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You made it to Friday. Congratulations!!
It's been a remarkable two weeks for those directly, or even tangentially, in the crypto industry. VCs, founders, memecoin traders, and airdrop farmers are all dancing around in a circle, singing kumbaya. I'd imagine that Deribit's early investors are pretty happy, too. Here's what happened:
Coinbase bought crypto derivatives provider Deribit last week for $2.9B - the largest M&A deal in crypto's history. This gives Coinbase a foothold in non-US markets, signals a widening of its institutional investor base and allows it to onboard and cater to more sophisticated retail investors.
Coinbase was in the news again this week, with perhaps an even bigger headline - that they are set to be included in the S&P 500, effective Monday, May 19th. Coinbase shares ripped 24% in after-hours trading on Tuesday to a market cap of $66B. Because the S&P 500 is a market cap-weighted index, and passive index funds like SPY and VOO are required to hold a proportional amount of every company in the index, we can do some back-of-the-napkin math. Index funds collectively hold about $10T in assets, and if Coinbase makes up roughly 15% of the S&P 500 by market cap, those funds will need to allocate about 0.15% ($15B) of their total assets to Coinbase stock. Once $COIN gets added on Monday, there will be $15B worth of automatic demand for the equity, as those funds have to purchase shares to match the index composition. That means that your boomer "Bitcoin is a scam" uncle who only invests in safe index funds will soon own a piece of Coinbase by proxy, since just about every pension fund, 401(k) and 401(k)-equivalent in the western world allocates a portion of its holdings to the S&P 500. The cherry on top of all of this is such - there can only be 500 companies in the index. One in means one out. Funny enough, the company getting bumped from the index is Discover, a boring web2 payments company. Crypto is replacing traditional payments, and it's playing out for the entire world to see.
Facebook/Instagram/Whatsapp parent company Meta announced that it is exploring the use of stablecoins for cross-border creator payouts, signaling a re-entry into crypto after abandoning the Libra project.
Robinhood is now building its own blockchain platform to allow retail investors in Europe to trade US-listed securities.
Fintech darlings Stripe and Ramp both are getting in on the onchain action, too. Stripe (via its recent $1B acquisition of Bridge) rolled out features allowing businesses in 100+ companies to hold, receive and send USD. Meanwhile, Ramp launched stablecoin-backed corporate cards for cross-border transactions.
Bitcoin surged back into the $100K club, reaching an all-time high of $105,000 earlier this week, with gains coming from Trump's trade deal announcements and increased institutional buying. Ethereum has climbed roughly 50% following a successful upgrade to the blockchain's scalability and privacy. Solana is also up, as the memecoin narrative continues to draw capital from other chains. Altcoins and shitcoins are having a heyday, too. It's a great time to be in the trenches.
The crypto industry is going through a glow-up phase - a period of positive and noticeable transformation in its appearance (how the underlying technology and its use cases are perceived by the general public and non-crypto natives), confidence (a wave of positive sentiment means that builders will want to go out and build cool things), and overall well-being (token prices, adoption and transaction volume). Crypto adoption is accelerating at a rapid pace, driven in large part by the involvement of high-integrity, well-respected companies like Stripe, Ramp and Meta. When these established Web2 giants publicly commit to building on crypto rails, it lends credibility and mainstream appeal to the technology, signaling that blockchains are not just a fringe experiment but a foundational layer for the next era of the internet. This kind of endorsement cuts through the noise of the crypto echo chamber and makes the technology more accessible, and trustworthy, for the general public. It's often more impactful than the efforts of even the most innovative web3 startups, as these legacy companies have the reach, brand equity and customer trust needed to bridge the gap between early adopters and the mainstream.
The first law of thermodynamics says that energy cannot be created or destroyed, only transformed. The energy and excitement around Web3 has always existed, and while momentum may wax and wane along with market sentiment, it has never fully disappeared. Instead, it has evolved, shifting from the grassroots passion of early adopters to the institutional push we're seeing today. Now, this energy is being transformed from the top down, as established companies bring scale, credibility and practical use cases to blockchain technology, catalyzing a new phase of mainstream acceptance.
This is interesting because broader mainstream acceptance and net-new adoption, coupled with a friendly administration in the White House and elevated token prices, creates the ideal market setup for a new tech narrative to take over in crypto. We saw this with ICOs in 2017, DeFi in 2020, NFTs in 2021, and memecoins in 2024. Watch out for what's next, and be early.
Coinbase is the first crypto-native company (even though it is structurally centralized) to join the S&P 500. It won't be the last, and every other company on the index will use some element of crypto rails in the next decade to remain competitive. Invest in and allocate bandwidth towards what the markets will wake up to - the foundations of a more permissionless and programmable internet economy.
I've always been been directionally bullish on blockchain technology, but it was only during writing this that I realized just how early we still are. Sure, there are cohorts like OG cryptopunks collectors or those who bought Bitcoin when Satoshi released the whitepaper in 2008, that were the earliest adopters, but it is still relatively early when you look through a broader lens. We're still in the primordial phase of blockchain technology's evolution. The foundational layers are just now being laid, and the breakthroughs that will transform industries, reshape economies and redefine the way we interact with the digital world are ahead of us. The greatest era of value creation is just getting started.
Think bigger, and step your foot on the gas.
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