Introduction:

This month, the attention of the crypto market is still focused on the flow of funds rather than the fundamentals. After two months, the US BTC spot ETF saw a net outflow for four consecutive days (a net outflow of $836 million between March 18 and 21), while the positive inflows of the first-tier BlackRock and Fidelity, as well as other funds, offset the outflow of the canary release Bitcoin Trust GBTC, indicating that we are witnessing some capital transfer. At the same time, we see that the game between profit-taking miners and net inflows of ETFs is driving the continuation of the volatile market.

1. Macro Perspective

1.1 The rise of US stocks did not meet expectations, but the breadth of expansion may continue

The US stock market’s rise in the first quarter has boosted the confidence of stock investors, but market sentiment has not yet reached the “frenzy” level that usually indicates a stock market top.

According to the latest report from US Bank, its “sell-side indicator” rose slightly by 22 basis points to 55% in March, the highest level since May 2022. The “sell-side indicator” is a contrarian sentiment indicator that tracks the average recommended allocation ratio of Wall Street sell-side strategy analysts to balanced fund stocks. When this indicator is the same or lower than the average recommended level, there is a 94% chance that the stock market return rate will be positive in the following 12 months.

US Bank strategist Subramanian pointed out that the current indicator value means that the US stock market will rise by at least 13% in the next year.

The rise in US stocks may have boosted confidence. Sentiment in the US stock market rose in March, but it did not reach the level of excitement. The US Bank predicts that with the Fed’s interest rate cut, the cash return rate will drop to 3% within two years, and trillions of dollars in cash in retirement accounts will be transferred to stocks.

Strategist Subramanian also said that the broad expansion of US stocks is likely to continue.

The proportion of stocks that outperformed the market in March increased from 40% in the previous month to 60%, the highest level since December last year. The rise of US stocks is no longer dominated by technology stocks, and the market breadth index has significantly improved, with cyclical stocks collectively rising. The “Seven Tech Giants” gradually stopped their gains in March, with a market value-weighted increase of only 1.6%, the worst performance since December last year, while cyclical industries such as energy and finance, which performed well, rose nearly 12% in the first quarter.

1.2 BTC Shock Market is Co. About 2 Million BTC is at the Critical Loss

After the net outflow in the first week of the US BTC spot ETF in January, the BTC spot ETF experienced four consecutive days of net outflow in mid-March, causing the BTC price to fall by -15.4% from the new high of $73,100 reached on March 13 and fall to $61,200 on March 20. Later, as the ETF turned to net inflows, the BTC price recovered to $70,000 and began to fluctuate around this price.

As shown in the above chart, when the market reached an all-time high of $73,200 (ATH), investors sold on the chain, locking in more than $2.60 billion in realized profits. About 40% of this profit-taking can be attributed to long-term holders, including investors who withdrew from GBTC trusts. The remaining $1.56 billion realized profits were locked in by short-term holders, and traders used the inflow of liquidity and market momentum. The realized profits of both groups have reached a similar level to that during the bull market peak in 2021.

As the price fell from its historical high to a recent low of $61,200, a total of 2 million BTC transitioned from a “profitable” state to a “losing” state. The market then rebounded to $66,500, and approximately 1 million BTC returned to a “profitable” state. As shown in the chart above, we can see:

Compared with past data, after the bull market ended in 2022, the BTC price did not cover the cost until 2024, and miners began to make profits. From the supply side, the bull market may have just begun. With the addition of traditional institutions and the increase in recognition of the value of BTC, there is a high probability that BTC will allow miners to achieve long-term stable profits like gold. That is, the long-term stability of BTC price is higher than the mining cost.

1.3 After Dencun Was Upgraded, Base Competed with Solana for Development

On March 13th, Dencun upgraded and activated on the ETH mainnet, causing a surge in on-chain activities on many networks. Following the upgrade of Base to use Blob, the transaction fee of Base network decreased from $0.31 to $0.0005. Afterwards, Base TVL exceeded $1.70 billion and the daily transaction volume of Base also increased to 2 million, an increase of 350%.

With the frenzied market of Meme coins, in addition to the significant rebound of Solana’s active level, Base also competed with Solana to layout and develop together with the significant reduction of network fees, making the FOMO sentiment of Meme coins almost dominate the market in March.

From the performance of transaction fees on Base, the median transaction fee for these networks has been consistently below $0.01 during low congestion periods. However, during congestion periods, transaction fees on Base skyrocket to pre-Dencun levels, leaving some underpriced transactions pending until market fees return to their target rates for execution, resulting in higher median transaction costs during congestion periods.

Looking at Solana, because it does not have pricing based on computing units (i.e. fees are not directly related to computing resource consumption) and lacks an effective priority fee mechanism, Solana can always maintain a low median fee. However, this method incentivizes people to send spam transactions to the network to increase the possibility of transaction packaging, resulting in a large number of discarded and failed transactions on Solana.

For Solana and Base, their scalability roadmaps are still long, and there are different trade-offs on the routes they take.

2. Cryptomarket Data

2.1 Market Cap & Ranking Data

Under the general rise this month, the market value of the top 10 tokens has increased to varying degrees. Except for Solana, which briefly surpassed BNB and jumped to fourth place, the overall ranking has not changed much. Looking at the 30-day increase, DOGE rose by 116%, ranking first, followed by SOL with 67.9% and BNB with 46.6%, while BTC ranked fourth with 24.9%.

The huge increase of DOGE and SOL mainly comes from the Meme coin market in March. The skyrocketing markets of PEPE, BOME, WIF, DOGE, and FLOKI took turns, and SOL became the cornerstone of the prosperity of the Meme ecosystem, driving up the price and market value of SOL. Currently, both Base Chain and BNB Chain are empowering and promoting the activity and development of Meme coins, and it is expected that the Meme market will continue in April.

Among the top 100 tokens by market capitalization, the tokens with the highest increase in March were dogwifhat (+ 480.3%), FLOKI (+ 412.8%), and FLOKI (+ 256.0%). Their growth trends were distributed throughout the month. Combined with the hot trend of the Meme ecosystem on Base Chain, this high-rise Meme market is likely to continue in April. In addition, the AI track and BTC ecosystem have shown significant popularity recently and are expected to perform well in April.

2.2 The Inflow & Outflow of Stablecoins

The trend of stablecoin inflows in March performed well, with the total amount of stablecoins exceeding $150B. From the starting slope, this growth rate may still be accelerating. It is expected that with the continued strength of this cycle, this growth rate will continue and reach its peak in the next 3–6 months.

The fastest growing stablecoin this month is USDe, with a rise of 156%; followed by USDC, with a rise of 17.79%; while FDUSD, which had the highest increase in the previous two months, fell by 11.01%. Although there are many doubts about USDe in the industry, its rapid growth seems to indicate that the role of algorithmic stablecoins will become more important in this round of market trends.

USDe is published by Ethena. As of March 30th, the supply has exceeded 1.50 billion coins, and the contract positioning opened by this protocol accounts for 15% of the global ETH contract positioning. Seraphim, the head of Ethena’s growth, tweeted that the next step is to include BTC in the collateral category and plan to expand the publishing scale of USDe to over $5 billion in September.

In terms of USD inflows, the overall trend of stablecoin growth is the same. The highest daily net inflow was $1.34B on March 25th. Although there were occasional short-term net outflows during this period, the amount and frequency of net outflows were much lower than those of net inflows. In addition, from the news perspective, the buying power of US institutions in the market is still very strong, which will inevitably continue to drive the increase in USD inflows.

2.3 On-chain TVL Ranking

The TVL on the entire chain showed significant fluctuations in March, showed a significant downward trend in the third week of this month, and gradually rebounded afterwards, continuing to grow in a slower trend. This trend is almost consistent with the overall market trend. It is expected that with the brief pullback and large fluctuations before the halving, the TVL on the chain will also change accordingly, but the growth trend of the coin standard will continue.

The most eye-catching project this month is etherr.fi. With the airdrop application and listing of its token ETHFI on major CEX, etherr.fi’s TVL growth rate reached 74.59%, leading other projects in the TVL TOP10 and far exceeding EigenLayer’s 24.99%.

DeFiLlama data: As of March 29, ETH liquidity re-pledge protocol TVL reached 7.678 billion dollars, of which EigenLayer ranked first with TVL exceeding 12 billion dollars; followed by ether.fi, TVL exceeding 3 billion dollars; and Renzo, TVL exceeding 1.60 billion dollars.

Among the 142 projects with TVL above $100 million currently (only 31 last month), the project with the highest TVL growth this month is Hyperlock Finance. Hyperlock is a production enhancement and meta-governance protocol aimed at deepening Thruster’s liquidity. By allowing traders and DAOs to obtain additional income on Hyperlock, Blast ecosystem projects can more easily obtain liquidity. It is expected that with the expansion of Blast’s ecosystem, Hyperlock will converge and empower its ecosystem. Specifically, its TVL may continue to grow significantly in the next three months.

About Blast, Thruster and Hyperlock

- Blast is an optimistic rollup that is compatible with EVM and has native benefits. Users’ balances will automatically compound and earn additional Blast rewards.

- Thruster is Blast’s native DEX, designed to leverage Blast’s native revenue, customized liquidity solutions, and a more streamlined UI/UX.

- Hyperlock is a protocol based on Thruster that optimizes revenue and governance for Blast. Thruster LP and THRUST stakers provide higher rewards.

Divided by DeFi category, TVL’s total ranking TOP10 track this month, ranked first, is still LSD 51.44 billion dollars, although compared with last month (53.30 billion dollars) decreased, considering the overall market price changes, in fact, the total is still growing.

In addition, in other tracks, except for CDP which decreased by about 1 billion dollars, there has been varying degrees of growth, especially in the Lending, Bridge and Dexes tracks, which also indicates that the activity level on the chain is becoming higher and higher, and the market is gradually heating up.

According to the chain category, the TVL of Base performed the best in March, reaching 116%; followed by Bitcoin’s TVL, which rose 77.6% (694% last month), and Solana, which continued to maintain high growth, rose 55.3% (40.33% last month).

The high increase of Base and the continuous increase of Solana are mainly due to the market’s FOMO sentiment towards MemeCoin and the resulting surge. Recently, BSC has also empowered MemeCoin after Base. It is expected that TVL will continue to grow in the month and will still be affected by the MemeCoin market.

2.4 Mining Pool Data

BTC：

Currently, the total POW computing power of the entire network has reached 596.81 EH/s, an increase of about 3.78% from last month (575.08 EH/s). Among them, the top three mining pools are still Foundry USA, AntPool, and F2Pool, with no updates or changes. However, Foundry USA has the most stable performance in terms of growth rate.

The overall trend of mining pool computing power continues to steadily increase, which means that more funds and computing power are gradually joining in, and more people are willing to consider mining as an investment option in the industry.

The total network computing power of BTC mining pool is 14.440EH/s, an increase of about 3.6EH/s from the end of last month. Obviously, as the halving approaches, some miners are increasing their computing power equipment in advance to ensure their profits, which has also caused instability and decline in the lucky value of block production this month (currently 93.64% lucky value on the 30th). In addition, there are still 2,217 blocks left before the fourth BTC production halving, and the expected halving time is April 21, 2024.

Although there has been a significant increase in computing power, with the increase in difficulty, the average cost of BTC output this month is still $50,000, with a maximum of $65,000. After the halving, as the output decreases, the average cost is likely to exceed $100,000, which will inevitably lead to a continued rise in BTC price and market value.

ETH：

The supply trend of ETH tends to flatten, and there has been no significant fluctuation since June 2022, basically maintaining around 122 million. This indicates that the POS mechanism has indeed played a very positive role in stabilizing the ETH ecosystem. The market value of ETH is strongly correlated with ecological value.

As the largest ecosystem in the current industry, ETH only needs to focus on the construction and expansion of its internal ecosystem to achieve convenient exploration and driving of the entire industry. In fact, what we see is just like this.

Meanwhile, the total number of ETH POS pledges continues to rise. As of March 31st, there were 978,052 active validators, with 31,328,059 ETH pledged across the network, accounting for 26.80% of the total ETH supply. Among them, 2,306,499 new pledges were added in March, and the stake share of the liquidity pledge protocol Lido accounted for 30.11% of the total.

With the growth of ETH staking, the incentive part of validators will depend more on the active level of on-chain transactions. This, together with the POS mechanism, forms a complete regulatory closed loop within the ETH ecosystem. However, the absolute proportion of Lido makes how to be more decentralized an urgent problem that the ETH Foundation needs to solve, and it is recommended to focus on it.

3. Market Trends

3.1 BTC Market Gains Weakened

TradingView data: The lowest price of BTC in March was $59,005, and the highest price was $73,777, with an overall increase of 16.6%. This increase has weakened compared to the 43.57% increase in February, which may be affected by the decrease in net inflows of BTC spot ETFs in March.

According to Coinglass data, the net inflow of BTC spot ETF in March was $4.6368 billion, much lower than the net inflow in February ($6.03 billion). However, the BTC price remained relatively stable throughout March.

Based on historical experience, the price of BTC is likely to experience a pullback before and after the halving. However, we believe that with the stable foundation of the Bitcoin spot ETF and relatively stable macroeconomic environment and indicators, coupled with the benefits of halving, even if Bitcoin experiences a pullback, it will still continue to maintain an upward trend.

3.2 Restaking Waves Begin to Emerge

Restaking track is also the focus of attention in March. With the opening of the ether.fi airdrop application, ETHFI was launched on CEX on March 18th, with an opening price of 0.2 dollars. On the same day, its price soared to a maximum of 5.3 dollars, an increase of more than 26 times. Although it fluctuated later, the overall trend was upward, with a maximum price of about 8.6 dollars, which is 43 times the opening price.

The rise of ETHFI and the trend of the market make people have higher expectations for other Restaking projects that have not yet issued coins, and the focus is on Renzo. According to Defilama data, since March 1st, Renzo’s TVL has been steadily increasing. From March 1st to March 20th, its TVL increased by about 350 million dollars; after that, its upward slope increased significantly, and from March 20th to 31st, its TVL increased by about 1.08 billion dollars, more than three times the previous growth rate.

Renzo’s TVL growth mainly comes from people’s high expectations after its issuance. After ether.fi, if Renzo’s performance is consistent with or similar to people’s expectations, the wave of Restaking will be unstoppable.

3.3 Meme Coin Continues to Drive FOMO Sentiment

The performance of the MEME sector in March was still impressive. After the wealth creation effect of DOGE, SHIB, and PEPE in February, Meme tokens such as BOME, MEW, WIF, and BRETT took turns performing a skyrocketing plot, allowing the FOMO sentiment in the market to continuously accumulate and release.

In the Coingecko TOP10 gainers list, CAT has started to lead a new wave of skyrocketing sentiment, while CHEEMS, OMNOM, DEGEN, and others have started a new relay. This market trend, on the one hand, indicates that the entire cryptocurrency market is still hot and the market funds are active; on the other hand, it also indicates that the market needs new stimulation, whether it is emotional or narrative.

Behind the Meme coin market, there is more promotion and empowerment from Solana and Base within the ecosystem. Through the market and community introduction of Meme coin, the Solana and Base ecosystems have become extremely active, providing people with an outlet for emotional release. In addition, BSC is also making corresponding plans, which may further boost the rise of the Meme sector, but whether it will continue and for how long is still a question mark. Especially with the huge volatility of Meme coins, how to seize the appropriate investment opportunity is a huge challenge for individual investors.

4. Observations of Investment and Financing

4.1 Summary of Investment and Financing

In March 2024, the total amount of completed crypto market was 1.16 billion USD, an increase of 52.6% compared to the previous month. The data is as follows:

Among them, seed round financing events are the most, followed by strategic financing and A round financing, while other types of financing events are growing rapidly.

Overall, although the number of acquisition events has declined, the financing events, average financing amount, and median financing have all increased significantly, especially the significant increase in strategic financing and other types of financing events, indicating that the market’s bullish sentiment is rising, and the influx of investment and financing hot money is also continuing to increase. The market’s bullish sentiment and cyclical sentiment are still surging.

The largest 5 rounds of financing in March:

- Optimism completes $89 million financing, valuation undisclosed;

- Zama completes $73 million Series A financing, valuation undisclosed;

- Berachain completes $69 million Series B financing with a valuation of $1.50 billion;

- Figure Markets completed 60 million USD Series A financing, valuation undisclosed;

- Eclipse completes $50 million Series B financing, valuation undisclosed;

4.2 Analysis of Financing Institutions

From the perspective of VC institutions: Firstly, Animoca Brands’ investment and financing are mainly concentrated in the infrastructure and GameFi fields, followed by Polychain, Binance Labs, and Coinbase Ventures. These three companies have more investments in the infrastructure and DeFi fields, while other VC companies focus on the infrastructure field.

This also reflects the distribution and pattern of industry construction and application at the current stage. Infrastructure is still the current focus of construction, while GameFi and DeFi are the business focus on the application side.

4.3 Trends in Investment and Financing

Looking at the investment and financing market in March, investment and financing activities in the crypto field are growing significantly, both in terms of the number of projects and the amount of investment, and have reached a high point in nearly a year. Investment is still concentrated in infrastructure, DeFi, and NFT/GameFi.

In April, the most concerned sectors currently include AI + Crypto, GameFi, Modularization, new applications of Solana and Base chains, and Bitcoin Layer2. With the increasing activity of investment and financing, it may further stimulate the investment market boom. Although it may be affected by various factors such as the global economy, technological innovation, and policy environment, the overall positive trend remains unchanged.

5. Summary

The data and market trends for March 2024 have shown us multiple important trends.

Despite the significant fluctuations in the current market, the market dominated by traditional capital and ETFs is still the main narrative. In this cycle, the Meme coin market has significant differences compared to previous cycles, especially with the successive entry and driving of Solana, Base, and Bsc after Dencun upgraded in March, making the market FOMO sentiment exceptionally warm and unique during the relatively calm period.

In addition, technological innovations and related investment hotspots such as Restaking, Modularization, BTC ecosystem, and AI have been continuously growing and stimulating the activity of market funds, especially the combination of traditional finance and RWA. Let’s wait and see if it will have a stronger penetration and impact on the global financial ecosystem.

Note: All of the above opinions are not investment advice. If there are any inappropriate points, please feel free to leave a message to correct them.

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