🟠 The First Quantum Defense
💸 U.S. Greenlights Crypto Yield
💰 USDh Yield Recap
📈 Weekly Market Review

This week brought a wave of positive discoveries across crypto, and I tracked them all.

First, Lightning Labs’ Olaoluwa Osuntokun unveiled a prototype that could help wallet owners prove control without relying on cryptography that quantum computing might one day break. A possible defense path has now emerged.

Second, Washington moved closer to reality. A new White House paper undercut the banks’ core argument that banning yield-bearing stablecoins would protect lending. One of the banks’ strongest arguments against crypto yield just got weaker.

Crypto is getting stronger where it counts.

Bitcoin’s quantum debate has yielded something more useful than alarm: a possible defense.

For years, the fear has been that quantum computers could one day break the cryptography protecting Bitcoin wallets.

A path forward has emerged. This week, CTO of Lightning Labs, Olaoluwa Osuntokun, unveiled a prototype designed to avoid that outcome. 

The prototype gives wallet owners another way to prove control, relying on knowledge of the root secret from which the wallet was derived rather than on cryptography quantum computing could eventually break.

This is meaningful progress, and we expect it to continue.

As practical solutions emerge and post-quantum defenses mature, we will evaluate and integrate the most robust solutions into our infrastructure.

One of the banks’ strongest arguments against crypto yield just got weaker.

The claim was straightforward: yield-bearing stablecoins pull deposits out of banks, reduce lending capacity, and do it without the same regulatory constraints.

This week, a new paper from the White House Council of Economic Advisers challenged that logic. It found that banning yield on dollar-backed stablecoins would do little to support bank lending, because capital shifting into stablecoins is often recycled into Treasury bills and redeposited across the banking system.

The findings reduce weight of the anti-yield case. More importantly, it points to a shift in Washington. Policymakers are getting more comfortable with the idea that digital dollars can earn, rather than remain artificially non-yielding to preserve the old deposit model.

Our view is unchanged: yield is becoming a durable part of digital financial products. Our yield product suite is ready for the market taking shape as policy catches up.

Did your stablecoin do anything for you this week?

USDh did. 2% APY earned in Week 15.

Bitcoin moved above $71,000 on Wednesday as geopolitical developments drove a broad recovery in risk assets and a pullback in oil. Strategy (MSTR) bought 4,871 BTC for $329.9 million at a $67,718 average in the first week of April, raising holdings to 766,970 BTC.

The S&P 500 rose 2.5% to close near 6,760, its best session since April 2025, while the NASDAQ gained 2.8%. The VIX fell from 25.8 to 21.6; U.S. equities are now less than 5% below highs.

Data Summary:

Simple Moving Averages (SMA) in Figure 1:

Bitcoin’s 7- and 30-day SMAs are converging near $69,400–$69,700 and are acting as support after the ceasefire spike. Price is below the 180-day ($85,400) and 360-day ($97,400) MAs, confirming the intermediate-term downtrend. The 200-week SMA near $59,500 continues to provide structural support. Support levels are $69,700, $67,000, $65,000, and $59,500, while resistance levels are $72,000, $74,000, and $76,000.

Net inflows totaled $197 million since last Thursday.

April 6 saw $471M in net inflows, the largest single day since February, led by IBIT ($182M) and FBTC ($147M). Earlier in the week, April 1 saw $173.7M exit the ETF complex. Total AUM is near $97B, and the average ETF holder cost basis is near $84,000.

DVOL fell to 44.56% from last week’s 52.28%, the lowest level since February 28. Implied volatility dropped roughly 8 points in a single session, moving below the 50%-55% post-selloff range that had held for seven weeks.

The equal-weighted basis spread is 2.52% APR, up from 2.41% last week, with positive basis across maturities and no backwardation. Figure 6 shows normal contango, from 1.48% on the front week (April 17) to 2.39% on June 26, 3.09% on September 25, and 3.60% on March 2027.

Geopolitical developments involving the U.S. and Iran reached a provisional conclusion on day 40. The Strait of Hormuz has reopened under a revised transit framework, with shipping routed closer to the Iranian coast and subject to inspection. Iranian officials have also indicated that transit fees will apply, with payment expected in currencies including Bitcoin, yuan, and other alternatives to the U.S. dollar. 

WTI fell 16.4% to $94.41, Brent 13.3% to $94.75, marking the largest single-day decline in oil since April 2020. U.S. gasoline remains near $4.00 per gallon, while European TTF gas futures fell ~20% to ~€44/MWh but are still ~60% above levels seen before the recent geopolitical developments.

The Fed remains at 3.50%–3.75%. The March FOMC minutes released April 8 reinforced a hawkish bias. Gold rose to $4,802, DXY fell to 98.9, and the 10-year yield eased to 4.25%. The next FOMC meeting is April 28–29.

Sincerely,
The Hermetica Team