For weeks, people have been talking about crypto “entering” a bull cycle. Well, the bull cycle is officially here. This week in The Context, we talk about BTC hitting record highs, the London Stock Exchange opening its arms to exchange-traded notes, and Ethereum upgrading to Dencun.
[Bitcoin of the realm 🌐]
Bitcoin set several new record highs over the past week, peaking above $73,000 on Wednesday.
What Journalists Said 🧑💻:
Analysts see the introduction of exchange-traded funds (ETFs) as fueling the boom, 💥reported Tim Copeland (The Block). “BlackRock and Fidelity’s ETFs rank third and fourth, respectively, in year-to-date flows among all ETFs in mid-March.” They’ve “blown away expectations.”
Everyone’s trading bitcoin. Just look to the (bitcoin) futures, said Omkar Godbole (CoinDesk). Over on the Chicago Mercantile Exchange, “the combined open interest of over $10 billion is twice as large as the peak of $5.2 billion registered during the 2021 bull market.”
“If bitcoin’s an inflation hedge, shouldn’t we adjust it for inflation?” asked Daniel Kuhn (CoinDesk). Bitcoin would need to hit $78,905 to be worth as much as it was in 2021. Maybe it doesn’t matter, he argued—the asset was worth $0 in 2008, it’s hitting highs in other currencies, and some think it’s a better store of value than the US dollar. 🏪
PR Perspective:
Amidst Bitcoin's extensive media coverage, PR teams are contending with big numbers to secure coverage beyond discussions on BTC's price or ETFs. Our advice to protocols is to leverage the current crypto momentum. For instance, as interest in Bitcoin rises, so has interest and usage of DeFi applications - a rising tide lifts all boats and all that. By highlighting how your solutions address pertinent issues in the crypto ecosystem and emphasizing practical applications, community involvement, and future aspirations, you attract media interest and underscore your role in shaping the broader blockchain landscape.
[Shall we swap notes? 🔄]
The London Stock Exchange announced it will accept applications for Bitcoin and Ethereum exchange-traded notes (ETNs) aimed at professional investors next quarter. 🇬🇧
What Journalists Said 🧑💻:
What are these? Tyler Pearson (DLNews) explained: “Like the ETFs, they provide investors with exposure to an asset. While spot ETFs represent a stake in an underlying commodity, ETNs are issued as senior debt notes and are traded more like bonds than stocks.”
This creates “another avenue for professional investors to invest in the asset class,” wrote Tom Metcalf and Emily Nicolle (Bloomberg). But if you’re not a financial firm, you’re out of luck; the Financial Conduct Authority reiterated a ban on crypto ETNs for retail investors. ✋
Still, the exchange is putting up some guardrails to protect its reputation, shared Ben Strack (Blockworks): The ETH or BTC “must be physically backed” (meaning it can’t be leveraged for other purposes), and the crypto must be mostly in cold storage.
Why It Matters:
This signals the UK’s maturing stance toward cryptocurrency regulation—one that aims to foster innovation while protecting investors. By enabling the listing of Bitcoin and Ethereum ETNs on the London Stock Exchange, the UK is taking significant steps towards legitimizing cryptocurrencies as a viable asset class for institutional investors. This initiative aligns with Prime Minister Rishi Sunak's vision of turning the UK into a "crypto hub" and sets a precedent for how cryptocurrencies could be embraced by other leading financial markets around the world. As these developments unfold, the focus will be on how these ETNs will be structured, and regulated, and ultimately, how they will influence the broader acceptance and understanding of cryptocurrencies in the institutional investment community.
[Upgrade your flight to Dencun 🛩️]
The latest upgrade to the Ethereum network, Dencun, went live on Wednesday.
What Journalists Said🧑💻:
This upgrade is important because “it is expected to significantly reduce the transaction fees of layer-2 networks and enhance Ethereum’s overall scalability,” said Zoltan Vardai (Cointelegraph). That’s important because mainnet transaction fees are currently spiking.
Dencun transforms Ethereum from a “backroad into a four-lane highway” by more efficiently storing data, explained Sander Lutz (Decrypt). “At present, data can only be stored on Ethereum forever, which is immensely expensive. Proto-danksharding will allow layer-2 data to instead be stored temporarily for a period of about a month.”
How low can that push fees on layer-2s? Try next-to-zero, according to a Fidelity Digital Assets research report, reported Will Canny (CoinDesk). That, in turn, could pull lots of new users into the space.
Why It Matters ⁉️ :
This upgrade hasn’t gotten as much buzz as the last major Ethereum update, which enabled staking withdrawals. But trade publications and people paying close attention are speaking in superlatives about Dencun’s potential to revolutionize the Ethereum ecosystem.
[Tweet Of The Week]
Credit: @jacqmelinek
[Contextualised Connect London 2024]
We are hosting a Contextualised Connect event in London on Tuesday 19th March alongside Digital Asset Summit. If you’re in the area and interested in attending please register here. See you there! 🚀 🔥
[DeFi Definitions]
A segment exploring one particular aspect of DeFi. View previous entries here
This week: ‘’Danksharding” by Leila Stein.
Danksharding is a new concept of sharding for Ethereum first introduced as EIP-4844.
It was created by Ethereum researcher Dankrad Feist to avoid the MEV (Maximal Extractable Value) concerns thereby increasing decentralization and security.
Danksharding is a sharding design that implements the concept of a merged market fee. Unlike regular sharding, in which shards have both different block and block proposers, only one proposer exists in danksharding. In danksharding, the block builders have the duty of choosing the data and transactions that go into each slot of a block.
Danksharding and sharding are interrelated, but they are different. While sharding is the overall design for the splitting of networks in an effort to scale Ethereum, danksharding is a step towards the realization of this goal.
The usual disclaimer: This newsletter collates the main themes and headlines of the week in DeFi/crypto/metaverse/Web3/NFT land and tries to provide unbiased context. It's aimed at anyone who wants to keep an eye on the space. It's put together by a team at YAP and doesn't contain any promotion of our clients (if one is mentioned, we'll flag that).
The team: Founder Samantha Yap and consulting editor Jeff Benson, Sam O'Donohoe, Ewan Brewster, Andrew Wickerson, Tiffany Mac Sherry, Liam Quinn, Becky Corbel and Delon Chan. Your feedback is, as always, welcome. Ping us at thecontext@yapglobal.com. Old newsletters can be found here.
This newsletter is prepared by YAP Global, an international P.R. Consultancy focusing on helping cryptocurrency, Decentralised Finance (DeFi) and brands through impactful storytelling. Find out more about us here.