Weekly Digest: March 2025 | Week 4

Highlights

• Bitcoin rose 3% to $84,000, fueled by a dovish FOMC meeting and a reversal in Bitcoin ETF flows.

• BlackRock’s BUIDL surpassed $1B AUM, becoming the largest tokenized U.S. Treasury fund and driving DeFi integrations.

• Bitcoin network activity declined, but excitement is building around the upcoming Taproot Wizards mint.

Market Update

Bitcoin gained momentum last week, rising 4% to $86,000 amid renewed optimism following dovish signals from the Federal Reserve. The Fed held interest rates steady at 4.25%-4.50% and announced a slowdown in quantitative tightening, reducing monthly Treasury runoff from $25B to $5B beginning April 1. Despite ongoing trade war concerns and a lowered U.S. growth forecast from 2.4% to 2.1%, the market interpreted Powell’s message—calling rising inflation projections “transitory”—as a potential cue for future rate cuts.

This policy shift sparked $750 million in Bitcoin ETF inflows, ending a five-week outflow streak. BlackRock’s IBIT captured $500 million of that, while Ethereum ETFs posted $90 million in outflows, led by BlackRock’s ETHA (-$70M).

Solana futures trading launched on the CME, with Volatility Shares unveiling 1x and 2x Solana Futures ETFs. These futures-based products, historically a precursor to spot ETF approval, signal increasing institutional interest. VanEck and Franklin Templeton have filed for spot Solana ETFs, echoing this trend.

Institutional Activity: Strategy and Bitcoin Accumulation

Strategy (formerly MicroStrategy) unveiled plans to offer 5 million shares of Series A Perpetual Preferred Stock (STRF), featuring a 10% annual dividend and a unique compounding mechanism. This capital raise aligns with their broader “21/21 Plan” to amass $42 billion through debt and equity for Bitcoin purchases.

With a recent acquisition of 130 BTC, Strategy now holds 499,226 BTC, highlighting continued institutional conviction in Bitcoin amid macroeconomic uncertainty.

Real-World Assets (RWA): BUIDL’s $1B Milestone

BlackRock’s tokenized Treasury fund, BUIDL, hit $1 billion in AUM, becoming the largest on-chain U.S. Treasury fund. BUIDL allocates capital to cash, Treasury bills, and repos, offering yield-bearing exposure to government debt on Ethereum, Avalanche, and other chains.

DeFi protocols are increasingly integrating BUIDL. Ethena Labs deployed $200 million into BUIDL to back its stablecoin USDtb, while also announcing Converge, an EVM-compatible blockchain for tokenized asset settlement launching in Q2 2025. Supported by Aave’s Horizon, Pendle, Maple, and others, Converge will use institutional validators to secure its infrastructure and integrate major oracle and bridging protocols.

Aave Labs' own initiative, Horizon, also focuses on bringing institutional capital into DeFi. Horizon allows borrowing of GHO stablecoins against tokenized MMFs like BUIDL. The DAO rejected a separate Horizon token, opting instead for direct value accrual to AAVE holders through a revenue-sharing model starting at 50% in year one.

These integrations mark a pivotal moment in the convergence of TradFi and DeFi, blending stability with innovation and improving the utility of tokenized government debt.

Bitcoin Network Metrics and the Taproot Wizards Catalyst

Despite price gains, the Bitcoin network is experiencing a slowdown:

• Monthly volume hit a low of $1.1T, the weakest since Dec 2023.

• Daily transaction fees dropped from $2M to $400K.

• Miner fee share fell to a five-year low of 1.2%.

• The hashprice index hovers near record lows at $45/PH/s/day.

Yet the upcoming Taproot Wizards mint is generating buzz. Founded by Udi Wertheimer and Eric Wall, the collection aims to raise $35M via a 0.2 BTC/NFT mint, followed by a public auction. Backed by a $30M Series A, the project focuses on building apps using OP_CAT, a Bitcoin improvement proposal enabling programmable smart contracts—potentially unlocking Ethereum-like capabilities on Bitcoin.

Mining Sector Update

Despite reduced network activity, miners are doubling down. The top 19 public mining companies now hold over 100,000 BTC, driven by a wave of aggressive financing:

• In Q4 2024, miners raised $6.4B, including $4.6B in debt.

• Most debt financing involved zero-coupon convertible bonds, easing cash flow compared to 2021’s interest-heavy loans.

• This reflects both strong institutional belief in Bitcoin’s future and a shift toward capital-efficient growth strategies.

Closing Thoughts

As Bitcoin regains strength and macroeconomic signals evolve, digital asset markets are being shaped by:

• Renewed ETF demand and Fed dovishness

• Institutional moves like Strategy’s BTC accumulation

• Real-world asset integration through BUIDL, Horizon, and Converge

• A potential resurgence in Bitcoin’s on-chain activity via Taproot Wizards and programmable smart contracts

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