Market Update

Last week, Bitcoin shed 5% to $78,000 as markets absorbed the harsher-than-expected tariff news, triggering $1B in long liquidations while aggregate open interest across centralized exchanges fell 10%, suggesting a broader positioning unwind. President Trump's April 2 announcement introduced a 10% baseline tariff on all U.S. imports starting April 5, with exemptions for USMCA-compliant goods. Additionally, reciprocal tariffs targeted economies with significant trade imbalances with the U.S., reaching 34% for China, 20% for the EU, 46% for Vietnam, and 32% for Taiwan. This escalation heightened global trade tensions, with China retaliating by imposing an additional 34% tariff on U.S. imports (totaling 54%) effective April 10 and banning exports of seven rare earth minerals to the U.S., amplifying supply chain concerns. In contrast to China's aggressive response, Taiwan has signaled its openness to reducing trade barriers and increasing U.S. investments to maintain market access.

The broader markets recoiled sharply, with the Nasdaq and S&P 500 marking their steepest single-day drops since March 2020, alongside weekly losses of 10% each. Gold shed 2% on weekly, while Bitcoin followed traditional markets lower with a 5% decline, erasing the 1% gain it had maintained until Sunday evening. Altcoins faced even sharper drops, with Ethereum plunging 13%, followed by the GMCI30 and GMCIMID indices tumbling 11% and 15%, respectively. Meanwhile, gold shed 2% over the week. CoinShares Crypto Miners ETF (WGMI), which tracks a diverse basket of Bitcoin mining stocks, fell 13% since the tariff announcement. U.S. miners face rising production costs on ASIC imports from China, where industry leaders Bitmain and Canaan are based, further pressuring profit margins. Amid this macroeconomic turmoil, Circle postponed its IPO, citing extreme volatility and a cooling appetite for risk assets.

In assessing the economic implications, Federal Reserve Chair Powell noted that tariffs could drive higher inflation and slower growth, potentially elevating unemployment. He highlighted a likely transitory inflationary spike, though cautioned it might persist, complicating the Fed's 2% inflation goal. Powell maintained a measured tone, opting for a wait-and-see approach rather than signaling immediate monetary policy shifts as the Fed balances trade policy fallout with its dual mandate.

Our take: Market sentiment is tightly intertwined with the escalating trade war, and with neither the U.S. nor China showing any willingness to compromise, the outlook grows increasingly precarious. Until resolution, this deadlock threatens persistent volatility, supply chain fractures, and inflationary pressures, further creating a concerning outlook for crypto markets and beyond.

Bitcoin Accumulation Dynamics

Last week, a wave of institutional players significantly strengthened their Bitcoin portfolios. Bitcoin treasury company Strategy purchased 22,048 BTC for $1.9 billion, further intensifying Bitcoin acquisition after last week's 6,911 BTC buy and boosting its holdings to 528,185 BTC, over 2.5% of Bitcoin's supply, with an average purchase price of $67,458 per coin. Similarly, Tether, which commits 15% of its quarterly profits to Bitcoin, added 8,888 BTC for $735 million in Q1 2025, raising its total to 92,646 BTC as part of its diversification efforts. Meanwhile, GameStop raised $1.5 billion via convertible notes (instead of the initially planned $1.3 billion) to bolster its Bitcoin reserves. Additionally, MARA Holdings, the largest publicly traded Bitcoin miner with 46,374 BTC, revealed plans to raise $2 billion through a stock offering to further expand its holdings.

The surge in institutional buying underscores a broader trend of significant Bitcoin accumulation by major players. Whales (entities holding over 10,000 BTC), including institutions like Strategy and Tether, are intensifying their purchases, as indicated by an Accumulation Trend Score (ATS) of 0.6. According to Glassnode, the ATS assesses the buying or selling behavior of entities by evaluating the relative size of their Bitcoin holdings (participation score) and their net coin balance changes over the past 30 days (balance change score), with a score closer to 1, signaling strong accumulation. In contrast, smaller holders with less than 1 BTC are distributing their assets, reflected by an ATS below 0.2, which indicates a tendency toward selling. This growing divergence highlights a notable wealth transfer from retail investors to larger institutional hands.

While whales and institutions bolster their positions, longer-term holders reveal a different trend. Cohorts holding Bitcoin for more than 180 days have reduced their share of the circulating supply from 60% in October 2024 before the U.S. election to 40% by February 2025, stabilizing around 39.5% since then. This decline suggests that while some long-term holders may be taking profits or reallocating assets amid market shifts, the current market is being driven by accumulation from whales and institutions.

Additionally, the 90-to-180-Day Cohort, comprising addresses that acquired Bitcoin between October 2024 and January 2025 as prices climbed from $67,000 to $105,000, now controls 32.5% of the circulating supply, a sharp rise from their 7.5% share at the December 2024 low. In this October-to-January period, it’s possible that many institutions, beyond just Strategy and Tether, bought Bitcoin, spurred by the pro-crypto stance President Trump took, which may have significantly boosted this cohort’s share. This group’s steadfast holding, even as Bitcoin’s price currently sits at $79,000, reflects the confidence that aligns with the institutional optimism seen in recent purchases. Meanwhile, shorter-term holders (under 90 days) show a more volatile pattern: their ownership doubled from 26% in October 2024 to 52% in February 2025 before retreating to 28%, indicating frequent trading and exchange of hands among newer entrants.

Our take: The launch of spot Bitcoin ETFs and a pro-crypto U.S. administration in late 2024 catalyzed a wave of institutional accumulation. However, the recent economic downturn presents the first real test of these institutions’ resilience- serving as a critical litmus test for the asset class’s staying power in institutional portfolios.

Avalanche Update

Institutional enthusiasm for layer-1 blockchains continues to grow, with Grayscale filing for an AVAX spot ETF following VanEck’s filing earlier this month. The filings come under a backdrop of technical advancements over the past months, starting with the Avalanche9000 program in September 2024, which introduced permissionless validation and removed the requirement for L1 validators to stake 2,000 AVAX and validate the Primary Network, replacing it with a nominal 1.33 AVAX monthly fee. This change significantly lowered the barrier to entry for validators while maintaining network security. Its Retro9000 initiative, offering up to $40 million in retroactive grants, has incentivized the creation of custom L1 blockchains pertaining to RWA, gaming, and others. In December 2024, the Etna upgrade eliminated the 1,000 AVAX minimum staking requirement for Primary Network validators while introducing sovereign validator sets, custom gas tokens, and elastic validator sets that dynamically adjust to network demand all while maintaining sub-second transaction finality. 

These developments have coincided with significant network growth: daily transactions rose from 1 million in September 2024 to 4 million in early April 2025, while active addresses increased from 60,000 to 222,000 over the same period, with a spike to 372,000 last week. This surge was primarily driven by the Mainnet launch of Gunzilla's GUNZ Chain, a gaming-focused Layer 1 blockchain built on Avalanche. During its testnet phase, GUNZ Chain recorded the creation of 14 million wallets, approximately 1 million daily active users, and 500 million total transactions, underscoring Avalanche’s capacity to handle high-volume gaming applications. Avalanche’s infrastructure upgrades, including HyperSDK, a modular blockchain framework for building high-performance custom L1s, have enabled developers to efficiently create gaming-specific blockchains with features optimized for player engagement, asset ownership, and real-time transaction processing.

Despite this overall growth trend, another notable update last week was a 72% decline in L1 validators outside the Primary Network, dropping from 1,374 to 383, while the C-Chain validator count remained stable at around 1,400. This contraction aligns with the Retro9000 program’s April 2025 snapshot event; following the snapshot, some projects likely wound down or consolidated, reducing validator numbers. Additionally, the upcoming Fortuna upgrade requires nodes to adopt AvalancheGo v1.13 and meet stricter health checks by April 8, which may have caused some validators to leave the network.

Our take: Avalanche has positioned itself as a notable contender for Web3 gaming adoption, supported by high-profile games like Off The Grid and Shrapnel that have garnered significant interest. Similar to how memecoins boosted Solana’s value and visibility, a gaming boom could enable Avalanche to benefit, provided it sustains technical stability and widespread developer engagement despite challenges such as validator consolidation.