This article is compiled and organized by BlockWeeks
Less than two months after the approval of spot Bitcoin ETFs, their "second-order effects" have already begun to spread to a broader range of traditional fund products. At the same time, after Bitcoin hit an all-time high, Meme coin trading volume has seen explosive growth; meanwhile, on the Ethereum side, concentration in the block-building segment is rising rapidly, sparking serious discussion about transaction censorship.
BlackRock applies to add Bitcoin allocation to more funds, ETF second-order effects emerge
On March 4, BlackRock submitted an amendment to the U.S. Securities and Exchange Commission (SEC) to add to its Strategic Income Opportunities Fund the ability to purchase shares of Bitcoin ETFs. The amendment states: "The Fund may acquire shares of exchange-traded products (ETPs) designed to broadly reflect the price performance of Bitcoin through direct holdings of Bitcoin, including shares of Bitcoin ETPs sponsored by BlackRock affiliates." The amendment also grants the fund the ability to invest in Bitcoin futures.
According to information on BlackRock's official website, the Strategic Income Opportunities Fund (ticker BSIIX) was launched in February 2008 and is positioned as a flexible core bond complementary product, diversifying across markets and strategies to pursue total return consistent with capital preservation. As of March 6, 2024, the fund had total assets of $36.7 billion and net assets of $24.1 billion.
Only about two months after the first batch of Bitcoin ETFs was approved, the world's largest asset manager has already applied to add Bitcoin exposure to other fund products. Previously, in the research "Sizing the Market for Bitcoin ETFs," a core judgment was that the greater impact of Bitcoin ETF approval may come from second-order effects—various investment vehicles (mutual funds, closed-end funds, private funds, etc.) will incorporate Bitcoin into portfolios under different investment objectives and strategies. For example, alternative funds (currency, commodities, and other alternative strategies) and thematic funds (disruptive technology, ESG and social impact) may both add Bitcoin exposure.
Such filings reinforce the argument that "Bitcoin can serve as a portfolio diversification and return-enhancement tool." In the short term, most managed wealth platforms in the United States have not yet opened access to Bitcoin ETFs, but they are expected to gradually do so; other global and international markets are also likely to follow the United States in offering similar products to a broader range of investors. As the world's largest asset manager endorses it through actual filings, Bitcoin's acceptance as an asset class is expected to accelerate.
Meme coin trading volume surges after Bitcoin's new high
Over the past week, Meme coin trading volume has expanded significantly, closely coinciding with Bitcoin setting an all-time high. Currently, a total of 7 so-called "Meme coins" have a market capitalization exceeding $1 billion, of which 6 rank among the top 100 cryptocurrencies by market capitalization. Meme coins are a category of tokens with blurred boundaries, centered on carrying spreadable cultural memes; although some tokens come with other functions, their main selling point is "owning a coin that symbolizes a certain meme and can unite community identity."
Dogecoin is the first Meme coin in history, launched in 2013, four years after Bitcoin's genesis block. Its community is known for various "stunts," such as sponsoring the Jamaican bobsled team and becoming Elon Musk's "designated token." Since then, tens of thousands (perhaps even hundreds of thousands) of Meme coins have been issued. Dogs are the most popular source of inspiration, with 6 of the top 7 Meme coins by market capitalization related to dogs; however, cats, animated characters, and even presidential candidate themes have also gone viral.
Although Meme coins experienced a major pullback after the FTX collapse, they were among the first categories to recover trading volume in the bear market, with multiple tokens going viral in the spring and summer of 2023. Today, both new and old public chains have their own Meme coins, and they often rank among the top ten by market capitalization on each chain.
The heating up of the Meme coin market is not surprising; this is a pattern that appears in every cycle; the difference is that this time they appeared unusually early. There are several driving factors behind this:
First, the approval and listing of Bitcoin ETFs played a key role. These developments brought new capital to Bitcoin, driving it to new highs. ETF inflows do not directly bring on-chain activity (Meme coins are usually issued on-chain), but they significantly boosted market confidence and spawned more experimental behavior. Coupled with Bitcoin's market capitalization at historical highs and a solid market share, traders began rotating funds into other projects.
Second, there is a lack of crypto products with actual use cases. Infrastructure construction still accounts for the bulk of industry investment, and the on-chain products available to users are limited, which instead amplifies the presence of Meme coins. Meme coins are often the first batch of tokens issued on new chains because, compared with more substantive applications, they are faster, cheaper, and simpler to deploy—requiring only a token standard and basic DeFi primitives.
Ethereum block building highly concentrated: Beaverbuild's share approaches 40%
As of March 1 (Friday), nearly 40% of all blocks on the Ethereum network were produced by a single entity, Beaverbuild. Among Ethereum block builders, Beaverbuild's market share has reached 43%, up from 37% at the beginning of 2024 and 25% at the beginning of 2023. Beaverbuild is one of Ethereum's three major block builders, primarily responsible for producing blocks containing maximal extractable value (MEV)—that is, additional block revenue obtained beyond transaction fees and issuance by reordering user transactions according to profitable strategies such as front-running, back-running, and sandwich attacks. The other two builders, Titan Builder and rsync, control 29% and 15% of the market, respectively. Among the three major builders, only Titan Builder does not actively censor user transactions.
On-chain censorship can be measured by calculating the proportion of "blocks that do not contain transactions interacting with OFAC-sanctioned addresses" over a period of time. Currently, hundreds of crypto addresses are on the sanctions list of the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC), spread across 17 blockchains including Bitcoin, Ethereum, Arbitrum, and Binance Smart Chain. On Ethereum, one of the sanctioned addresses that users continue to interact with is the smart contract of the mixing protocol Tornado Cash: over the past month, Ethereum has processed 20 to 140 transactions interacting with Tornado Cash each day.
According to censorship.pics, a website that tracks censorship behavior by Ethereum validators, builders, and relays, over the past month, the vast majority of builders produced blocks with zero OFAC-sanction-related content; by contrast, about 2% of the blocks built by Titan Builder over the past 30 days contained sanctioned content.
Concerns about increasing builder censorship have sparked discussion about modifying code at the protocol layer to strengthen the network's censorship resistance. But the root of the problem is: as long as builders, validators, and staking pools may face liability from the U.S. Treasury for the transactions they include, most entities in the Ethereum block production chain will choose to "act cautiously" and censor blocks.
The appropriate response from Ethereum protocol developers to this fear and behavior by builders or validators should not be to impose liability on one party for conduct that may be viewed as criminal by the U.S. government through proposals such as "inclusion lists"; the correct direction should be to promote decentralization of block production—encouraging diversification in the types of entities participating in block production, as well as diversification in geographic distribution. The latter path is clearly harder and more time-consuming, and cannot be completed through a single network-wide upgrade. But the scale of the problem itself determines the scale of the solution: MEV and its centralizing effects can only be truly weakened through long-term, gradual approaches, making Ethereum more resilient to these forces.
On-chain observation: Bitcoin's realized price hits an all-time high
Bitcoin's realized price—the average price at which each coin last moved on-chain, that is, the price at the creation of each UTXO—hit an all-time high of $25,255 on March 6, 2024. A rising realized price means that old coins that last moved at lower prices earlier are "coming back to life," pushing up the average price. This behavior usually appears in sync with the start of a new bull cycle, because rising prices prompt holders to sell. In the previous cycle, the peak realized price was $24,623 in April 2022. Notably, Bitcoin's market value to realized value ratio (MVRV) is rising but has not yet reached levels that historically marked market tops.
Other news this week
- Wormhole's airdrop on Ethereum and Solana could be worth nearly $3 billion
- Arkham says it has identified Tesla and SpaceX Bitcoin addresses, holding nearly 20,000 BTC combined
- Injective's inEVM Layer 2 launches on mainnet
- Uniswap Foundation token reward proposal passes temperature check vote
- Polygon welcomes Astar Network as the first user of its new "AggLayer"
- The second most expensive CryptoPunk ever sold for 4,500 ETH, worth more than $16 million
- SEC Commissioners Peirce and Uyeda criticize the agency's "ambiguity" after the ShapeShift settlement
- BlackRock's IBIT spot Bitcoin ETF sets a single-day inflow record of $788 million
- DeFi total value locked exceeds $100 billion for the first time since May 2022
