Trakx Weekly Update:TACO Tuesday

Key Crypto Market Figures

CTIs Weekly Performance

Digital asset prices remained resilient for much of last week. In a familiar pattern, President Trump softened his stance (“TACOed”) last Tuesday after escalating rhetoric around Iran, triggering a sharp relief rally that sent crude oil prices down over 15%. However, sentiment reversed over the weekend as US–Iran peace talks ended without agreement, pushing crypto prices lower. Against this backdrop, our flagship large-cap Top 10 Crypto CTI gained just over 1%. The standout performer was the Lending CTI, which rallied 7%, while the Meme CTI lagged, declining a little over 2%.

A New Crypto Use Case

While the ongoing Iran conflict has continued to drive volatility in digital asset markets it also highlighted a new use case for the seminal cryptocurrency, Bitcoin. According to the Financial Times, Iran’s leadership announced that as part of its intention to reopen the Strait of Hormuz it plans to levy a $1 fee for every barrel of crude oil transported through the narrow stretch of water. Notably, while the US dollar is the referenced unit of account for the levy, Iran’s government is seeking payment in Bitcoin¹.

Critics may view this as another example of crypto facilitating illicit activity, but the truth is deeper. Due to the decentralized nature of the Bitcoin protocol, it cannot easily be frozen, sanctioned nor subject to capital controls unlike fiat currencies as the Russian central bank found out early in the Ukraine war when the US froze it $400bn plus forex reserves. This makes it the perfect form of electronic money in a low trust environment (a pretty apt description of the international environment currently). Indeed, we made this very point in our recently published Monthly Update when we noted that “[c]rypto’s ability to serve as a neutral global settlement layer will likely be viewed as an increasingly valuable trait”.

1After negotiations broke down over the weekend, President Trump announced that the US Navy would stop ““any and all ships trying to enter or leave the Strait of Hormuz” so it is not assured that Iran will be able to collect its $1 levy per barrel of oil.

Muddy US Macro

Macro developments in the US also weighed on investor sentiment. Q4 GDP was revised sharply lower, from an annualized 4.4% to just 0.5%, which is barely above stall speed. At the same time, inflation remains stubborn: March CPI showed headline inflation rising to 3.3% year-on-year. This combination complicates the Fed’s ability to balance its dual mandate of price stability and full employment. Minutes from the March Fed meeting revealed growing concern among policymakers that interest rates may need to rise further to counter inflationary pressures—particularly those linked to geopolitical tensions. Such tightening would reduce liquidity and likely dampen demand for cryptocurrencies and other risk assets.

AI Threat

Finally, beyond macro and geopolitical risks, technological threats to digital assets are also evolving. While quantum computing remains a long-term, largely theoretical concern, a more immediate risk has emerged. Last week, Anthropic announced its latest AI model, Mythos, which can autonomously identify and exploit software vulnerabilities at scale. Due to its capabilities, the model has not been publicly released and is instead being shared selectively under “Project Glasswing.” The announcement prompted high-level discussions among financial authorities and major institutions around the globe regarding cybersecurity risks. This threat extends beyond tradfi. In the crypto ecosystem, DeFi protocols are particularly exposed. With over $200 billion locked across various protocols, they represent an attractive target for malicious actors. Tools like Mythos could significantly lower the cost and complexity of discovering exploitable vulnerabilities, increasing systemic risk across the space.

Sources: Trakx, Coingecko, Alphavantage

Market Trends

• Iran Wants Bitcoin Payments From Oil Ships Seeking Hormuz Passage: FT: Decrypt
• Bitcoin reacts to US economy moving close to stalling, but inflation still too hot for easy Fed rescue: Cryptoslate
• Move over bitcoin and quantum risks. Anthropic’s Mythos AI could have major implications for DeFi: CoinDesk
• Bitcoin can be made quantum-safe without protocol upgrade: Researcher: Cointelegraph
• A new exposé says Adam Back is Bitcoin creator Satoshi Nakamoto. Here’s a list of all the other suspects: DLNews
• Japan’s cabinet approves bill to classify crypto assets as financial products: Nikkei: The Block

Trakx News

• The Trakx team will be attending the Paris Blockchain Week at Carrousel du Louvre  on April 15-16. If you are also planning to attend it would be great to meet up.

Trakx CTIs Performance

Sources: Coingecko and AlphaVantage

*Return of bitcoin is calculated since 01/05/2020, while CTIs performances were calculated since their respective launch date.
**Includes simulated performance.
***The risk signal is determined according to the historical volatility level, the higher the riskier.

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Disclaimers: No Investment Advice. Index returns and statistics are for illustration only. Index returns do not reflect any transaction costs or expenses. Past performance does not guarantee future results. The information provided in this newsletter does not constitute investment advice, financial advice, trading advice, or any other sort of advice and you should not treat any of the newsletter content as such. Trakx.io does not recommend that any cryptocurrency should be bought, sold, or held by you. Readers shall conduct their own due diligence and consult their financial advisors before making any investment decisions.