minimum (or floor) price of a Pudgy Penguins NFT as of Monday morning. The collection, which raised a $9 million venture capital round last year and has expanded into selling toys at Walmart, is approaching the value of Bored Ape Yacht Club.
TOKEN TRIVIA
Farcaster is an example of which web3 use case?
A
Decentralized autonomous organization
B
Decentralized exchange
C
Decentralized social media
D
Centralized exchange
Find the answer below.
Trivia Answer
C
Decentralized social media
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