Q9 Weekly |Another One Bites the Dust

Q9 Capital
6 min readMay 4


4 May 2023

Another One Bites the Dust

  • BTC transactions, Ordinal inscriptions and hash-rate all reach ATH’s
  • Mining stock index up +100% since Jan
  • First Republic fails, acquired by JPM. PacWest plummets 60%

Whilst traditional banks wobbled and faltered, Bitcoin set a new record of daily transactions this week. The number of transactions processed on the Bitcoin blockchain in one day exceeded 682,000.

BTC Confirmed Transactions and Market Price

Source: Blockchain.com

A Kind of Magic

The surge was largely led by Ordinal inscriptions, which topped 350k daily transactions on May 1st, bringing the total number of Ordinal inscriptions to 3mn. Bitcoin Ordinals are unique, nonfungible tokens built on the Bitcoin network, each representing a distinct position in the Bitcoin blockchain. Each ordinal is “inscribed” on a satoshi (the smallest denomination of Bitcoin), and owners can prove digital ownership of their sats.

Ordinals have gained traction among collectors, investors and enthusiasts, offering a new way to engage with the Bitcoin ecosystem. Still, most inscriptions are text-based, data shows. These cost much less than digital art or meme coins because network fees are dependent on the amount of data inscribed.

Source: Dune Analytics

The Ordinals BRC-20 token (Bitcoin Request for Comment) marketplace has now surged to a total market cap of $137mn, significantly up from the $17.5mn recorded a few weeks ago, according to data tracked by Ordinals-builder Ordspace.

Source: Ordspace

I Want to Break Free

A lot of Bitcoin miners also just came back online. The Bitcoin hash rate, or the total computing power of the Bitcoin blockchain, just soared to 439 exahashes per second (EH/s) — an all-time-high. The hash rate is a crucial indicator of the network’s health, with a higher hash rate meaning more miners are participating, thus making the network more resistant to attacks.

Source: Timechainstats

The surge in the hash rate reflects growing investments in mining infrastructure despite fluctuations in Bitcoin’s price. More territories and regions around the world are mining Bitcoin — with increasing amounts of renewable energy — allaying fears of centralization or environmental impacts that have shrouded Bitcoin mining in the past.

Listed mining companies have soared in 2023, with the HI Crypto Mining Stock Index up more than 100%, showing a return of investor appetite for mining socks.

Source: Luxor

Don’t Stop Me Now

BTC-based investment products and funds have increased their market share from 69% in January 2023 to 72% in April, whereas ETH-based products have remained relatively stable, decreasing only slightly from 25% to 23%, according to CryptoCompare.

Bitcoin and Ethereum-based products saw an increase of 6.3% and 8.7%, respectively, reaching $24bn and $7.8bn AUM, with the latter following the successful implementation of the Shapella Upgrade.

Source: CryptoCompare

Source: CryptoCompare

The Show Must Go On

Bitcoin has recorded its best monthly winning streak since 2021. The assets resurgence since January plus its recent milestones all demonstrate the network’s strength and stability, and the increasing adoption of Bitcoin for various use cases.

Source: Bloomberg

Under Pressure

The banking crisis of 2023 has claimed its largest US victim to date: First Republic Bank.

Over the past day PacWest plummeted over -60%, Western Alliance was down -30%, and Metropolitan Bank fell -20%. The total market cap lost in the US banking sector just crossed $2.5 trillion this year.

First Republic Bank, PacWest Bank and JP Morgan, % 5 Day

Source: TradingView

The deal that regulators orchestrated in the early hours of Monday for JPMorgan Chase to acquire the California lender’s assets and deposits is perhaps the best outcome that might have been expected in the circumstances.

Sharing First Republic’s loan losses with JPMorgan will limit the costs to the Federal Deposit Insurance Corporation to $13bn. Yet the failure of a bank that was, on the surface, highly successful and not engaged in obviously risky activities is alarming.

Source: Yahoo! Finance

What First Republic shared with Silicon Valley Bank and Signature Bank, which failed in March, was a business model that did not adapt well to rising interest rates. Yet while SVB’s problem was its stock of mortgage bonds and Treasuries, First Republic’s issues were more in its loan portfolio, where its model of providing cheap mortgages to wealthy customers left it sitting on large paper losses on its mortgage book when rates rapidly climbed.

Source: Mbostock

Hammer to Fall

This all highlights the need for a rethink of rules on liquidity requirements and making stress testing more rigorous and imaginative. The withdrawal of $40bn from SVB in one day in March had already demonstrated the dizzying speed at which deposits can be taken out in the digital banking age, and how social media can amplify a panic. First Republic’s fate was in effect sealed last week when it revealed customers had pulled out $100bn of deposits in the first quarter.

As another one bites the dust, the question that many have in mind now is not just “Who might be next?”, but also “How many more?”. Back in 2008 25 banks failed. This time around, how big will that number be?

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