Sup, nerds!

Here’s what you’re getting in today’s edition:

• 💅 This is cool: Institutional allocations to memecoins have increased over 300% this year

• 🔎 This seems important: What the heck happened this weekend?

• 🤝 Partner: Quit sending emails like a dinosaur​

• 🔪 Let's dissect this: Why did BTC transaction fees just skyrocket?

• 💡 Bellwethers in Web3: Erin Redwing, Open Ordinals Institute

Terms used in this edition (click for an explanation, or ask Web(GPT)3!):
Memecoin, wallet, protocol.

💅 This is cool:

Institutional Allocations to Memecoins Have Increased Over 300% This Year

In one sentence: Institutional allocations to memecoins are up+ 300% this year, reaching almost $300M in April (up from $63M in Jan) — this could indicate an accelerated cycle.

• Pug dogs

• Stanley Cups

• The fries at In n’ Out

These are all things that we’d file under “we don’t get the hype, but a lot of people seem to be into them.”

(Ready for us to shoehorn this into today’s first story? Here it comes…)

It seems institutional are making a similar filing with the memecoin space.

(BOOM! Nailed the landing).

12 months ago, most people would have scoffed if you had have told them that institutional investors would soon be piling into memecoins — but here we are.

In fact, Institutional allocations to memecoins have increased over 300% this year, reaching almost $300M on the ByBit exchange in April (up from $63M in Jan).

What’s the takeaway?

This isn’t a sure thing — but this might indicate we’re in an accelerated cycle.

Typically, bull runs last for ~12-18 months after the Bitcoin halving (which took place in April) — with new all-time-highs first being reached ~6 months after the halving.

At which point, retail investors start to go further out on the risk curve (into things like memecoins, NFTs, and smaller projects) in an attempt to catch new wins. After that, institutional investors tend to follow, pushing the market to its high — all before everything starts to retract.

This time around, the market reached new all-time-highs, while both retail and institutions both piled in to memecoins before the halving had taken place.

(Which is a first for both).

These accelerated patterns play into the theory we’re going to see an accelerated blow-off top (and peak) for prices before the year is out.

The downside is: this would mean we see a prolonged bear market following such an event.

…guess we’ll just have to hurry up and wait.

🥇 Want the news before anyone else?

🔎 This seems important:

What the Heck Happened This Weekend?

In one sentence: Fears of further rate hikes caused BTC to sell off on Fri, from ~$72k to ~$68.4k, before bouncing back up to ~$69.3k (where it stayed for most of the weekend).

This is going to sound odd, but…

Crypto prices tanked on Friday, because the economy was too healthy.

Here’s what we mean:

The Federal Reserve is looking for weakness in the economy — enough weakness to allow them to lower interest rates, without causing more inflation.

Cause when they lower interest rates, everyone’s loan/credit repayments become a little cheaper, allowing for us to spend more money.

…but consumers having more money to play with, typically incentivizes businesses to inflate their prices (which is what the Fed is trying to fight).

So they’re hoping to see signs of a weakening economy, that will allow them to lower rates enough for us all to get by, without everyone going on a spending spree.

If these signs don’t show, the Fed will likely keep interest rates higher for longer (possibly even raising them again).

So when unemployment rates were shown to have risen last Friday, that was a good sign in the Fed’s eyes…unfortunately job growth rose to cancel a lot of that out, raising fears of further rate hikes.

As a result, Bitcoin (and the rest of the crypto market) sold off, with BTC moving from ~$72k, to ~$68.4k in a matter of hours, before bouncing back up to ~$69.3k and hovering there for most of the weekend.

Alright, now you know!

🤝 Partner:

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🔪 Let's dissect this:

Why Did BTC Transaction Fees Just Skyrocket?

In one sentence: On Friday, OKX consolidated their unspent transaction outputs (UTXOs) which sent BTC transaction fees skyrocketing.

Late last week, out of nowhere, BTC transaction fees started to skyrocket.

Which made us question…was this because of Gamestop? Had Runes suddenly had a massive breakout? Or something else?

Turns out, it was something else.

The third largest crypto exchange in the world - OKX - just consolidated a whooole bunch of unspent transaction outputs (UTXOs).

Here’s what that means:

Imagine Seb wanted to send Chevy 5.1 BTC.

Chances are, Seb doesn’t have exactly 5.1 BTC in his wallet (especially if he has done a few BTC transactions in the past).

So instead of transferring exactly 5.1 BTC, Seb might transfer 5.2 BTC because right now, in Seb’s wallet, there’s 5BTC and 0.2 BTC (see the header pic or watch this video for a better understanding).

The ‘change’ Seb receives (0.1 BTC minus any fees) would become the UTXO.

Now, this becomes a huge problem for a crypto exchange that sees thousands of trades per day, with most resulting in some amount of UTXO.

And every so often an exchange might consolidate their main wallets to reduce UTXO’s - all in the plan to reduce the cost of future transactions, and reduce congestion on the Bitcoin network for future trades.

Which is exactly what happened on Friday.

The good news is, this isn’t a super common thing for exchanges to do (they may do it once or twice per year) - but it does feel like something that needs some improvement.

The Runes Protocol has gone a long way to help solve for this and there are probably other solutions being worked on as we speak.

Reason #4283 why we love crypto: constant innovation.

💡 Bellwethers in Web3

The Web3 Daily team just got back from Austin, where Pavan Bahl & Will Gaines interviewed 30 incredible Web3 & Crypto builders during Consensus 2024.

"Bellwether's in Web3," is a daily profile series recorded live with Nolcha Shows and Movement Labs in collaboration with Bellwether Culture. This Wednesday, at The Arlo Williamsburg, Nolcha is hosting a gathering to toast the new series.

If you’re in NYC, register here (access code: summerbtc) and you just might catch Chevy there too!

Interview: Erin Redwing,
President of the Open Ordinals Institute

Erin Redwing is the President of the Open Ordinals Institute, Co-Founder and CEO of Inscribing Atlantis, and Co-Host of Hell Money Podcast. She is an astrologer who followed the stars to Bitcoin.

Follow: @realizingerin (Twitter), @realzingerin (TikTok) & @InscribAtlantis