April Overview

Your Monthly Brief into the World of Digital Assets

JKL Group
17 min readMay 1, 2023

1. Market update

2. April in a Nutshell

3. Regulators

  • Hong Kong’s Top Officials Show Support at Web3 Festival

4. Institutions

  • The Future of Centralized Exchanges and CeFi

5. Crypto Projects

  • Arbitrum DAO’s bumpy start

6. Mining

7. May Preview

  • Bitcoin performance calendar
  • Macroeconomic events
  • Crypto events

1. Market update

Crypto markets carried strength into early April and traded briefly above $30k, which is for the first time since June last year. This was boosted by a favorable March headline CPI report that came in at 5.0% YoY, compared to the 5.2% estimate. The PPI figures were also encouraging and reflected the increased likelihood for inflation numbers to come further down. Nevertheless, momentum weakened after mid-April alongside weak-performing stock markets. Traders displayed less risk appetite as they prepare for another possible Fed interest rate hike in May.

The strength of memecoins again served as a reliable indicator for a local market top. In early April, Dogecoin rallied when the Twitter logo was changed to the Kabosu “doge” icon. Around one week later, as the market was in euphoric mode above $30k, a new class of “Pepe the Frog” themed memecoins emerged, of which some gained up to 100x in less than one week and created enormous wealth for some traders.

The Ethereum Shanghai upgrade was completed on April 12. This enabled ETH holders to withdraw their staked tokens and contributed to short-term selling pressure. The bright side of the upgrade is that the removal of liquidity constraints could incentivize more investors to stake their ETH over the longer term. Indeed, we are seeing some early signs of this reflected through the data. Up to 22 April, 1.37M ETH tokens were withdrawn from the staking contract, but there were also 650k tokens newly deposited.[1] According to a CoinDesk report, institutional interest towards staking spiked after the Shanghai upgrade, with the largest institutional staking platforms receiving 3x more new deposits compared to last month.[2]

Market strength improved towards the end of the month and Bitcoin appears to stabilize above $27.7k. Charts wise, the bullish trend remains intact as long as price stays above this key level, and price could be working its way towards the resistance zone at $31.5k. If this level is successfully claimed, Bitcoin can potentially challenge the next major resistance around $35.7k.

Some attribute this strength to the latest developments of the U.S. banking crisis, as First Republic Bank reported a staggering 40% drop in customer deposits in the first quarter and is close to be entering federal receivership. Prominent Bitcoin analyst Anthony Pompliano describes that the banking crisis is not over yet. Like the collapse of Silicon Valley Bank in March, the news reinforces the narrative of Bitcoin as a flight to safety asset. Moreover, while the Fed is still maintaining its tightening path, many financial institutions are still holding “billions of dollars” in debt that is underwater. Each additional rate hike will aggravate these mark-to-market losses. Therefore, the Fed should be more cautious from here onward, and it is possible that they will need to turn on the “money printer” again soon.

Chinese central bank liquidity could be another driver behind recent price action. As shown by the indicator (orange bars in Bitcoin chart above), the People’s Bank of China has been injecting another round of liquidity towards the end of April, following an earlier round in late March.[3] In both instances, Bitcoin price spiked shortly afterwards. This easing is expected to continue and reflect positively for Bitcoin. In fact, China does not have inflation problems and is flexible to use monetary policy to offset the effects of external tightening.

2. April in a Nutshell

3. Regulators

Hong Kong’s Top Officials Show Support at Web3 Festival

April was a big month for the bustling city of Hong Kong, which has resumed to full throttle following the end of COVID restrictions at the turn of year. The international financial center of China stunned the crypto community earlier when it announced its ambitions to become a hub for digital assets and Web3.

The highlight of the month was the Hong Kong Web3 Festival hosted by Wanxiang Blockchain Labs and Hashkey Group. The event had an impressive turnout of over 10,000 registered participants who attended physically and many more who joined via live streaming. Although no official statistics were provided, it was observed that most participants were from Mainland China, Hong Kong, and Singapore. This reflected an immense interest in Web3 infrastructure and ventures from the Chinese-speaking geographies.

Hong Kong’s Financial Secretary Paul Chan Mo-po was invited to give the opening speech for the event. He had written a blog post two days prior, saying that “now is the right timing” to push Web3 adoption in the city. Nevertheless, he was cautious not to sound excessively enthusiastic. He emphasized that “stability of the financial system and investor protection” are the key premises of Web3 development in Hong Kong.

Chief Executive John Lee Ka-chiu paid a visit to the Digital Economy Summit, which was held simultaneously at the Hong Kong Convention and Exhibition Center. Accompanied by the likes of Peter Yan, CEO of Cyberport, and Jianping Kong, CEO and founder of Nano Labs, John Lee delved into the metaverse by creating a three-dimensional avatar of himself.

The Securities and Futures Commission (SFC) and the Hong Kong Monetary Authority (HKMA), which are the city’s two major regulatory pillars, gave respective updates to their efforts to construct a well-defined framework to regulate crypto-related activities.

Some attendees of the conference were surprised to learn from Keith Choy, Senior Director of the SFC, that decentralized finance (DeFi) platforms will be subject to licensing requirements like traditional financial firms. Nevertheless, many found the decision understandable when considering the “same activity, same risks, same regulation” principle that has been reiterated by the regulators, as well as their open-yet-conservative attitude in general.

Source: HashKey Group / Jianping Kong, Twitter @punk8185

Clara Chan, Executive Director of the HKMA, said that the Authority is aware of the role of stablecoins as an integral part of Web3 finance infrastructure. That said, stablecoins must live up to their name of being “stable” and a key regulatory direction is to ensure this. A preliminary consultation over stablecoins was conducted, and conclusions were published in January 2023. She appreciates the contributions from industry experts and the generally supportive attitude towards the Authority’s agile and risk-based approach. A further round of consultation will be carried out with more details to be announced.

Duncan Chiu, member of the Legislative Council, said that according to China’s 14th Five-Year Plan, Hong Kong will focus on becoming a hub for international innovation and technology. The city will dedicate resources and provide necessary infrastructure during this process, including the Top Talent Pass Scheme that aims to attract highly qualified individuals. He also mentions the sizeable potential brought by tokenizing real-world assets, and that Hong Kong is well-positioned to capture this next wave of financial innovation.

Regulators: Read More

1–15 April

- U.S. Government Sold $216M of Seized Silk Road Bitcoin This Month (Read More)

- Singapore Plans New Guidance for Banks on Vetting Crypto Clients (Read More)

- Hong Kong’s Finance Chief Pushes for Web3 Adoption (Read More)

- Montenegro’s Central Bank to Test CBDC With Ripple (Read More)

- DeFi Could Be Forced to Incorporate and Certify, French Central Bank Says (Read More)

- SEC Is Adding Attorneys to Crypto Enforcement Unit (Read More)

- Chinese officials pledge support for Hong Kong’s tech, Web3 ambitions at digital economy summit (Read More)

- High Hopes for EU’s MiCA Law With Final Vote Imminent (Read More)

16–30 April

- Crypto Lender Amber Group Weighs Selling Japan Unit: Bloomberg (Read More)

- Canada’s New Crypto Rules Push Trading Platforms to Comply or Leave (Read More)

- Hong Kong’s Central Bank Digital Currency Could Be on Permissioned Blockchain: Source (Read More)

- Gensler Refuses To Call Ether A Security At Congressional Hearing (Read More)

- CFTC Adviser Chris Perkins Says U.S. Risks Falling Behind in Crypto (Read More)

- Coinbase sues the SEC for answer on rule specific to digital assets (Read More)

- SEC Chairman Gensler Releases Another Video Dig at Crypto Industry (Read More)

- Regulators Prepare to Seize and Sell First Republic (Read More)

4. Institutions

The Future of Centralized Exchanges and CeFi

The Hong Kong Web3 Festival was an action-packed four-days event that gathered industry veterans and experts from crypto firms including exchanges, venture capital firms, infrastructure providers, as well as traditional institutions like banks and fund managers.

The first day of the event revolved around the theme of centralized exchanges (CEX) and centralized finance (CeFi). Speakers shared lessons learned in the recent bear market and brainstormed about the outlook of CeFi and crypto.

Teong Hng, co-founder and CEO of Satori Research, joined a panel of six for a discussion. He said that crypto institutions are in the process of rebuilding trust, having suffered from a significant blow from the events of Three Arrows Capital and FTX last year. He names transparency as a key aspect to improve over the shorter term.

Hng also remarked that as the leader of the crypto market, Binance currently possesses more than 60% market share for both spot and derivatives crypto trading. Although it is an “amazing” trading platform, he does not think that the dominance of a single exchange is healthy for the crypto ecosystem, and in fact represents a major source of risk.

When asked about his opinion on regulation, Hng shared his experience of running a regulated exchange in Japan, where regulatory oversight is stringent. He explains that exchanges need offer a wide range of tradable token and products to flourish, and jurisdictions aiming to develop the crypto industry should keep this in mind. Shifting back to Hong Kong, he witnessed the difficulties of a licensed local exchange that had to work within narrow guardrails in the past few years. Looking ahead, Hng feels encouraged by Hong Kong’s decision to loosen restrictions and believes that the city is moving towards the right decision. That said, policymakers must be proactive and maintain constant dialog with the crypto industry to create more leeway.

In a subsequent panel, Dovey Wan, Founding Partner of Primitive Ventures, provided a unique point of view as one of the fewer speakers who came from a decentralized finance (DeFi) background. She said that although 2022 was a turbulent year, most problems came from CeFi while most things in DeFi worked well. She praises the high degree of flexibility and ownership made possible by DeFi. For example, on the decentralized exchange GMX, users can provide to the exchange’s liquidity pool and effectively becoming part of the “house”. She feels very bullish on DeFi and believes that recent events like FTX and Silicon Valley Bank led to increased adoption of DeFi and self-custody.

Source: HashKey Group

Changpeng Zhao (CZ), founder and CEO of Binance, also appeared through live video to chat with Chao Deng, CEO of HashKey Group. While CZ agrees that DeFi and self-custody can solve many problems, he notes that most crypto users are not yet capable to handle these aspects. As a centralized exchange, Binance wants to simplify and smoothen the crypto user experience, even for beginners. The exchange also aims to be as transparent as possible, for example through Proof of Reserves (PoR), to build Binance’s creditability and trustworthiness.

When asked about “mass adoption”, which is an oft-mentioned buzzword in crypto, CZ said that the field is fast-growing and quickly evolves through time. Crypto adoption will come in waves, like Bitcoin in 2014, followed by ICOs around 2017 and then NFTs in 2021. He believes that the next wave could be brought by increased integration of blockchain-enabled technologies with traditional finance.

Regarding regulation, CZ said that the most undesirable situation is a lack of clarity. This is even worse than stringent rules so long as they are well defined. Also, regulators need to understand the crypto industry, but unfortunately most policymakers do not have industry experience. He believes that patience is needed for regulators to find the optimal balance between protecting investors and fostering innovation.

Source: HashKey Group

The CeFi theme was again raised on Day 3 in a panel that featured Annabelle Huang, Managing Partner of Amber Group, and XiaoXiao, Partner of HashKey Capital. Along with the moderator and two more panelists, they discussed the institutionalization of virtual asset investment.

Huang said that institutional participation in crypto has increased at least threefold in the past five years, and it is no doubt that institutions will assume the majority of market share. She noted that the last cycle brought important lessons to the industry in terms of risk management. As assets under management (AUM) skyrocketed, firms failed to manage risks properly and overleveraged when attempting to maintain high yield and returns. Moving forward, Huang expects to see increased transparency in the crypto space and best practices that mimic traditional finance.

XiaoXiao added that the effect of crypto institutionalization will be net positive. While retail continues to be an important segment of the crypto market, institutions help facilitate early-stage projects and hence the development of new technology and infrastructure. Personally, she observes that crypto institutional investors are becoming more patient as the market matures and are willing to give more time for Web3 builders to build. She feels ascertained that more money and capital will be flowing into the space.

Institutions: Read More

1–15 April

- Trio of Canadian Crypto Exchanges Confirms Plans to Merge (Read More)

- MicroStrategy adds to massive bitcoin bet, takes total to 140,000 BTC (Read More)

- China’s Douyin App Takes Down Bitcoin Price Ticker Hours After It Went Live (Read More)

- A16z Highlights Web3 Strength in Its Second ‘State of Crypto’ Report (Read More)

- JPMorgan, Fidelity at odds on the impact of Ethereum’s Shapella upgrade on ether (Read More)

- Hong Kong’s ZA Bank offers crypto conversions, accounts in city’s push (Read More)

- Crypto VC Funding Plunges by 80% in Dire Quarter for Startups (Read More)

- Crypto Exchange FTX Could Reopen, Its Attorney Says; Firm’s FTT Token Surges (Read More)

16–30 April

- Nike’s multi-million dollar crypto push is here (Read More)

- Bitcoin Financial Services Firm Unchained Capital Raises $60M (Read More)

- Ontario Teachers fund steers clear of crypto after $95mn FTX loss (Read More)

- Celsius auction set for Tuesday, Coinbase and Gemini join bidding for bankrupt firm (Read More)

- Bitcoin Price May Hit $100K by Year-End, Standard Chartered Bank Says (Read More)

- Visa is hiring engineers for ‘ambitious’ crypto product roadmap (Read More)

- Franklin Templeton Says Its Money-Market Fund Is Attracting Crypto Assets (Read More)

- Binance Pulls $1 Billion Voyager Asset Deal, Says U.S. Has ‘Hostile’ Environment (Read More)

5. Crypto Projects

Arbitrum DAO’s bumpy start

Before becoming a decentralized autonomous organization (DAO), Arbitrum was fully operated by Offchain Labs, a New York based company valued at $1.2 billion following a $120 million Series B in August 2021. The Arbitrum One mainnet was launched at the same time and for 18 months, the network gradually moved forward in its decentralisation roadmap. After the Nitro update in August 2022 that greatly improved scalability and the launch of institutional mainnet validators in November 2022, the nominal control over Arbitrum was handed over to the Arbitrum Foundation and the DAO in March this year.

Under Offchain Labs management, Arbitrum became a highly popular Ethereum layer 2 solution thanks to its high EVM compatibility, as well as its seamless developer and user experience. Arbitrum’s EVM compatibility reaches the byte code level, meaning that any developer familiar with Solidity or Vyper languages can build on Arbitrum with no additional prior knowledge. To further lower barriers to entry, Offchain Labs requires no specific developer tools like debugging software, compilers, or plugins to build on Arbitrum.

According to DeFiLlama, Arbitrum has grown to become the fourth largest blockchain in terms of total value locked (TVL), with 310 protocols building on the chain.[4]

Under the DAO’s management, upgradability is no longer in the hands of Offchain Labs. Instead, token holders are the ones to vote over whether an upgrade goes forward or not. If the protocol needs to patch an emergency vulnerability, the security council, which is a multisig owned by 12 popular members of the community, will be able to change the code at its discretion.

Out of Arbitrum’s 10 billion ARB tokens, 44% were issued to Offchain Labs and early investors. The remaining 56% are community owned with 12.75% airdropped to individual wallets. During the airdrop event, a total value of around $1.8 billion was distributed[5] for free to 500,000 wallets in less than 24 hours. It triggered sky-high fees, platform crashes and a great deal of scams. Phishing tactics were so intense that even Arbitrum’s official twitter page was taken down by mistake.

Source: Arbitrum Foundation

The ARB airdrop was not the only chaotic step of Arbitrum’s decentralisation process — its inaugural DAO proposal also ended in turmoil. On April 4, the Arbitrum Improvement Proposal Framework 1 (AIP-1) was voted against by 77% of voters.[6]

The proposal by Arbitrum Foundation outraged the community for multiple reasons. First, token holders were asked to ratify the Arbitrum constitution without prior negotiations of the terms. Many felt that they completely misunderstood what decentralised governance means and neglected the community, which is the most important ingredient. Second, AIP-1 implied that 750 million ARB tokens, worth more than $1 billion, will be transferred to the Foundation to fund ‘special grants’ and cover operating costs. A follow-up tweet from the Arbitrum foundation even stated that 10 million ARB tokens had already been sold for fiat and 40 million ARB tokens were lent to Wintermute, a market maker.[7]

In other words, token holders were asked to ratify a proposal they did not contribute to, only to realize that the Foundation had already taken action before the vote was even passed.

In reaction to community backlash, Arbitrum Foundation revisited the propositions made in AIP-1 and segmented them in multiple sub-AIPs. But further controversies ensued. As part of AIP-1.05, the Arbitrum DAO refused to send back the remaining 700 million ARB tokens to the DAO treasury. This led to AIP-1.1 where voters agreed to allocate the ARB tokens to the Arbitrum Foundation via a four-year vesting schedule that is secured by a “smart contract-controlled lockup”.[8] While a portion of the money will be used for operational expenses, funds cannot be directed towards any other activities like giving out ‘special grants’ until the community approves a budget. The fractionalization of AIP-1 continues with AIP-1.2 voted on April 17, decreasing from five to one million the necessary number of ARB tokens to submit an AIP.[9]

All in all, DAO governance structures are a double-edged sword. They have the potential to build lasting community engagement but can also kill in a few days what took years to build. Arbitrum DAO’s inception is yet another test on decentralised governance and for now, many find this concept to be a theoretical utopia, as opposed to a rationally realistic way to manage projects and communities.

Crypto Projects: Read More

1–15 April

- Alchemy Pay Raises $10M at $400M Valuation to Push South Korean Expansion Plans (Read More)

- Dogecoin Jumps More Than 30% after Musk Changes Twitter Logo to Image of Shiba Inu (Read More)

- Euler Says All ‘Recoverable Funds’ Stolen in $200M Hack Have Been Returned (Read More)

- Crypto Protocol LayerZero Raises $120M at $3B Valuation (Read More)

- Bitcoin Climbs Past $30,000 for the First Time Since June 2022 (Read More)

- Sushi DEX Approval Contract Exploited for $3.3M (Read More)

- Shiba Inu’s Metaverse Will Partially Open by End of 2023, Developers Say (Read More)

- Ethereum’s Shanghai Upgrade Is Complete, Starting New Era of Staking Withdrawals (Read More)

16–30 April

- Over 1M Ether Withdrawn After Shapella Fails to Dent Risk Appetite (Read More)

- BNB Chain issues list of 191 high-risk, untrustworthy DApps and fake tokens (Read More)

- Kyber Network warns liquidity providers of ‘potential vulnerability’ in Elastic platform (Read More)

- ‘Pepe the Frog’ Meme Coins Rocket as Crypto Twitter Moves Over Dogecoin Obsession (Read More)

- Optimism’s OP Token Jumps Ahead of a16z Project Announcement (Read More)

- Ethereum’s Shanghai Upgrade Spurs Institutional Investment Into Staking (Read More)

- Polygon, Cardano and Solana NFT Sales Rise as Ethereum NFT Sales Slump (Read More)

- Rocket Pool Adoption Surges After Atlas Upgrade (Read More)

6. Mining

1–15 April

- Marathon mines record bitcoins in March and first quarter (Read More)

- Texas Bill Limiting Benefits for Crypto Miners Unanimously Passes Committee Vote (Read More)

- DCG’s Bitcoin Mining Firm Foundry to Stop Offering Free Services (Read More)

- Bitcoin Miner Sphere 3D Sues Partner Gryphon Digital (Read More)

- Bitcoin’s Energy Transparency Is a Double-Edged Sword: Hut 8 Mining CEO (Read More)

- Bitcoin Miners Will Have Same Rights as Data Centers, Says New Arkansas Bill (Read More)

- CleanSpark Buys $144.9M of Bitcoin Mining Rigs to Double Its Hashrate (Read More)

- Crypto Miner Core Scientific Appoints a New President (Read More)

16–30 April

- Sweden Drives Final Nail Into Its Bitcoin Mining Industry With Tax Hike (Read More)

- Intel signals end of Bitcoin mining chip business amid cost-cutting effort (Read More)

- Bitcoin Miner Mawson to Sell Texas Sites for $8.5M to Singapore Fund Manager (Read More)

- Russia Plans to Mine Crypto for Cross-Border Deals, Says Central Bank (Read More)

- Here Are Six New Projects Looking to Mitigate Bitcoin Mining’s Energy Footprint (Read More)

- World Economic Forum highlights flare emissions for Bitcoin mining (Read More)

- A Crypto Mining Firm May Have Moved $150M in Bitcoin, CryptoQuant Says (Read More)

- Beleaguered Bitcoin Miner Greenidge Inks Deal with Core Scientific (Read More)

7. May Preview

The month will begin with the Fed’s interest rate decision on May 3, and traders will scrutinize the narrative of Fed officials to assess whether or not the central bank will push for additional hikes. As of now, most are expecting the Fed to deliver 25 bps in May and pause from here.

Inflation indicators will remain under the spotlight, as U.S. monetary policy could still be rather constrained before inflation returns closer to the 2% target. On a positive note, Truflation data reflects that real-time inflation in the U.S. continued to ease. Traders will meanwhile place increased weight on fundamental economic indicators like PMI readings and labor market metrics as the macroeconomic backdrop worsens. Weaker-than-expected numbers may exacerbate recession concerns. Separately, the looming U.S. debt ceiling could be an additional source of worry.

Bitcoin performance calendar

Referencing historical performance, it is reasonable to expect volatility in May. In the past two years and earlier in 2018, Bitcoin recorded double-digit percentage losses in the month. On the flipside, 2014, 2017 and 2019 were years that brought sizeable gains for the orange coin.

Source: Glassnode, JKL Group. Data as of 31 Apr 2023.

Macroeconomic events

Crypto events


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JKL Group

Quantitative fund focused exclusively on trading digital assets and blockchain technology. Find out more on www.jkl.capital