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 18th 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.
YTD S&P 500 top 5 performers + Bitcoin/Ethereum (as of 4/30/23)
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