In Brief

April was a recovery month for Bitcoin, but not a clean risk-on month. BTC gained roughly 12% over April, rebounding from the weakness earlier in the year and trading back toward the high-$70,000 range by month-end. The key driver was not just spot momentum but the return of institutional demand: U.S. spot Bitcoin ETFs recorded $1.97 billion in net inflows in April, the strongest monthly print of 2026 and well above March's $1.37 billion. Underneath the surface, however, DeFi was being stress-tested. The $292 million KelpDAO exploit left Aave with up to $230 million in potential bad debt and triggered $12 billion in TVL outflows, with capital rotating toward isolated-market lenders like Spark and Morpho. The macro backdrop reinforced the divergence. The Strait of Hormuz remained effectively closed, Brent briefly traded above $126, and the Fed delivered an 8-4 split hold at Powell's final FOMC — the most dissents since 1992. Markets are now pricing zero rate cuts in 2026.

Our view is that April revealed the market's new structure very clearly: Bitcoin now has a persistent, regulated ETF bid, while the broader crypto market remains acutely sensitive to macro shocks and protocol-level counterparty risk. BTC is becoming more institutionally owned; DeFi and altcoins are still being repriced through a risk-premium lens. We remain constructive on Q2 and are watching Fed messaging under Warsh and the CLARITY Act markup window as the two important variables.

ETFs Bid and DeFi Bleeds

Bitcoin's April rally mattered because of where it came from, not where it went. BTC clawed back from the mid-$60,000s and pushed into the $79,000–$80,000 resistance zone, but it did not fully reprice into a broad bull-market breakout. The strength was concentrated in Bitcoin itself and in ETF-linked flows; DeFi risk assets stayed under pressure after the KelpDAO/Aave incident.

The ETF data was the clearest positive signal of the month. U.S. spot Bitcoin ETFs absorbed $2 billion in April, pulling year-to-date flows back into positive territory after the January and February outflows.

The character of the rally is what matters. April looked less like risk-on conviction and more like a portfolio allocation trade — institutional investors using ETF vehicles to buy the drawdown, while crypto-native capital turned defensive in the wake of the DeFi stress event. The result is a two-speed market: Bitcoin can remain resilient even as parts of DeFi and the altcoin complex are actively de-risking.

On regulation, the CLARITY Act remained in focus but lost momentum in the Senate, held up by unresolved issues around stablecoin yield. Galaxy's April update framed the bill as still viable but increasingly time-sensitive, with a markup possible in May if negotiations progress.

In Hong Kong, the HKMA granted stablecoin issuer licences to Anchorpoint Financial Limited and The Hongkong and Shanghai Banking Corporation Limited, both effective April 10, 2026. Regulated stablecoins are not just trading instruments; they are the "cash leg", essentially the on-chain settlement money for RWAs, tokenized deposits, and the rest of institutional on-chain finance.

Our view is that Hong Kong's stablecoin framework is somewhat underpriced. For institutions, the question has never been whether USDT or USDC works technically — the question lies in whether accounting, legal, and compliance teams can sign off on the cash instrument. We think a locally licensed HKD stablecoin regime closes the last major gap in Hong Kong's RWA stack, which already includes a licensed exchange framework (VASP), the SFC's tokenization rules, and a mature professional services base in legal, accounting, and finance.

Oil Seems to Eat the Cuts

Macro remained the single largest external constraint on crypto. The Strait of Hormuz crisis continued to dominate energy markets, with the waterway effectively closed and roughly 20% of global oil and gas supply choked off. Brent briefly traded above $126 before retreating to around $114.

Oil is now functioning as an inflation transmission channel. Higher crude feeds straight into gasoline, transport, production costs, and inflation expectations, and that directly compresses the Fed's room to cut. The liquidity narrative that crypto investors had been counting on to underpin a broader risk-asset rally is, for now, off the table.

The April 28–29 FOMC meeting was Jerome Powell's final session as Chair, and it delivered the most dramatic split vote in years. The committee voted to hold the federal funds rate at 3.5%–3.75% for the third consecutive meeting, but the tally was 8-4, the most dissenters since October 1992, with one member preferring a cut and three objecting to the statement's easing bias. Kevin Warsh is now firmly on track to take the chairmanship and is expected to lead his first FOMC meeting in June.

Source: CME FedWatch; Data as of 02 May 2026

Markets had priced in 100% odds of a hold, and the post-meeting reaction confirmed what derivatives markets had already telegraphed: investors are now pricing no rate cuts in 2026 and well into 2027. Coming into the year, futures markets were priced for one to two cuts in 2026; the Iran shock and the inflation pass-through from energy prices have moved that to zero.

Our take is that Bitcoin is increasingly trading like a macro reserve asset backstopped by ETF demand, while altcoins are still trading like liquidity-duration assets. If the Fed stays on hold and oil remains elevated, the market is likely to keep paying a premium for BTC liquidity while continuing to penalize complex, leveraged, or reflexive DeFi exposures.

The KelpDAO/Aave Incident: A DeFi’s Stress Test

On April 18, an attacker exploited a vulnerability in KelpDAO's LayerZero-powered cross-chain bridge to mint approximately 116,500 unbacked rsETH tokens — roughly 18% of circulating supply, worth approximately $292 million. Critically, the attacker did not dump on the market. Instead, they deposited approximately 89,567 rsETH into Aave V3 as collateral and borrowed approximately $190 million in real wrapped ETH (WETH) and other assets across Ethereum and Arbitrum.

Aave's pricing oracle, which checks market value but not collateral provenance, continued to value rsETH at the pre-exploit rate. By the time Aave froze rsETH markets, $190 million in real ETH was already gone. The exploit did not compromise Aave's contracts — Aave's systems functioned exactly as designed — but the protocol was left holding impaired collateral and facing potential bad debt of between $124 million (if losses are spread across all rsETH holders) and $230 million (if losses are isolated to L2 networks).

The market reaction was swift and severe. Aave’s TVL dropped from $26.4 billion to approximately $14.1 billion, representing more than $12 billion in outflows.

In response, Aave and a coalition of major DeFi protocols launched DeFi United, a coordinated industry effort to recapitalize rsETH and prevent losses from being socialized across Aave users. By April 27, total pledged commitments had exceeded $300 million, although much of the support remained subject to governance approval.

Our view is that this was a real stress test, and DeFi passed, but not without damage. Capital did not really leave DeFi but rotated. Spark, within the MakerDAO/Sky ecosystem, saw TVL rise from $3.8 billion to $4.7 billion over the period. Morpho saw modest outflows, with TVL declining from $7.8 billion to $7.1 billion, but its modular and isolated-market architecture, built around Morpho Blue and curated Vaults, now looks structurally advantaged.

We expect a broader repricing across the restaking, LST, and LRT complex, with investors reassessing the cost of clean ETH exposure versus layered ETH exposure. Restaking-as-collateral also needs to rethink. More importantly, the KelpDAO/Aave incident did not happen in isolation. It followed a series of major security events in April, including Drift, Hyperbridge, Grinex, and Rhea Finance. This does not mean DeFi is broken. It means the market needs to be more honest about risk. In a bear market, composability becomes a contagion channel.

Key Charts to Watch

$BTC: BTC gained roughly 11.8% this month, gradually reclaiming the $75,000 level before pulling back after touching the upper bound of its trading channel, helping to significantly ease market sentiment. It is now testing $75,000 as support. A failed retest could open the door to a move lower into the $68,000–$72,000 range. From a higher-timeframe perspective, BTC has yet to break above the resistance from its EMA trendline. The rally has also lacked strong, high-volume bullish candles, suggesting that bears have not fully capitulated.

Bitcoin’s DVOL (implied volatility) has fallen back to its lowest level in nearly six months, suggesting the market is waiting for the next catalyst to trigger a new leg higher.

$ZEC: ZEC rose roughly 33% this month, with gains reaching as much as 56% at its peak, significantly outperforming the broader market. After a sharp rally marked by strong bullish candles from April 7–9, ZEC has entered a consolidation phase. It has also shown relative strength during the recent BTC pullback. $ZEC may retest the area around $300 before resuming its rebound trend.

SpaceX Leads the Pre-IPO FOMO

The pre-IPO market has been very hot recently, especially around mega-unicorns such as SpaceX, OpenAI, and Anthropic, which are being traded as some of the most important potential IPO assets of 2026. In April, Reuters grouped these three companies together as core names that could drive a massive IPO wave. Meanwhile, pricing in the private secondary market for leading AI companies has shown notable volatility; separate market reports indicated that Anthropic at one point saw secondary-market implied valuations approaching $1 trillion.

SpaceX has been the clearest focus of pre-IPO excitement in April. Multiple media outlets reported in early April that SpaceX had confidentially filed IPO documents, targeting a valuation of around $1.75 trillion and potentially listing as early as June. Reuters later reported that the company planned to hold an analyst day, a move that suggests it was preparing for more structured engagement with analysts and investors. In late April, Reuters’ reporting around SpaceX’s confidential S-1 further highlighted risks and long-term ambitions related to AI, space-based data centers, and chip supply.

Stablecoin Liquidity Supports the Recovery Case

Stablecoin inflows reached $5 billion in April, the highest monthly level in nearly six months. Together with the inflows recorded from February to April, this has fully offset the $7 billion outflow seen in January. Despite April’s backdrop of geopolitical instability and tighter macro conditions, crypto liquidity is improving at an accelerating pace. The GENIUS Act is also progressing in an orderly manner, potentially further accelerating institutional capital inflows into the sector. We remain constructive on the broader market outlook for Q2, while keeping a close watch on the Federal Reserve’s policy trajectory.

Disclaimer

The content provided in this report is for illustrative purposes only and is intended to offer insights into the cryptocurrency market. It is not, and should not be interpreted as, investment advice or recommendations. The information contained herein is based on sources believed to be reliable; however, we do not guarantee its accuracy, completeness, or suitability for any purpose, and it should not be relied upon as such. Any opinions expressed reflect a judgment at the date of publication and are subject to change without notice. Readers are advised to conduct their own research and due diligence and, where appropriate, seek professional advice before making any investment decisions. The authors and publishers of this report accept no liability for any loss or damage arising from the use of the information provided.

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