Market Update

Last week, Bitcoin experienced a 4% drawdown to $83,000, accompanied by over $1 billion in long liquidations across assets on centralized exchanges. During this period, U.S. PCE inflation data exceeded expectations at 2.8% annually (versus 2.7% forecasted), fueling concerns about persistent inflation and tighter Federal Reserve policies. Additionally, President Trump’s announcement of 25% tariffs on imported automobiles, effective April 2, with Canada and Mexico threatening retaliation, further escalated trade war tensions coinciding with broader market declines, including in crypto.

On the institutional front, spot Bitcoin ETFs saw $195 million in weekly inflows, with BlackRock’s IBIT accounting for $170 million of it, now representing 47% of the total Bitcoin ETF assets under management (AUM). However, Fidelity’s FBTC recorded $93 million in outflows on Friday, breaking a ten-day inflow streak - the longest for Bitcoin ETFs this year. Meanwhile, U.S.-based spot Ethereum ETFs saw $9 million in net outflows yet registered their first positive inflow day on Friday after seventeen consecutive days of net outflows.

Institutional appetite for Bitcoin extended beyond ETFs, as Strategy purchased 6,911 BTC for approximately $584 million, taking its total holdings past 500,000 BTC, equivalent to ~2.4% of the total BTC supply. The company now holds a total of 506,137 BTC, worth over $44 billion, bought at an average price of $66,608 per bitcoin. Strategy bolstered this latest acquisition by upsizing its 10% Series A Perpetual Strife Preferred Stock (STRF) offering from $500 million to $722.5 million. Following Strategy’s lead, GameStop Corp. announced plans to acquire Bitcoin as a treasury asset on Tuesday, prompting an initial 12% surge in its stock price. However, the stock dropped 8% after hours on Thursday when the company clarified that this Bitcoin investment would be funded through a $1.3 billion convertible note offering, raising concerns about potential shareholder dilution from the debt converting into equity.

Our take: GameStop’s recent Bitcoin acquisition plans, alongside firms like Metaplanet, may indicate early interest in cryptocurrency among public companies. While these firms take a more unconventional approach to Bitcoin adoption, their moves highlight how companies are exploring financial engineering strategies with Bitcoin at the core, potentially benefiting both the cryptocurrency and the companies that execute these strategies effectively.

Ethereum Update

Last week, Ethereum recorded its lowest daily burn rate (53 ETH/day) since EIP-1559’s implementation in August 2021, highlighting a reduced demand for its blockspace. Introduced with the London hard fork, EIP-1559 mandates burning the base fee of Ethereum transactions to exert deflationary pressure on the token supply, a mechanism that, combined with the Merge in September 2022 reducing issuance, aimed to make ETH deflationary. In Q1 2024, Ethereum’s supply decreased at an annualized rate of 0.37%, reflecting deflation. However, since then, this trend has reversed, and the supply is now projected to increase at an annualized rate of 0.76%, indicating a return to inflation. This shift is largely due to the Dencun upgrade in March 2024, which introduced blobs via EIP-4844, slashing the cost for Layer 2s (L2s) to post data to Ethereum and reducing base fees burned on the mainnet. The low burn rate mirrors broader signs of decreased mainnet engagement: monthly active addresses hit their lowest since November 2023, alongside a slowdown in network usage. Monthly onchain trading volume dropped 51% since December 2024 to $103 billion, while monthly validator revenue in March 2025 fell to $118 million from $339 million in December 2024. As a result, average transaction fees have plunged to a five-year low of $0.40. These challenges have weighed on Ethereum’s market performance, with the ETH/BTC ratio declining approximately 35% year-to-date.

Meanwhile, MegaETH emerged as a notable high-performance Layer 2 (L2) in the Ethereum ecosystem, nearing its full launch. On its testnet, MegaETH has achieved 20,000 transactions per second (TPS), surpassing most L2s, with plans to reach 100,000 TPS and block times as low as 10 milliseconds upon deployment. Unlike traditional rollups like Arbitrum One or OP Mainnet, which rely heavily on Ethereum’s L1 for data posting, MegaETH uses a hybrid validium model, offloading much of its data to EigenDA while anchoring security and settlement to the mainnet. This design could support complex, high-frequency applications—such as decentralized order-book exchanges like Hyperliquid or large-scale gaming—that traditional EVM-based L2s may not be able to efficiently support, which could distinguish MegaETH among L2 solutions. While MegaETH’s performance promises to enhance Ethereum’s scalability, its design choices—a validium structure and using EigenDA for data availability—may further limit value accrual to the mainnet, potentially exacerbating Ethereum’s economic challenges despite bolstering its ecosystem with high-throughput applications.

Our take: Ethereum's success as a platform paradoxically challenges its tokenomics, potentially requiring fundamental reconsideration of how security and value capture function in multi-layered blockchain architectures. The market appears to be recognizing this tension, as reflected in ETH's underperformance relative to BTC, suggesting that solving for technical scalability without corresponding economic model adjustments may be insufficient for sustained ecosystem growth.

Solana Update

Last week, Solana’s ecosystem experienced a wave of potential high-impact developments. BlackRock's tokenized money market BUIDL fund, with an AuM of $1.7 billion, announced its expansion to Solana. BlackRock’s move mirrored Franklin Templeton's $671 million OnChain U.S. Government Money Fund (FOBXX) expansion to Solana earlier this year. The institutional interest in Solana extends beyond tokenized funds—Fidelity, a global asset management titan, recently registered a Solana Fund trust, joining Franklin Templeton, Grayscale, and others in pursuing Solana ETFs. The trend gained steam with the launch of CME Futures and Volatility Shares’ Solana-linked futures ETFs, as noted last week. 

Beyond traditional finance, Polymarket, the world’s largest prediction market, which was previously limited to Polygon-based USDC deposits, began accepting direct SOL deposits, which is likely a strategic move to tap into Solana’s growing user base. Polymarket’s monthly active addresses reportedly dropped 30% from January’s peak of 450,000, a decline attributed to broader market trends, though the SOL integration may influence future activity.

Pump.fun, a retail-centric dApp, remains a top fee-generating protocol, reportedly earning approximately $37 million in fees over the past month, a notable decline from $89 million in February. To bolster its ecosystem, Pump.fun diversified its revenue streams through PumpSwap DEX, which routes graduated tokens directly to the platform's native DEX. This initiative bypasses the previous migration to Raydium, eliminating the 6 SOL migration fee and setting the stage for future creator revenue sharing. PumpSwap collected ~$5 million in fees over the past week, the third-highest after Hyperliquid and Pancakeswap. Over the past week, PumpSwap has claimed 15% of the DEX volume share ($1.4 billion) on Solana, compared to category leader Raydium’s 20% ($1.8 billion).As Pump.fun exhibits vertical integration from token creation to trading DEX, impacting Raydium’s leading Solana DEX market share, Raydium’s LaunchLab counters by targeting memecoin creation. The platform- LaunchLab promises a robust toolkit: three bonding curve options- linear, exponential, and logarithmic, support for multiple quote tokens like SOL, USDT, and USDC, and customizable third-party fee settings for launching teams. Moreover, it will integrate Raydium's liquidity pool locker via Fee Key NFTs, allowing teams to lock liquidity and earn swap fees indefinitely.

Our take: While retail investors have evidently flocked to Solana over the past year, the deployment of mass-appeal protocols (Polymarket) alongside rising TradFi interest indicates Solana may continue to thrive as a versatile blockchain, bridging retail adoption and institutional financial infrastructure, though its staying power could still be tested by evolving market dynamics.