Weekly Market Update - Friday, April 7, 2023

Crypto News: What Happened This Week?

Takeaways

The crypto industry narrative shifted back toward Ethereum this week as we approach the highly-anticipated Shapella hard fork with ether (ETH) reaching an eight-month high. ETH briefly broke out of its recent trading range to above $1,900 USD. The ETHBTC pair rallied to ~0.068 earlier this week from the 2023 lows of ~0.063 on March 16. Bitcoin (BTC) nevertheless showed continued resilience, and Arbitrum had a rocky start.

Crypto prices remain steady despite continued economic pressure

Bitcoin (BTC) and cryptos in general remained resilient despite continued economic headwinds including the surprise cut in oil production from OPEC+ and U.S. job openings dropping below 10 million for the first time since May 2021.

In traditional markets, 10-year treasury yields fell to ~3.26% on Thursday, the lowest level since September 2022, as the S&P 500 was largely flat week-over-week. The U.S. jobs market slowed somewhat in March, adding 236k jobs compared to 472k jobs added in January and 326K in February, while the unemployment rate fell to 3.5%.

A shift in the crypto narrative - Ethereum

In the build up to Ethereum's Shapella network upgrade, which is set to take place on April 12th, ETH has seen increased interest and strong price appreciation. Despite fears that the upgrade could bring a wave of selling pressure as stakers are finally able to freely withdraw their staked ETH, prices rose to the highest level since August 2022, touching $1,940 USD on Wednesday.

ETH also performed strongly against BTC this week, with the ETHBTC pair rising from ~0.063 at the start of the week before hitting resistance at ~0.068. Adding to that momentum, open interest in ETH futures increased to a new 2023 high of ~$6.22B USD across exchanges.

Bitcoin shows continued resilience

For the third straight week BTC price action has been concentrated between the ~$27.5k USD and ~$28.5k USD levels, testing both support and resistance again throughout the past week.

The biggest price move this week came on Monday after a prominent figure in the crypto community (@cobie) tweeted an encrypted message using the SHA-256 hash function. The idea behind this sort of tweet is to retrospectively reveal that they knew about the news in advance (if it turns out to be true) without having any impact on the market. However, the message was exposed early and read “Interpol Red Notice for CZ”, suggesting an international law enforcement request to detain him.

This caused some panic in the market, perhaps enhanced by Binance and CZ being sued by the CFTC last week. BTC saw a sudden ~$1,000 USD drop from ~$28.2k USD to ~$27.2k USD as investors digested the news, but quickly bounced back above ~$28k USD as it became apparent that the rumor could not be verified.

Elon Musk briefly replaces Twitter bird with Dogecoin dog

In altcoin news, DOGE was a strong performer this week after Twitter unexpectedly changed the company’s logo to the Dogecoin symbol on some parts of their web application. The price of DOGE immediately rallied higher, with the price jumping over 30%, briefly trading above $0.10 USD and becoming one of the top trending topics on Twitter.

Although it is well known that Twitter CEO, Elon Musk, is a big fan of the Doge meme, it is unclear if there is any motive or reason behind the change. Musk tweeted “As promised” and shared a screenshot of a Twitter exchange back in March 2022, where he joked about buying Twitter and changing the logo. On Thursday, the Doge meme was removed as the logo on Twitter, causing the price of DOGE to fall immediately after.

Arbitrum (ARB)’s first protocol proposal fails

Following the long awaited airdrop of its ARB governance token at the end of March, Arbitrum’s first attempt at a proposal (AIP-1) did not go smoothly. The community hit back at the proposal which included giving the Arbitrum Foundation control of 750 million ARB tokens for special grants and operational costs, with ARB holders increasingly frustrated as the Foundation began using the tokens before the vote had even occurred.

The Arbitrum Foundation released a statement explaining that they believe the negative sentiment was due to confusion among the community around AIP-1 being a ratification and not a request. As a result of the backlash new proposals have now been posted, split between AIP-1.1 — covering a smart contract lock up schedule, spending, budget, and transparency, and AIP-1.2 — lowering the proposal threshold from 5 million to 1 million ARB.

Following the community uproar, the price of ARB dropped from above $1.40 USD at the end of March to around $1.10 USD. It has since climbed back to ~$1.20 USD.

-From the Gemini Trading Desk