BTC Wealth Report – Issue 02

👋 Welcome to BTC Wealth – Issue 02

Bitcoin popped over the weekend. Gold’s ripping — sound money trade is ON.

Here’s what we’re watching this week:

• A minor rebound in ETF inflows — but it’s still BlackRock carrying the bid

• Fed rate cut odds holding steady, even as Trump turns up the heat

• Crypto lending quietly rebuilding, with DeFi leading the charge

• Why Bitcoin lending still matters — and how yield always comes with leverage

Let’s get into it.

🟠 Bitcoin ETF Tracker: A Glimmer, Not a Reversal

ETF flows picked up slightly this week — but it’s not a trend shift yet.

BlackRock posted net inflows every day, adding 2,206 BTC over the week — the first full-week streak in months. But the strength ended there.

Fidelity sold (–1,463 BTC)
ARK continued bleeding (–1,187 BTC)

Across the board just +194 BTC for the week.

This pattern isn’t new: IBIT trickles in, while the rest continue to unwind. TradFi flows remain closely tied to broader equity sentiment, and with the S&P struggling, there’s little urgency to rotate into Bitcoin.

Until risk appetite returns in size — or macro conditions ease — don’t expect serious flow momentum.

🌐 FedWatch: The Market’s Still Expecting a Cut — Just Not Yet

Markets are still pricing in a rate cut — just not on Trump’s timeline.

He’s ramping up pressure on the Fed, calling Powell “Too Late and Wrong,” labeling the latest report a “complete mess,” and saying “Powell’s termination cannot come fast enough.”

Meanwhile, FedWatch shows the market is expecting a move — but not urgently:

• 12% chance of a cut at the May meeting

• 61.5% chance of a 25bps cut in June (to 400–425bps)

• 30.4% expect no change

• Just 8.1% are pricing anything deeper

The ECB has already cut seven times. Trump wants the Fed to follow.
For now, the bond market is still betting Powell holds the line.

🏦 The State of Crypto Lending

CeFi collapsed. DeFi adapted. Institutions are circling back.

Galaxy just released one of the most comprehensive reports we’ve seen on crypto lending

Here’s what stood out:

Total Market Size: Still Below Bull Market Highs

• The crypto lending market peaked at $64.4B in Q4 2021.

• As of Q4 2024, it’s rebounded to $36.5B, still down 43% from the peak.

• Most of the recovery has come from DeFi, not CeFi.

DeFi Is Dominating the Comeback

• Onchain borrowing is up 959% since the Q4 2022 bottom.

• DeFi now accounts for 63% of all crypto lending (excluding CDP stablecoins) — up from just 34% during the last bull market.

CeFi Is Consolidating (and Evolving)

• The CeFi market shrank 82% from peak to trough.

• But as of Q4 2024, it has recovered to $11.2B, with Tether, Galaxy, and Ledn now controlling 89% of CeFi lending.

• Traditional institutions like Cantor Fitzgerald and Fidelity are quietly stepping in, using ETPs and onchain credit infrastructure.

💰 Why Bitcoin Lending Matters

Leverage and Speculation

In bull markets, leverage is what fuels upside reflexivity — price goes up, collateral increases, more borrowing happens, and the whole thing compounds.

In bear markets or deleveraging phases, like late 2022 through early 2023, these markets disappear. Lending shrinks, basis collapses, and volatility drops. That’s what Galaxy’s report captured: a lending market that’s coming back, slowly.

Unlocking Liquidity Without Selling

For long-term holders lending provides a crucial financial tool: the ability to extract liquidity without selling.

This is particularly useful for:

• Avoiding capital gains tax

• Retaining exposure to upside

• Funding expenses or investing in other assets without giving up BTC

Yield Products

Bitcoin is a bearer asset — it doesn’t yield anything on its own.
And yet, the appetite for yield hasn’t gone anywhere.

Whether it’s to enhance returns or fund real-world spending, many Bitcoiners — especially those with size — are still looking for ways to generate income from their holdings.

But here’s the structural truth:

From CeFi “interest accounts” to structured products like MSTY, yield isn’t magic — it’s compensation for risk.

When lending dries up, these products disappear.
But they’re starting to come back.

As borrowing picks up again, so does the appetite — and infrastructure — for yield.
The two are inseparable.

That’s your BTC Wealth Report.

Thanks for reading.

- Thomas Fahrer