8K views
✖️ Why we've left March cautiously optimistic.
March was a stabilization month for crypto after February's capitulation amid a difficult macro and geopolitical backdrop.
Notably, March marked the first positive month for Bitcoin after five consecutive down months, the longest such streak since 2018.
Bitcoin largely ranged in the high $60Ks to low $70Ks, sitting at ~$73K today, April 13th, as Strait of Hormuz concerns have, on balance, been tamed.
The strength is also on the back of positive ETF inflows - U.S.-listed spot Bitcoin ETFs recorded roughly $1.2B of net inflows in March, their first positive month since October 2025.
March marked a decisive regime shift, from "disinflation and cuts" to "energy shock and higher-for-longer."
The Fed held rates steady but struck a hawkish tone, pushing the 10Y toward ~4.45% and compressing risk appetite broadly. Simultaneously, the escalating US-Iran conflict drove a sharp oil rally, tightening financial conditions further and driving risk assets lower.
Against this backdrop, crypto majors showed notable resilience. Since the February 5th capitulation, BTC has outperformed both the Nasdaq 100 and S&P 500, holding its range through several equity drawdowns, a divergence we read as an oversold signal.
Crypto's muted up-beta to equities it has realized over the past several months appears to have reversed, consistent with an oversold regime that can support sharp rebounds in high-beta assets if sentiment flips. Altcoins have yet to lead, with total crypto market cap ex-BTC and ETH still lagging BTC meaningfully in the latest rally.
Two potential catalysts could accelerate recovery: a reopening of the Strait of Hormuz or a broader de-escalation of the US-Iran conflict would reduce energy-driven inflation expectations, improving the rate outlook and risk sentiment simultaneously.
We see the probability of a crypto recovery rising as these tail risks recede, though we keep an open mind should the geopolitical situation deteriorate further.
Currently, the market has shrugged off the US’ military blockade of the Strait of Hormuz.
Spot Bitcoin ETFs snapped a multi-month outflow streak, returning to a positive-flows regime with $1.2B+ in net inflows, a meaningful sentiment shift after negative monthly flows since November 2025.
Spot ETH ETFs remained subdued, attracting just $18M.
The quiet standout was Solana: despite a fraction of the majors' AUM, Spot SOL ETFs posted $52M in net inflows in March, extending their positive-flow streak to 15 consecutive months, a streak of consistency that continues to impress relative to the asset's stage of institutional adoption.
Some of the largest DATs continued accumulating coins in March despite depressed mNAVs. Saylor’s Strategy was the only DAT to make BTC purchases in March, buying a total of ~45,000 BTC, followed by ~$1B in purchases in early April at the $71K range.
Tom Lee’s Bitmine continued purchases in early April, bringing its total ownership of the ETH token supply to 3.98%.
That being said, with most of the DAT mNAVs at discounts, DAT flows have been confined to just these two players.
Persistent mNAV discounts across DATs should continue pressuring these companies to act via balance sheet rightsizing, asset divestitures, and consolidation in 2026.
Onchain data is mixed - stablecoin and RWA AUM is a noticeable bright spot, but recent smart contract hacks have weighed on onchain sentiment.
Stablecoin & RWA AUM continues to grow - the total market cap of stablecoins sits at ~$316B as of April 8, a new ATH after a brief outflows experienced in Feb and March.
RWA assets issued onchain sits at an ATH of over $28B, with US Treasuries leading growth in absolute dollar terms.
RWA trading and lending in DeFi continue to compound.
Hyperliquid is cementing its position as the premier onchain venue for RWA trading, with RWA volumes now surpassing the platform's aggregate volume ex-BTC.
The platform is earning mainstream recognition as the go-to destination for weekend access to traditional finance assets, a gap legacy venues have never filled.
Silver kicked things off weeks ago, and now traders are responding to geopolitical events via oil perpetual futures on Hyperliquid during weekend hours, with weekend notional trading volume reaching a high of $3.4B on April 12.
@kamino, the borrow/lend protocol on Solana and RockawayX portfolio company, ended the month as the top borrow/lend protocol in crypto by RWA TVL.
This is a significant milestone.
Ethereum has long led onchain lending, where incumbents like @aave and @Morpho have historically dominated. But Kamino is now carving itself a meaningful niche in RWA borrow/lend, validating both its strategy and the Solana ecosystem at large.
But the biggest focal point of late in onchain markets is smart contract risk.
The quarter’s defining security event was the @DriftProtocol exploit on April 1 (~$285M), which took place just days after the Resolv hack. What initially looked like a technical exploit appears to have been enabled by a months-long social-engineering campaign targeting contributors, executed by DPRK-linked hackers.
Importantly, none of our funds were impacted by the hack - our Market Neutral fund was not a counterparty to Drift and our Venture funds were not investors and did not hold DRIFT tokens.
As a result of the recent smart contract hacks, market participants are focused on risk premium associated with onchain yields - is the smart contract risk worth the reward?
The answer is: it depends. Asset selection is paramount, and real yields must be high enough to offset smart contract risk.
This is where RockawayX’s portfolio companies shine.
DeFi yields on average are below the risk free US t-bill rate. In stark contrast, RockawayX portfolio company @onrefinance, is delivering stable, diversified, and uncorrelated reinsurance yields to onchain investors.
OneRe is growing in this environment, steadily amassing AUM while paying >10% yields to onchain investors.
March 2026 crypto deal flow showed signs of life and was headlined by a pair of massive prediction market raises - @Kalshi's $1B round at a $22B valuation and @Polymarket's $600M raise - signaling institutional conviction.
Payments infrastructure was the busiest sector by deal count, with four Series A rounds closing alongside Mastercard's $1.8B acquisition of BVNK, while AI/crypto crossover deals (RoboForce, Gency AI, VeryAI) and tooling plays like Startale Labs ($63M) and Cryptio ($45M) rounded out the larger raises.
M&A activity was notably active beyond just BVNK, with Polymarket acquiring Brahma and GSR consolidating two smaller firms, suggesting that, alongside fresh capital deployment, the market is also entering a consolidation phase, which we see as healthy.
Regulatory progress continues to be uneven but directionally constructive. There’s a continued movement toward licensing and clearer supervision of exchanges/custody in multiple jurisdictions, and a push to legalize perps in the US, which, according to the CFTC, are “coming soon” as of statements made in early March.
The GENIUS Act, which was signed into US law last summer, requires federal agencies to finalize rules by 18 July 2026, with a full implementation by January 2027, or 120 days after the final rules are published.
The Act establishes a regulatory framework for payment stablecoins in the US, but still has several items that are open to implementation rule-making. These include the treatment of foreign issuers such as Tether, tokenized deposit accounts, and reserve asset diversification guidance, among others.
The US CLARITY ACT has visibly stalled due to shifting priorities in DC and a battle between the crypto and TradFi bank lobbies over stablecoin rewards. The central unresolved question is stablecoin policy design, specifically whether interest-bearing or reward-generating mechanics will be permitted, and under what conditions, as banks push back hard on provisions they view as a threat to their deposit base.
The US midterm elections are approaching, and DC insiders fear that the bill must make it to the Senate floor for a vote before May (see here and here), or else it will be overlooked in favor of US midterm elections.
Polymarket pricing for a 2026 passage has been variable, but sits at just 59% today, down from a high of 82% in mid-Feb.
We leave March cautiously optimistic. The tape has stabilized, flows are improving at the margin, and real onchain adoption continues to compound.
That said, the macro path is still hostage to geopolitics and its knock-on effects, and recent security events are a reminder that protocol risk has not been fully repriced.
Our base case is a grind higher with bursts of volatility, and that positive regulatory developments in the US will continue to compound and act as a tailwind for the industry.
We will stay selective as always, prioritizing the highest quality teams with defensible moat in high growth sectors at the forefront of DeFi innovation.
Reactions and replies to this article.
Silvio • 62K views
Ryan Watkins • 361K views
Steakhouse Financial • 1K views
Maria 🐸 • 323K views
Patryk • 10K views