Market Insights: Mar 2025 | Week3
Wavebridge Research/
Bitcoin Market Trends and ETF Outflows
The Bitcoin market has been going through a lot of changes lately. According to Bitcoin.com, Bitcoin ETFs have continued their trend of outflows for the fifth consecutive week with a net outflow of $938.8 million. The largest single-day net outflow occurred on Tuesday, 11 March, with $371 million in outflows on that day alone. BlackRock's IBIT fund was the most affected, with net outflows of $338.5 million. Bitcoin mining difficulty continues to increase. Mining difficulty has increased at an average annual rate of 107% since 2016, with a 55% increase in 2024 alone. Currently, the network is performing around 800 operations per second, and even higher computing power will be required in the future. Short-term holders of Bitcoin have sold more than 100,000 BTC since February. Meanwhile, gold ETFs have overtaken bitcoin ETFs again: while the price of bitcoin has fallen 19% in the last three months, the price of gold has risen 12.5%. Bitcoin ETFs have seen outflows of around $3.8 billion since 24 February this year, while gold ETFs have seen their largest monthly inflows since March 2022. However, bitcoin's DeFi market share is growing rapidly. The total value of bitcoin locked or staked on the Bitcoin network has surpassed $8 billion, overtaking Solana's $6.7 billion. Babylon Labs, in particular, now accounts for 50 per cent of the total value of Bitcoin DeFi.
Developments in Solana, Ethereum, and XRP Ecosystems
The Solana network will maintain its current fixed token issuance policy after the reform proposal SIMD-228, which would have reduced the inflation rate by 80%, was defeated in the final vote. The proposal, which aimed to increase network security by adjusting issuance based on staking participation, failed to meet the 66.67% threshold with 61.39% in favour. Meanwhile, the Ethereum network has surpassed $500bn in total value of assets held, of which 51% are ERC-20 tokens, 46% are ETH, and 2.5% are NFTs. ERC-20 tokens have a market capitalisation of around $261 billion, with the top three tokens - Tether, BNB, and USDC - accounting for 55% of the total. The Ethereum Foundation also announced the launch of the ‘Hooli’ testnet on 17 March for final testing purposes before deploying a new code update, the ‘Pactra’ upgrade. XRP's FDV has surpassed Ethereum's at around $235bn, although Ethereum still maintains its dominance in terms of actual market capitalisation. XRP offers faster and cheaper transactions than SWIFT, the traditional method of international money transfers, and has seen growing adoption by financial institutions and banks. Recently, Ripple issued an additional 6.5 million new RLUSD, bringing the total supply to around 141.9 million. Liquidity continues to decline in the DeFi market, most notably on the Hyperledger platform, where $166 million in assets were wiped out in a single day, the second-largest single-day outflow on record. Finally, the supply of stablecoins has continued to grow steadily, reaching around 1% of the U.S. money supply (M2). The current supply of stablecoins is valued at around $226.9 billion, with some estimates slightly above that.
U.S. Legislative and Regulatory Actions on Crypto
The US House of Representatives is moving forward with a bill that would legislate Bitcoin strategic hoarding. Unlike the ‘Bitcoin Act’ introduced by Senator Cynthia Loomis, it does not specify a specific amount of BTC to be purchased. The governor of Nebraska has signed a bill to protect users of bitcoin ATMs and electronic kiosks, while Congressman Nick Begich has introduced a bill to stockpile 1 million BTC. The state of Texas is also working on a new bill to invest up to $250 million in bitcoin and digital assets. The US Securities and Exchange Commission has delayed a decision on Grayscale's proposal to launch an XRP ETF, and has also pushed back the deadline for a decision on whether to list options on Fidelity's Ethereum ETF to 14 May. In addition, CBOE has asked the SEC to allow staking on its Ethereum spot ETF. Analyses have estimated that crypto projects have lost between $1.8 billion and $2.6 billion due to the geo-blocking of US users, with an estimated 9.2 million to 52 million US crypto holders affected by the airdrop blocking policy. Finally, with the news that President Trump's family is in talks to acquire a stake in Binance.US, the idea of the US government issuing a $2 trillion ‘bitbond’ to buy Bitcoin on a large scale has been mooted.
Global Crypto Adoption and Regulatory Changes
Russia is utilising cryptocurrencies such as Bitcoin, Ethereum, and Tether in its oil deals with China and India to circumvent Western financial sanctions. This is a way to free up liquidity in the process of converting yuan and rupees into rubles, with transactions reportedly worth tens of millions of dollars per month. Argentina has finalised new regulations for virtual asset service providers, which will require all VASPs to register, and unregistered firms can be blocked by court order. Turkey is also tightening cryptocurrency regulations, and a bill has been proposed in Brazil that would allow salaries to be paid in digital assets. Russia's central bank is considering allowing crypto trading for certain investors, the Bank of England has completed testing a real-time gross settlement system in partnership with Ripple, Japan has submitted a bill to ease regulations on stablecoins and crypto brokers, Thailand has officially recognised Tether, and the Singapore Exchange is planning to list bitcoin perpetual futures. OKX acquired a Maltese firm to tap into the European derivatives market, which will allow OKX to offer financial services to institutional investors in the European Economic Area. Ripple received a licence from the Dubai Financial Services Authority to provide cross-border payment services in the Middle East.