Around the block

Highlights:

1.     A dichotomy of regulatory progress

• Global regulatory progress for crypto came to a head in recent weeks with a stark contrast between European and U.S. regulators.
• The divergence is accentuated by comments from Patrick McHenry, Chair of the House Financial Services Committee, noting that Europe’s passage of MiCA (see p. 2) potentially places them at a competitive advantage that “should send chills up the spines” of Americans.
• Coinbase sued the SEC, attempting to force a public ruling seeking regulatory clarity in the face of aggressive SEC enforcement actions.
• The April 18^th testimony of SEC Chair Gary Gensler before the House Financial Services Committee was contentious and marked a distinct difference of opinions between the Committee and the SEC.
• A Stablecoin bill, which looked encouraging in July 2022, now faces a setback with former Chair Maxine Waters stating her desire to “start from scratch”.

2.     Bitcoin and Ethereum correlations with S&P 500 plummet

• The two largest cryptocurrencies have each seen their correlations with the S&P 500 decline from an all-time high in May 2021 to new relative lows.
• This could signal increasing independence of this nascent asset class at a time when the S&P 500 remains in a choppy trading range.

Chart of the month – Bitcoin and Ethereum thaw

The Bitcoin and Ethereum blockchain’s dominance within the crypto ecosystem currently stands at 65% of its total market value, a metric we show each month. This month, for context, we review these two largest cryptocurrencies’ YTD performance along with the top 5 performing S&P 500 components through April 30.

• Bitcoin and Ethereum would rank #3 and #4 in YTD performance behind only Meta and NVIDIA.
• Bitcoin’s $569 billion market value place it just above Tesla, the 8th largest S&P 500 component.
• Ethereum’s $228 billion market value place it just above Costco, the 28th largest S&P 500 component at $223 billion.