The biggest crypto news and ideas of the day |
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Welcome to The Node! This is Ben Schiller to take you through the latest crypto news. Tariffs, tariffs, tariffs. Trump’s on-again, off-again import levies dominated the week. At the beginning, tariffs sent stocks and crypto appreciably lower. By the end, with all new non-China tariffs paused for 90 days, markets were up again. Bitcoin returned to a level ($82,000) that it was at this time last week. And analysts debated whether, in the panic of the previous days, it showed “safe haven” qualities (like gold) or whether it was a risk-asset like many others. The consensus was that bitcoin performed resiliently rather than completely reassuringly.
CoinDesk markets reporter James Van Straten looked at that question in an in-depth piece this week (below).
Omkar Godbole wrote about how bitcoin could be at risk from the "basis trade" ("Bitcoin's Price Stability at Risk From Potential 'Basis Trade Blowup' That Catalyzed the COVID Crash").
Oliver Knight explored if DeFi had shown resilience during the crash ("How DeFi 'Defied' Market Carnage as Traders Poured Millions Amid Panic"). And, in other news, Jesse Hamilton reported on Paul Atkins' confirmation as pro-crypto SEC Chair ("Atkins Confirmed by U.S. Senate to Take Over SEC Formerly Run by Gensler").
It was a week that showed how crypto was increasingly central to finance and even macro-economics. Fun times are ahead.
Check out the stories below.
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James Van Straten: Rethinking 'Safe Haven' |
James Van Straten, April 2:
The idea of "safe haven" assets—traditionally marked by gold and government bonds—amid market turmoil, is being tested like never before.
For decades, portfolio construction and risk management were simple: 60% equities, 40% bonds and when markets panicked, capital typically flowed into gold and government bonds. These assets were slow, steady, and predictable, making them an ideal safe haven for investors looking for protection against volatility. But in today’s world of 24/7 markets, geopolitical instability, and rising distrust in sovereign systems, have turned that logic on its head, asking the question: does the definition of a safe haven need a refresh? It is highly volatile, widely misunderstood, and often dismissed as a speculative asset by many corners of Wall Street and Main Street. Yet, it has staged an extraordinary run since the COVID-19 market lows. It’s up over 1,000% since the COVID-19 market crash in March 2020. During that same period, long-duration bonds—measured via iShares 20+ Year Treasury Bond ETF (TLT)—are down 50% from their 2020 highs. Even gold, the true and tried safe haven asset—up 90% over five years—looks less impressive when adjusted for monetary debasement, which saw, in 2020 alone, over 40% of the total USD money supply being printed.
Still, bitcoin’s safe haven credential remains contested by investors.
FULL ARTICLE |
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Omkar Godbole: Bitcoin and the Basis Trade |
Omkar Godbole, April 6:
Bitcoin's (BTC) recent stability amid Nasdaq turmoil driven by tariffs has generated excitement among market participants regarding the cryptocurrency's potential as a haven asset.
Still, the bulls might want to keep an eye on the bond market, where dynamics that characterized the COVID crash of March 2020 may be emerging. Nasdaq, Wall Street's tech-heavy index known to be positively correlated to bitcoin, has dropped 11% since President Donald Trump on Wednesday announced reciprocal tariffs on 180 nations, escalating trade tensions and drawing retaliatory levies from China.
Other U.S. indices and global markets have also taken a beating alongside sharp losses in the risk currencies like the Australian dollar and a pullback in gold.
BTC has largely remained stable, continuing to trade above $80,000, and its resilience is being viewed as a sign of its evolution into a macro hedge.
"The S&P 500 is down roughly 5% this week as investors brace for trade-driven earnings headwinds. Bitcoin, meanwhile, has shown impressive resilience," David Hernandez, crypto investment specialist at 21Shares, told CoinDesk in an email. "After briefly dipping below $82,000, it rebounded quickly, reinforcing its status as a macro hedge in times of macroeconomic stress. Its relative strength could continue to attract institutional inflows if broad market volatility persists."
The perception of stability could quickly transform into a self-fulfilling prophecy, solidifying BTC's position as a haven asset for years to come, as MacroScope noted on X. However, sharp downside volatility in the short term cannot be ruled out, especially as the "Treasury market basis trade" faces risks due to heightened turbulence in bond prices. The basis trade involves highly leveraged hedge funds, reportedly operating at leverage ratios of 50-to-1, exploiting minor price discrepancies between Treasury futures and securities. This trade blew up in mid-March 2020 as coronavirus threatened to derail the global economy, leading to a "dash for cash" that saw investors sell almost every asset for dollar liquidity. On March 12, 2020, BTC fell by nearly 40%. "When market volatility spikes - as it is now - it unearths highly leveraged carry trades vulnerable to big market moves. The blowup in the US Treasury market in March 2020, which disrupted basis carry trades, is a recent example. Risk of leveraged carry trade blowups is high...," Robin Brooks, managing director and chief economist at the International Institute of Finance," said on X. The risk is real because, the size of the basis trade as of March end was $1 trillion, double the tally in March 2020. The positioning is such that a one basis point move in Treasury yields (which move opposite to prices) would lead to a $600 million shift in the value of their bets, according to ZeroHedge. So, increased volatility in the Treasury yields could cause a COVID-like blowup, leading to a widespread selling of all assets, including bitcoin, to obtain cash.
FULL ARTICLE
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Oliver Knight: DeFi Not Bad |
Oliver Knight, April 9:
This week's tariff-inspired market meltdown has led to a rapid sell-off across crypto-assets, with BTC trading below $80K and ETH hitting a two-year low of $1,432. The decentralized finance (DeFi) sector was not entirely immune to the chaos as total value locked (TVL) slumped to its lowest point since November at $95 billion.
But it wasn't all bad news for DeFi. Amidst plunging asset prices, DeFi showed resilience with muted outflows with key usage metrics faring far better than the price of ETH, the asset that underpins much of Ethereum's DeFi ecosystem. TVL on Aave, the largest DeFi protocol, rose in ETH terms this week as deposits hit a record high of 11.02 million ($17.32 billion). Deposits have been steadily increasing since the turn of the year when it stood at 3 million ETH. What this shows is that whilst the recent bull market was focused on hype-fueled meme coins, the real-world use case of DeFi is still very much alive. In previous cycles DeFi has suffered due to centralized exchange dominance and a lack of liquidity, now capital is flooding in as traders deploy delta-neutral strategies, which increases liquidity on the long-term health of DeFi. As the market edges closer to bearish territory, DeFi may well be one of the pillars keeping crypto afloat. Aave was not the only protocol to experience inflows this week. TVL on Sky - formerly MakerDAO – increased from 1.85M ETH to 4.63M ETH. Lending protocol Spark also had a 1 million ETH boost in deposits earlier this month, according to DefiLlama.
The rush to DeFi during a market sell-off can be attributed to traders looking to de-risk, moving to stablecoins to acquire a delta-neutral yield through lending and borrowing instead of holding spot exposure during a volatile market.
Decentralized exchange volumes have also remained steady, hitting $11.8 billion on Monday and $9.8 billion halfway through Tuesday compared to last week when volumes failed to top $7 billion on any single day. |
Jesse Hamilton: Pro-Crypto SEC Chair Atkins |
Paul Atkins is just one oath away from taking over the U.S. Securities and Exchange Commission as President Donald Trump's pick to oversee the nation's securities sector — including whatever role the crypto sector plays in that.
A swearing-in ceremony will soon put the former SEC commission in charge of the high-profile regulator — a matter cheered on by the digital assets sector that sees him as a strong ally after his significant background advising crypto firms as a financial-services consultant in Washington. Atkins' Senate confirmation was easily cleared on Wednesday in a 52-44 vote. The longtime figure in U.S. financial policy — both in government and as an outside adviser — was generally expected to easily move through confirmation, though the Senate Banking Committee approved Atkins along party lines, with all the panel's Democrats opposing the nominee. Atkins' confirmation took the usual months to emerge from the Senate, and in the time between the departure of predecessor Gary Gensler and Atkins' arrival, Trump's interim agency chief, Mark Uyeda, carried out an ambitious and rapidly deployed crypto overhaul. The SEC has thrown out almost all of its high-profile digital assets enforcement actions, and its staff quickly outlined a number of segments of the industry that it considers outside its jurisdiction — including some stablecoins, memecoins (such as the president's own $TRUMP) and proof-of-work mining.
Many of the areas in which the agency has already demonstrated policy shifts overlap with Trump's family crypto businesses, including the family's memecoins and its ties to World Liberty Financial, which has pursued its own stablecoin. Atkins will be taking over those issues to apply permanent standards, potentially directed by future legislation that's now a priority in Congress.
Atkins' tenure will begin with an incomplete commission, which is meant to have five members and whose sole Democrat — Caroline Crenshaw — is occupying an already expired term. The White House hasn't yet moved to fill the two Democratic positions on the commission. |
Opinion: IRS Tax Headaches Ahead |
The end of one rule is the beginning of crypto’s unresolved tax issues, says Robin Singh, CEO of crypto tax platform Koinly:
The United States Congress recently voted to repeal the Internal Revenue Service’s (IRS) controversial decentralized finance (DeFi) broker rule, a big win for crypto. And on Thursday President Trump killed the measure for good. But let’s not fool ourselves — there’s more pain to come. In December 2024, the IRS proposed a broad rule requiring DeFi platforms to follow standard crypto broker tax rules, including extensive user KYC and other disclosures. The crypto industry pushed back immediately, with numerous blockchain groups suing the IRS almost as soon as the rule was announced. DeFi platforms aren’t designed to collect this type of information in the first place, and beyond that, the proposed rule contradicts DeFi’s core goal of protecting privacy while keeping transactions transparent. Thankfully, this rule is likely to be scrapped entirely under the Donald Trump administration after the U.S. Senate's 70-28 vote against the ruling on March 26. This follows the US House's 292-132 vote on March 11 and the Senate's earlier 70-27 vote on March 4, both in favor of repealing the IRS DeFi broker rule. If the rule had stuck, it would have hurt the U.S. crypto industry and innovation beyond just DeFi. As the operator of crypto tax platform Koinly, I know it would have made compliance significantly more costly and complicated for us too. But it is far from over.
This repeal was easy because the rule was so over-the-top that even most government officials saw it as unworkable. But what happens when the IRS returns with a more subtle, carefully crafted rule that again targets DeFi? Overturning this version doesn’t prevent the agency from trying again.
I wouldn’t be surprised if the IRS now goes on a hiring spree for DeFi experts to help with this, especially after bringing in several crypto specialists into the agency in February 2024. The IRS clearly believes it's missing out on crypto tax revenue and is pushing to expand its reach as much as possible. DeFi may be privacy-focused, but it still involves money, so it’s not going to be ignored anytime soon. The IRS won’t take this rule being rejected lightly either. It wouldn’t be a stretch to assume the agency will ramp up its audits even more on US crypto users to ensure their filings are accurate. FULL ARTICLE |
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