Nyheter
Bitcoin Nears All-Time High, 26% of ETH Staked, and Uniswap Considers Staking: What Happened in Crypto This Month?
February started with short-lived outages and ended with a bull run. As a cherry on top, Gemini Earn customers were promised to be made whole, in kind, after a billion-dollar settlement! Bitcoin’s price has increased by over 250% since the termination of Gemini Earn in January 2023. While profit-taking measures may follow Gemini’s pending payback, the accumulation levels of Bitcoin short-term holders and the record-breaking flows in U.S. spot Bitcoin ETFs, as mentioned in this report, may balance out the potential sell-off. In this monthly review, we’ll discuss the following trends driving the market:
• Bitcoin Nears All-time Highs During Slowing Economy
• More ETH Staked and the Growing Narrative of Liquid Re-staking
• Staking Rewards Revisited, Uniswap Breaks Out of Its 2-Year Lows
Bitcoin Nears All-time Highs During Slowing Economy
The Federal Reserve’s favorite gauge for inflation, the Personal Consumption Expenditure (PCE) index, rose by 2.8% from a year ago, the highest increase in the last 12 months but in line with expectations. After three straight months of increases, there was a 6.1% decline in manufacturing purchase orders of durable goods, less than the forecasted -4.9% and the lowest in almost four years. Although the economy is slowing down, the pace is fast enough to dodge a recession despite rising unemployment claims exceeding expectations. While one print alone is not indicative of how the Fed will respond, it still sets the tone for potential future interest rate cuts. Lower rates usually benefit risk-on assets like tech and crypto.
Bitcoin, in the meantime, has already reached all-time highs, as flows in Bitcoin spot ETFs break the record of $673M in daily net inflows. Speculation as we near the Halving, expedited by the spot Bitcoin ETFs in the U.S., has driven BTC to grow by ~45% this month, the biggest BTC/USD candle we’ve seen before a Halving event. A case in point showing this momentum is that in less than two months, Blackrock’s ETF has accrued the same amount of flows gold’s first ETF was able to accrue in two years: $10B.
As we close the second month since the launch of spot Bitcoin ETFs in the U.S., more institutions are warming up to Bitcoin. Wells Fargo and Merrill Lynch have started providing access to spot Bitcoin ETFs to select wealth management clients. Also, Morgan Stanley is allegedly evaluating the Bitcoin funds for its brokerage platform. Estimated to hold more than $100T in assets under management, the registered investment advisory (RIA) industry and its cautious entry are anticipated to unlock even bigger capital potential for this asset class.
As shown in Figure 1, Bitcoin short-term holders (holding BTC for less than 155 days) have continued accumulating as is customary a few months before the asset’s halving event — the approval of the spot Bitcoin ETFs in the U.S. catalyzed buying interest. Since January 11, short-term holders have increased their BTC supply by 25%. In contrast, long-term holders reduced their holdings by 3%, which is also a trend we’ve seen in the past halving events, as depicted in the chart below. On the other hand, Bitcoin’s Futures Open Interest has spiked significantly to levels not seen since the last bull run in 2021, which investors should be aware of, as it could imply higher volatility going forward.
Figure 1 – ETF launch in the U.S. catalyzes interest for short-term holders
Source: Glassnode, 21Shares
Nevertheless, innovation on the network is still churning. Soon, Bitcoin holders will be able to earn yield by staking their idle coins (SigNet BTC) to increase the security of proof-of-stake chains in a trustless manner. This will be possible through Babylon, a new external POS protocol pioneering the new primitive for Bitcoin, which has been on the testnet since February 28.
More ETH Staked and the Growing Narrative of Liquid Re-staking
ETH jumped by ~50% this month, steadily above the $3K mark since February 25. This jump can be explained by many factors, led by the speculation around a spot ETH ETF in the U.S., as well as a new experimental token standard dubbed ERC404, still not endorsed by the Ethereum Foundation. The experimental standard integrates attributes from ERC-20 (fungible), like transferability and divisibility for its fractionalized tokens, and ERC-721 (non-fungible) standard for its unique identifier feature to track the underlying NFT. ERC404 has the potential for native fractionalizing of digital assets like collectibles and tokenized real-world assets such as funds and real estate without needing third-party solutions.
Other factors may include Bitcoin’s recent rally since ETH has been positively correlated with BTC since 2018. From a user’s perspective, Ethereum’s growing staking ratio highlights its improving fundamentals as it demonstrates more people are willing to secure the network. A little over 26% of all Ethereum has been staked by 179K unique depositing addresses. That puts the total amount of staked ETH at 31M (+$100B), with Lido dominating more than 30% of the staking market, helping to secure the network further and earning around 4-6% yield while freeing up capital that can be used across DeFi. Finally, the hype has fueled the narrative surrounding re-staking, a method enabling users to re-stake their staked ETH or liquid staking tokens (LSTs) – representing staked ETH – for additional yield (approximately 2-4% on average, added to Ethereum’s staking yield).
What is re-staking?
Introduced in June by EigenLayer, re-staking offers an innovative way to validate the security of external protocols by harnessing Ethereum’s proof-of-stake network. Within EigenLayer, ETH deposits can be “re-staked” across various protocols, eliminating the need to establish their own validator lists and significantly reducing the cost and time required to launch new networks. That said, liquid re-staking has emerged as a pivotal addition to the staking ecosystem, capitalizing on the growing enthusiasm for re-staking, which has put EigenLayer as the second largest protocol with $10.5B in assets under management, trailing only Lido’s liquid-staking solution with $35.2B, on Ethereum. For further clarity, please refer to Figure 2 to demystify the increasingly complex staking ecosystem.
Figure 2 – Layers of Staking Primitives
Source: 21Shares
Like liquid staking, liquid re-staking simplifies the process of restaking, enabling users to maintain their capital while contributing to the security validation of the external networks integrated with EigenLayer. However, this new primitive is not without its critics, as it introduces additional slashing risks to ETH validators, who are now subject to the slashing rules of multiple networks. Moreover, Liquid Restaking Tokens (LRTs) have drawn comparisons to Collateralized Debt Obligations (CDOs) from 2008, where investment products were layered with levels of complexity that ordinary users struggled to comprehend. Of course, blockchain’s transparency sets it apart from the traditional financial system structure. Nevertheless, re-staking has been one of the fastest growing industries in 2024, as it increased by tenfold, from less than $500M at the beginning of January to more than $5B, as it continues to push the boundaries of Ethereum’s staking capabilities, as it can be observed in Figure 3 below.
Figure 3 – Growth of Liquid Restaking Tokens built on top of EigenLayer
Source: Hashed on Dune
Meanwhile, throughout February, the Dencun upgrade was successfully tested and is now scheduled for March 13. The biggest beneficiary of this upgrade will be Ethereum’s scaling solutions, such as Polygon, Optimism, and Arbitrum, whose gas fees are anticipated to decrease by around 90% once the upgrade is deployed.
Staking Rewards Revisited, Uniswap Breaks Out of Its 2-Year Lows
Uniswap is the largest decentralized exchange (DEX) by assets under management, with $5.7B in total assets locked. Before October 2023, Uniswap Labs received no fees and, therefore, no revenue; 11 investors, including Polychain and Paradigm, had solely funded the DEX. As of October 17, traders on Uniswap started paying 0.15% on their swaps only if they swapped directly on the DEX’s interface or wallet. This move added the first layer of revenue stream to fund the sustainable development of the DEX without relying on VC; Uniswap has collected $5.8M in fees since. However, the fee accrual did not benefit holders of the DEX’s native token, UNI, which remained an unproductive governance token below the $10 mark for two uninterrupted years following its all-time high of ~$45 in May 2021.
Not for long. Community members had proposed staking rewards earlier in May 2023. Almost a year later, on February 23, the Uniswap Foundation itself proposed enriching the fee mechanism to reward UNI holders who have staked and delegated their tokens. The upgrade is estimated to collectively bring between $62M and $156M to UNI holders in annual dividends. Based on that potential, UNI went on a 92% rally in February (jumping by 53% overnight after the proposal) to pass the $11 mark and increase its market capitalization by 87%. Depending on the fate of this proposal, which will be voted on starting March 8, we could see more applications follow suit as more value creation can be realized on the application layer, evident by protocols like Frax who’s already expected to unveil a revenue sharing mechanism at the end of this week. That said, caution should be exercised as enabling revenue sharing has historically been feared of triggering regulatory scrutiny; it could classify certain assets as a security due to potentially meeting the prongs of the Howey test.
Next Month’s Calendar
Source: Forex Factory, 21Shares
Research Newsletter
Each week the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com
Disclaimer
The information provided does not constitute a prospectus or other offering material and does not contain or constitute an offer to sell or a solicitation of any offer to buy securities in any jurisdiction. Some of the information published herein may contain forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those in the forward-looking statements as a result of various factors. The information contained herein may not be considered as economic, legal, tax or other advice and users are cautioned to base investment decisions or other decisions solely on the content hereof.
The impact of US tariffs continues to dominate market sentiment and risk assets, including crypto, struggled with this uncertainty throughout the month. The Nasdaq Crypto Index™ (NCI™) fell 4.46% in March as the S&P 500 and Nasdaq 100 dropped 5.63% and 7.61%, respectively.
Despite the macro uncertainty from Washington, US policymakers are continuing to embrace crypto in an unprecedented way, including launching a Bitcoin Strategic Reserve, Digital Asset Stockpile, and engaging in expansive work at the regulatory agencies and in Congress.
Our team spent the last week of the month in Washington, meeting with regulators to share our experiences and views on what’s most important for crypto investors in the US. In his latest Notes from the CIO, Samir Kerbage shares what he learned from these meetings and how investors should be thinking about the new regulatory regime in the US.
As always, we are greatly appreciative of your trust in us and are here to answer any questions you may have.
-Your Partners at Hashdex
Market Review
March was marked by the tariff dispute triggered by the Trump administration. Back-and-forth fiscal policies, threats, and retaliations dominated the month’s agenda. The uncertain macroeconomic environment put investors into a defensive stance and negatively impacted crypto assets. The Nasdaq Crypto Index™ (NCI™) closed the month down -4.46% after a period of high volatility. Major market indices, the S&P 500 and Nasdaq-100, also recorded steep declines of -5.63% and -7.61%, respectively. These concurrent drawdowns across equities and crypto underscored March’s broad market caution, as trade war uncertainty prompted investors to flee risk assets.
During times of uncertainty, it is common to observe increased correlation among different classes of risk assets. This pattern played out in March: the 6-month rolling correlation of monthly returns between the NCI™ and the Nasdaq-100 surged to roughly 0.91 (see chart below), its highest level since 2021, indicating that crypto assets were moving almost in lockstep with tech stocks. This spike in correlation confirms that crypto was behaving like a high-beta extension of the tech sector—an amplified version of the Nasdaq-100. The lack of clarity in the global landscape leads investors to reduce their risk exposure and seek protection, a movement known in financial markets as “risk-off” allocation.
6-Month Rolling Correlation of Monthly Returns between the Nasdaq Crypto Index and Nasdaq-100 (Apr 2021–Apr 2025).
The chart illustrates how this correlation has been increasing since the American elections in November 2024 and spiked to approximately 0.91 in the most recent period—a multi-year high. This visual evidence reinforces the view that crypto assets have been moving closely in tandem with tech stocks, effectively acting as a high-beta version of the Nasdaq-100 during the March risk-off phase.
Following this trend, risk reduction was evident within the crypto asset class. Among the NCI’s constituents, Bitcoin (BTC) posted a decline of -1.93%, withstanding the downturn far better than other constituents such as Ether (ETH, -17.4%) and Litecoin (LTC, -34.6%). BTC’s relatively mild drop in this sell-off aligns with the idea that it increasingly trades like a high-beta proxy for large-cap tech. It still declined, but less severely, whereas smaller-cap crypto assets behaved more like speculative growth stocks and suffered outsized losses. The only exception to the negative results was Cardano (ADA), which surprised with a positive return of 3.88% despite no significant protocol developments during the month.
Thematic indices also faced a challenging environment. As highlighted in previous letters, smaller capitalization assets tend to suffer more during periods of market stress, mirroring how speculative small-cap stocks are hit hardest in equity sell-offs. The biggest negative highlight was the Digital Culture Index, which dropped -17.45%, followed by the Decentralized Finance (DeFi) and Smart Contract Platform (Web3) indices, which fell -16.73% and -12.07%, respectively. The Vinter Hashdex Risk Parity Momentum Index recorded a negative result of -8.26% but outperformed the three other thematic indices, benefiting from its high allocation in BTC and TRX (which gained 4.68%). The heavy weighting in BTC – the more resilient large-cap crypto – helped cushion this index, underscoring the relevance of the momentum factor in a well-diversified strategy during times of market stress.
The market remains on the lookout for the outcome of the fiscal policy discussions, hoping for a reduction in uncertainties and an end to the tariff war. That would likely mark the moment when investors regain their appetite for risk assets, including crypto assets. The U.S. government has also signaled interest in advancing the crypto agenda, a development that could drive the asset class to a new level of adoption. We remain confident in our positive outlook for the rest of the year and the long term.
Top Stories
US creates Bitcoin Strategic Reserve and Digital Asset Stockpile
The Bitcoin Reserve will be capitalized with BTC owned by the Department of Treasury, which could further increase via new budget-neutral acquisitions. The stockpile will also include assets owned by the Treasury. This marks a major milestone, with the US government starting to integrate major crypto assets and continues the new administration’s work to lead the global crypto economy.
Stablecoins surpass $230 billion in market value
The total stablecoins market capitalization surpassed $230 billion amid institutional demand for dollar-backed digital assets. This showcases one of the most successful applications for crypto technology enhancing traditional financial payments. It could also pave the way for new use cases that require a strong and reliable global payment system.
FDIC eases banks’ ability to engage in crypto activities
The FDIC has rescinded previous guidelines which prevented financial institutions from engaging with crypto activities without prior sign-off. By removing bureaucratic hurdles, banks may more readily over crypto-related services, potentially leading to broader adoption and integration of digital assets into the financial system.
Spotlight on the tariff war
BSE8 ETF ger exponering mot företagsobligationer med förfall under 2028
En vecka för historieböckerna…
VGCF ETF investerar i korta företagsobligationer denominerade i euro
CBUV ETF satsar på Metaverse
Fonder som ger exponering mot försvarsindustrin
WisdomTree lanserar europeisk försvarsfond.
Warren Buffetts råd om vad man ska göra när börsen kraschar
De bästa börshandlade fonderna för tyska utdelningsaktier
Trumps återkomst får europeiska aktier att rusa
-
Nyheter2 veckor sedanFonder som ger exponering mot försvarsindustrin
-
Nyheter4 veckor sedanWisdomTree lanserar europeisk försvarsfond.
-
Nyheter2 veckor sedanWarren Buffetts råd om vad man ska göra när börsen kraschar
-
Nyheter3 veckor sedanDe bästa börshandlade fonderna för tyska utdelningsaktier
-
Nyheter4 veckor sedanTrumps återkomst får europeiska aktier att rusa
-
Nyheter5 dagar sedanSvenskarna har en ny favorit-ETF
-
Nyheter2 veckor sedanHANetf lanserar Europa-fokuserad försvars-ETF
-
Nyheter2 veckor sedanEn av de mest nedladdade finansapparna i Sverige
