Macro Update

Last week, Bitcoin surged 10% to $104,100, coming within reach of its all-time weekly close, which followed the U.S. election.. Spot flows remained firm whilst Ethereum led the move amidst a 39% weekly rise to $2,500, its largest since 2021. The broader market followed suit, with the GMCI30 index climbing 20%. The sharp uptick led to $830 million in short liquidations on Thursday across CEXs, the largest in the past six months.

A key driver was easing global trade uncertainties and underweight positioning. On Thursday, the U.S. finalized a trade agreement with the U.K., establishing a 10% tariff on U.K. goods and a 1.8% tariff on U.S. exports, while eliminating tariffs on U.K.-made plane parts. This is the first completed trade deal the Trump administration has made following ‘Liberation Day', providing the market with an optimistic signal for future deals. More importantly, U.S.-China trade negotiations made progress toward de-escalating tensions, further reducing fears of disruptive trade barriers.

Despite these positive signals, macroeconomic policy remains cautious, evidenced by the Fed maintaining interest rates at 4.25%–4.50% during its FOMC meeting, balancing concerns over persistent inflation and potential economic slowdown driven by newly imposed tariffs. Inflation remains above the Fed’s 2% target, and tariffs introduce risks that could either exacerbate price pressures or dampen growth, prompting the Fed to adopt a cautious, steady-rate policy. However, the Fed highlighted the economy’s resilience, pointing to robust growth, a strong labor market, and stable unemployment as signs of underlying strength, and emphasized a data-dependent approach.

On the adoption front, last week we saw three major crypto news developments coming out from the tech world. On Wednesday, reports surfaced that Robinhood is developing a blockchain-based platform to enable European retail investors to trade tokenized U.S. securities, marking an expansion beyond its current offerings of cryptocurrencies and local equities in the EU. Robinhood is reportedly evaluating blockchain networks as the basis for its platform. On the same day, Stripe launched Stablecoin Financial Accounts, a product that aims to enable businesses across 101 countries to hold, receive, and send funds using U.S. dollar-backed stablecoins such as USDC and Bridge’s USDB. A key feature offered is the ability to instantly convert stablecoin balances to fiat currency for bank transfers, aiming to reduce delays and costs in cross-border payments. The rollout followed Stripe’s $1.1 billion acquisition of Bridge in February 2025, reinforcing its intent to embed stablecoins into everyday financial workflows. 
The next day, Fortune reported that Meta is exploring a stablecoin-based initiative to enable payouts for content creators on platforms like Instagram and WhatsApp. This follows Meta’s earlier Libra/Diem project, which proposed a multi-currency-backed stablecoin but was discontinued in 2022 amid regulatory challenges during the Biden administration. Under a more crypto-friendly administration, the new initiative appears to be stablecoin agnostic and prioritizes existing stablecoins like USDC for low-cost, near-instant settlement, potentially reducing fees compared to traditional fiat transfers

Our take: The initiatives by Robinhood, Stripe, and Meta, coupled with BlackRock’s strong pro-tokenization stance, point to a potential evolution of global finance, where blockchain could play a central role in making value transfer and settlement more efficient and inclusive. While these developments challenge traditional banking’s primacy, they also invite collaboration between legacy systems and decentralized technologies.

Ethereum Update and Pectra Upgrade

Last week, Ethereum delivered its strongest weekly performance since January 2021, surging 39% to $2,500 and driving a 26% increase in the ETHBTC ratio. The rally appears primarily driven by a significant short squeeze, with reported ETH short weekly liquidations of $538 million outpacing Bitcoin’s $490 million. Despite approximately $16 million in ETH ETF outflows, suggesting limited institutional buying pressure, the price movement seems to reflect forced covering of crowded short positions. ETH trading volume on centralized exchanges soared, with average daily trading volume jumping 95% from $15 billion in April to $29 billion over the past week, outpacing Bitcoin’s 20% growth over the same period.

This rally accompanied the Pectra upgrade’s activation on May 7, an update aiming to enhance Ethereum’s scalability, security, and user experience through a number of EIPs.

Onchain activity surged, with the 7-day moving average transaction count rising 11% to 1.3 million. Under EIP-1559, 2,000 ETH were burned last week, the highest since January, amplifying deflationary pressure. 

Our take: A sharp ETH/BTC reversal and declining Bitcoin dominance may indicate a potential shift, with capital possibly flowing into altcoins, reminiscent of patterns observed in 2017 and 2021. However, selective outperformance and increasing capital dispersion in this cycle suggest we could be navigating uncharted territory.

Bitcoin Miners Turn to Renewables

According to Cambridge’s 2025 survey, which analyzed data from 49 mining companies across 23 countries, representing 48% of global hashrate, Bitcoin’s electricity consumption dropped from 149 terawatt-hours (TWh) in 2022 to 138 TWh in 2024. Despite rising energy demand amid heightened mining competition and network activity, energy consumption reduced due to a 24% improvement in mining hardware efficiency. This enables greater computational power per joule, allowing miners to sustain hashrate growth while reducing total energy use.

In 2024, sustainable sources powered 53% of mining operations (renewable + nuclear), up from 37% in 2022, with renewables like hydropower, wind, and solar contributing 43%. This shift also accompanies a steep decline in coal use and greater reliance on natural gas, which emits roughly half the CO₂ of coal. Economic incentives accelerated this transition, as electricity comprises over 80% of miners’ cash-based operating costs, making cost predictability essential for profitability. Exposure to volatile fossil fuel markets, such as those seen in regions like Kazakhstan with fuel price spikes in 2022, can erode margins. In contrast, long-term power purchase agreements (PPAs) for wind and solar offer stable pricing, shielding miners from such fluctuations. As a result, miners are increasingly relocating to regions with abundant, cost-effective renewables, with North America holding 80% of global hashrate, capitalizing on Texas and Canada’s wind, solar, and hydropower. Latin America, particularly Paraguay and Argentina, attracts miners with surplus hydroelectric capacity, while Ethiopia emerges as a hub due to its vast untapped hydropower reserves.

This cleaner energy profile has significantly lowered Bitcoin’s environmental impact. In 2024, estimated annual greenhouse gas emissions fell to 39.8 million tonnes of CO₂-equivalent (MtCO₂e), or 0.08% of global emissions, a sharp reduction from Cambridge’s 2022 estimate of 69.6 MtCO₂e and third-party figures of 85–95 MtCO₂e, which used less precise national grid data. This reduction demonstrates Bitcoin’s capacity to lower its carbon footprint while maintaining network security and growth, countering earlier criticisms of its environmental impact.

Our take: In 2021, Tesla’s decision to suspend Bitcoin payments due to environmental concerns, driven by heavy reliance on coal-powered mining, sent shockwaves through the crypto industry. Fast-forward to 2024, and Bitcoin is much greener than before. Coupled with the success of U.S. spot Bitcoin ETFs, Bitcoin is now more accessible and legitimate in the eyes of TradFi, even the environmentally conscious firms.