GM! A VanEck crypto fund manager agrees with us: This is the year of Bitcoin.

Today's newsletter is 993 words, a 3½-minute read.

🥑 1 big thing: Hunting for alpha post-halving

Van Eck's Pranav Kanade. Photo Illustration: Natalie Peeples/Axios. Courtesy photo

Pranav Kanade, portfolio manager of the VanEck Digital Assets Alpha Fund, wants to generate excess returns by not following the crowd and by keeping an eye on the whales, Crystal writes.

The big picture: The theme this year is Bitcoin, not Ethereum nor altcoins, according to Kanade.

  • Post halving, he said Bitcoin layer 2s have the potential to take the spotlight from Ethereum layer 2s, referring to blockchains built on top of the main networks.

Bitcoin is having a bit of a renaissance moment with folks trying to expand the network beyond digital gold, he said.

  • 🐳 "There are, like, 20-plus Bitcoin layer 2s that are coming to market," Kanade explained, adding, "A lot of these projects are backed by venture funds and exchanges out of Asia."
  • Transaction revenue accrues to the miners, not bitcoin holders, Kanade noted. "As people transact on those layer 2s, the value of that will theoretically flow to Bitcoin layer 2 tokens." (And their holders.)

Reality check: There are those who doubt that Bitcoin layer 2s will outperform Ethereum layer 2s because of how they're designed.

Zoom in: VanEck's Digital Assets Alpha — a private fund open only to qualified purchasers — aims to be invested in 10 to 30 tokens, plus stocks linked to crypto.

  • 🤫 Kanade won't tell us what's in it but tells us what he thinks about to give us a taste of what might be in his secret sauce.

Altcoins look hard to navigate because of the implied dilution of tokens launched in the last year, he noted.

  • The gap between their collective fully diluted capital and their current market cap is around $200 billion, according to Kanade. That's a sizable amount of looming supply, representing a third of the overall $600 billion market cap for altcoins excluding BTC, ETH and stablecoins.
  • It won't all hit at once. Kanade said: "It's probably going to be at a cadence of $2 to $3 billion per month."

🐋 Who owns those tokens matters in this moment, because VCs appear to be in exit mode, Kanade said.

  • "[VCs] have to distribute back to their LPs in order to raise their next fund," he explained. "So if we see this supply overhang, that keeps us away."

By the numbers: The Digital Alpha Fund is not for everyone... with a minimum investment of $1 million.

  • It also charges a 2%/20% management-performance fee.

👴 2. Charted: The biggest Runes token so far

Data: CoinGecko; Chart: Axios Visuals
Data: CoinGecko; Chart: Axios Visuals

The biggest market cap for a token created through Bitcoin's new Runes standard so far goes to SATOSHI•NAKAMOTO, a token named after the pseudonymous creator of Bitcoin itself, Brady writes.

By the numbers: Its market cap already cracked around $80 million (it's around $66 million at press time), with a supply of 21 million tokens (that's how many bitcoins there will eventually be in the world, too).

  • For context, the market cap of bitcoins didn't break $80 million till mid-2012, more than three years after the first coin was mined.

🐣 3. Some leading Runes

Illustration: Shoshana Gordon/Axios

Runes are new, and understanding precisely what's going on with this developing market is tricky at this point, Brady writes.

Why it matters: Prices are going to move fast in this nascent space, and a lot of money will be made (and lost) by the brave (or foolhardy) investors who step in early.

By the numbers: In its first few days, Runes transactions are holding steady at about a half-million per day, according to Dune Analytics (though it's really accelerating today, already).

It appears, based on the limited data available about this new category, that these are the three leading Runes, three days out from the protocol's launch:

  • SATOSHI•NAKAMOTO, (👆). It seems to be the biggest and purely speculative.
  • WANKO•MANKO•RUNES, is the No. 2. This one is inspired by a bit of a sketch that Casey Rodarmor, the inventor of Runes and Ordinals, wrote on his blog. It's an idea for an Anime show. You... don't want to know.
  • MEME•ECONOMICS (MEMERUNE) is No. 3. This seems to be another token created mainly for speculation. It still hasn't minted out all its tokens yet.

Catch up fast: Runes is a protocol for launching tokens on Bitcoins, without using Ordinals technology. Runes rely on how Bitcoin sends messages, which is called unspent transaction outputs (UTXOs).

Zoom out: In terms of trading volume, other Bitcoin ecosystem tokens still have more volume.

What's next: Centralized exchanges should start listing more Runes soon. Gate.io has already begun to do so, and others should soon follow suit.

  • Getting onto exchanges dramatically increases the liquidity for crypto assets, so it's always a price boost.
  • When Binance lists some Runes, that will be a big day for the first ones it picks.

🎥 4. Catch up quick

Illustration: Gabriella Turrisi/Axios

🛢 Venezuela is shifting to tether (USDT) to sell oil while evading U.S. sanctions. (Reuters)

🤝 SBF has agreed to help FTX creditors go after celebrity promoters, in exchange for settling a lawsuit against him. (CoinDesk)

👥 Two SEC lawyers resigned after a judge sanctioned the agency for "gross abuse of power" in March. (Bloomberg)

👩‍⚖️ Crypto advocates filed a lawsuit today over how the SEC defines a broker. (Blockchain Association)

🪙 5. What we're watching: Epic sat sale

Screenshot: @ViaBTC (social media)

ViaBTC, the Bitcoin mining pool that won the first block after the halving, is now auctioning one one-hundred-millionth of one of the bitcoins it won in that block reward, Brady writes.

  • The auction for Sat 1,968,750,000,000,000 will run till Thursday. The current bid is at 2.3 BTC (over $150,000).

Context: A "sat" is shorthand for a "satoshi," the smallest unit of a bitcoin (one bitcoin equals 100 million satoshis).

The intrigue: As a mining pool, rewards from income off block rewards and transaction fees are shared with pool members pro rata based on hash power they put into the pool.

  • The Block has reported that the pool hasn't yet distributed the epic transaction fees it got from the halving block yet.

What we're watching: ViaBTC is also being unclear about what it will do with the proceeds of the auction.

This newsletter was edited by Pete Gannon and copy edited by Carolyn DiPaolo.

Bitcoin is ticking back up ever so slowly. —C & B