April Summary

Macro and Markets

  • US markets have recovered Liberation Day losses and are essentially flat month over month on the back of tariff de-escalation, and strong tech earnings. Risk assets in the near term (Q2/Q3) will be driven by the Fed’s willingness to cut interest rates, the tax bill being passed and continued progress on trade negotiations before the Tariff extension deadline (July 8th).  

Crypto

  • BTC = Trading as a Gold + Risk Hybrid.  Heads I win / Tails I still win.  
  • Alts / Others = $Virtuals was the standalone outperformer in the alt market.

Regulatory News and Institutional Adoption

  • The Trump administration recently repealed the DeFi Broker rule which treated decentralised exchanges, where users buy or swap digital assets directly with one another, as brokers, subjecting them to onerous compliance requirements.  
  • In April 2025, Blackrock registered a new class of digital shares called “DLT Shares” for its $150 billion Treasury Trust Fund with the SEC in collaboration with BNY Mellon. Reminder: Blackrock already has $2.8bn of tokenized US Treasuries under security token BUIDL, and its Bitcoin and Ethereum Spot ETFs have $60bn and $2.3bn AUM, respectively.  

MSTR Copycats for BTC and SOL

  • BTC: MicroStrategy's NAV premium — the difference between its market cap and the value of its underlying BTC holdings—may be justified if the BTC Yield - i.e., growth rate in BTC per share exceeds the dilution from stock / convertible bond offerings (also has implicit assumption that over the long run BTC continues to strengthen versus USD).
  • SOL Micostrategy copycats have emerged, but have small market caps, and don’t trade heavily, with very low daily volumes. That there are many hats in the ring serves to further dilute the capital base. Unless these companies develop innovative investing or operating strategies which would make a right to their future cash flows compelling, we are skeptical the NAV premiums are sustainable over a long-term time horizon.    

OUR TAKE

US Market Recovery

In a V-shaped recovery, US markets shook off the early April tumult to end the month flat. As long-term investors, this is a reminder to us that short-term jitters and reactions to headlines can present buying opportunities in high-conviction positions.

What’s Driving the Recovery?

3 primary drivers:

I) Better messaging (More Pragmatic / Less Threatening)

II) A better messenger (Bessent) and;

III) Strong economic data

What’s Next After the V-shaped Recovery? Is There Another Shoe to Drop?

Negative “hard” data was unlikely to show up in Q1. First, Liberation Day and ensuing panic was in Q2 and, the market expected companies to front run tariffs in Q1 causing imports to surge, thereby shrinking Q1 GDP (which is why we rallied when that data came out).*

Ultimately, we are comforted that delivering on our mandate isn’t about timing short-term events. We monitor them for opportunities to increase positions in the best, most enduring crypto projects. To that end, we’ve got eyes on the following events in advance of July 8th, 2025, the Tariff Extension Deadline:  

I) Fed messaging at the FOMC

II) Tax Cuts and / or More Tariff De-escalation

III) Earnings forward guidance  

Powell will not cut rates in May, but investors will be on alert for a change in tone from “wait and see” to a willingness to slash earlier (Goldman Sachs still forecasts 3 cuts this year but with the first taking place in July rather than June).  

A more proactive approach is favorable for risk-on assets because “wait and see” increases the odds that cuts arrive after negative or recession-confirming economic data has already come out.  

Re: Forward Looking Guidance from Companies in Relevant Sectors -  

CEOs focus on their business performance, while staying cognisant of macro risks. Today, for startups, that amounts to ensuring sufficient runway (2+ years) to survive any (bearish) fundraising environment. For some, that means prudently reducing headcount and budgets based on scenario-planning. Ultimately, we think either:

  1. The labor market deteriorates in May and June, as more Companies err on the side of caution, then the Fed cuts rates in June, July and September, causing the yield curve to steepen and stocks to rally in Q3/Q4 (near term bullish for risk assets) or;
  2. The hard data deteriorates in Q3/Q4, Fed is behind the curve and curve steepens but stock multiples contract and markets do not rally until 2026 when Trump replaces Powell with a puppet Fed Chair (near term bearish for risk / bullish 2026).

On the tariffs; it’s unlikely that a deal with China is finalised before July 8th. However, the more deals the US can finalize ahead of that deadline, the more hope it gives the market for a positive outcome with China, which is also supportive for risk assets.  

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* GDP = C + I + G + (X-M) where C is consumer spending, I is business investment, G is government spending and (X-M) is exports – imports. Front running tariffs means imports surge, so (X-M) is negative, increasing the trade deficit and causing a decline in GDP.

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How Does This Impact BTC?  

In April, BTC traded like a gold / risk hybrid which presents a “heads I win, tails I win” opportunity moving forward - i.e., in risk off periods, where gold acts as a store of value and rallies, so does BTC, but if markets rally, BTC is a ‘risk-on’ darling.  

This does not mean that BTC is immune from drawdowns. During market shocks, it will sell off – in early April all assets including GLD were sold off to raise cash. However, BTC fell just as much as the S&P, but outperformed both the S&P and GLD during the recovery.  

We reiterate our bullish BTC view because we believe more investors are noting this gold / risk hybrid beta, which can become a self-fulfilling prophecy.  

Onto Tokens: What About Majors and Alts / “Others”  

Majors largely performed in line with their beta, and, with the exception of the AI token Virtuals (discussed below), alt coins continue to lag BTC and funding continues to be negative. Our prediction that once BTC breaks above $100K, alts will rally, has come to pass.  

Crypto Twitter has reignited the conversation surrounding AI agents and Virtuals Protocol. In the last 10 days, top Virtuals’ ecosystem tokens have risen between 30% and 185%+, and the total market cap of the ecosystem crossed the $2 billion threshold, rising ~70%. 

The primary driver behind the momentum was the recent update to Virtuals Genesis Launch. The Genesis Launch rewards users’ subscription points for interacting with the Virtuals ecosystem (trading agents, locking Virtual tokens, tweeting on socials, providing feedback etc.). The user can then “burn” these points in exchange for an allocation in the newest launched agents on the Virtuals platform at the lowest possible price. In essence, it promotes more active engagement for the Virtuals ecosystem and incentivises traders with the opportunity to buy low giving them upside.  

When Virtuals sold off in Q1 2025, it was because no one was launching agents, so the ecosystem metrics fell rapidly. The Genesis Launch provides a more sustainable supply restriction for the Virtuals token apart from simply being used to buy new agent launches. Now to gain access to new agents at the launch price, a user must continuously interact within the ecosystem (generating more fees for Virtuals LP pairs) and stay on top of upcoming launches to decide how they use their hard-earned points. More utility creates a better price and therefore better tech.  

The next step in the Virtuals ecosystem is for the Genesis agents to actually be useful and have their own utility separate and apart from giving traders the opportunity to buy low and later sell high when prices increase.  

One example of a useful agent was built by our portco and security audit firm, Ackee.xyz, which launched an autonomous agent called Wakehacker.ai. The agent continuously monitors deployed smart contracts across Ethereum mainnet and 15 other blockchains, including Optimism, Berachain, and Polygon, with additional networks coming soon. It leverages the Wake framework — an already battle-tested system known for identifying high and critical-severity vulnerabilities.

When the agent detects a flaw, it publishes a summary report on X and requests payment to disclose the full details. The agent operates on a utility-driven token model: every time it is paid, it automatically buys back and burns the $WAKE token, creating deflationary pressure.

In addition, $WAKE will serve as a gating mechanism for access to the private security terminal and for paying upfront security audit fees.

This is a compelling example of a self-sustaining, revenue-generating autonomous agent. By tokenizing its operations, anyone can gain exposure to the growing market of automated smart contract auditing — an area poised to expand rapidly as AI-generated code is quickly becoming the norm.

Regulatory Updates

Since being re-elected the Trump has made good on his campaign promises with regard to fostering innovation and establishing the US as the global leader in digital asset economy.  

We highlight some of the pro-crypto regulatory changes below:  

Institutional Adoption  

  • In April 2025, Blackrock registered a new class of digital shares called “DLT Shares” for its $150 billion Treasury Trust Fund with the SEC in collaboration with BNY Mellon, which will serve as the exclusive distributor and utilise blockchain technology to mirror share ownership records on a distributed ledger.  
  • By tokenizing shares of its Treasury Trust Fund, BlackRock aims to modernise financial infrastructure, offering enhanced transparency and potential efficiencies in the management and distribution of fund shares.

Industry Specific Insights and Analysis  

The Rise of MicroStrategy ($MSTR) copycats.

In the past month, we’ve seen a noticeable uptick in US companies emulating $MSTR’s business model of going public via a SPAC or reverse merger (or outright pivoting their business) and then raising capital from the public market to buy crypto, specifically BTC and SOL. Examples include Cantor Equity Partners ($CEP), Upexi ($UPXI) and Sol Strategies (HODL,CN), and DeFi Development Corp (fka Janover ($JNVR) among others). This is not just a US trend, as Metaplent (MTPLF) a Japanese hotel company, also holds ~400M of BTC on its balance sheet and plans to buy more.  

Why Is This Happening?  

  1. MSTR = Proof of Concept: MSTR’s BTC acquisition strategy has been so successful in boosting its stock price and market cap that it’s understandably the envy of other corporate treasuries.
  2. Larger Capital Pool of Buyers: Many institutions’ mandates prevent them from holding BTC directly, but they can buy stocks that are crypto proxies.  
  3. Opportunistic: Companies with dying or irrelevant business models that would not otherwise be able to raise capital are trying to jump on this trend to get financing.

Why Do These Offerings Have Demand?

I) NAV Premium – i.e., the amount by which a company’s market cap exceeds its BTC holdings and II) “BTC yield”.  

A simple example below explains these concepts. Assume the following:    

  • Initial BTC Holdings: 90,000 BTC  
  • Shares Outstanding: 10M share
  • Initial BTC / Share = .009 BTC / Share
  • Initial Stock Price = $500  
  • BTC $ = $50,000 / each  
  • Company Market Cap = 5 Trillion (10M shares * $500 / share)  
  • Company NAV = $4.5 Trillion (90,000 BTC * $50,000 / BTC)  
  • NAV Premium = 1.11x  

Convertible Bond (CB) Issuance: Company issues $1B in CBs paying a 5% coupon with shares convertible at 25% above the current market price.  

Dilution: If the stock price goes to $625, then $1B / $625 = 1.6M new shares are created.

BTC Purchase: Assume BTC is priced at $50K, then the CB proceeds would be used to buy another 20K BTC.  

Post Transaction:

  • New BTC Holdings = 110K BTC (90K + 20K)  
  • Total shares Outstanding post dilution = 11.6M (10M + 1.6M converted)  
  • New BTC / Share = .0095 BTC / Share (110K / 11.6M)  
  • Company Market Cap = $7.25T ($625 / share * 11.6M shares)
  • Company NAV = $5.5B (110,000 BTC * $50K / BTC)  
  • NAV Premium = 1.32x

Final Result: NAV Premium = 1.32x and 5.5% increase in BTC yield. How do investors benefit from this type of capital raise?  

From the perspective of the company’s investor, this structure NAV premium provides an opportunity to exit with a multiple on the underlying stock at (arguably) more than its worth.  

From a shareholder’s perspective, when you buy the stock you’re essentially long BTC, so as long as your BTC per share is growing net of the dilution from the stock / convertible bond offerings – loosely referred to as “BTC yield” – you are indifferent to the premium. Note, this capital raising model implicitly assumes that BTC appreciates over USD in the long run.  

From a convertible bond holder’s perspective, you have both upside exposure via conversion and downside protection via the coupon, making it an attractive investment.  

Risks -  

An investment in these vehicles assumes the NAV premium persists; that is not necessarily the case.  

The NAV Premium can be treated as the market’s perception of management’s ability to effectively grow holdings per share. One of the upstarts, CEP is backed by Tether, Bitfinex, and Jack Mallers of Stripe, and will launch with 42K BTC (or ~$4B at $95k / BTC). One could argue that experienced management teams with a large balance sheet should command a premium. If the market loses faith in management or the business model, that premium can disappear.    

The NAV premium can also be driven by structural factors. The SOL MSTR copycats ((JNVR, $UPXI and $HODL,CN (Sol strategies)) have a combined market cap < $1B and average daily volume (ADV) of < $1M – i.e., low float, thinly traded, small market caps.  Any outsized buys / sells from insiders, investors or retail will send these stocks material higher or lower, deviating from the underlying SOL holdings.

Will this work – can investors make money?‍

Re: BTC – Given Saylor’s success, BTC’s increasing acceptance as a “chaos hedge” asset and institutional acceptance of BTC as a treasury holding diversifier, we think well capitalised MSTR copycats such as $CEP will be good investments for buyers at NAV over the next 2-3 years (it’s already been a great trade going from $13 - $50 in a week) because BTC should continue to appreciate against the USD.    

Re: SOL – This is a bull market trade that could go south very quickly in a bear market and trade at a discount especially considering how volatile SOL is relative to BTC and the number of companies making this pivot – i.e., not everyone is Michael Saylor.  

For investors to exit with a substantial premium, the market cap and ADV of these stocks has to grow between 5x – 10x, retail needs to stay bidding, and investors can’t look for the exit at the same time (these SOL MSTR copycat stocks already don’t track SOL very well). As more of these copycats come to market, this gives buyers more options, diluting the capital pool making it harder for subsequent raises which should shrink the premium.  

As a historical reference, Grayscale’s Bitcoin Trust (GBTC), which once commanded a 2x premium to its underlying BTC holdings, fell to a 25% discount to NAV before the ETF was approved. The argument then goes that these companies can redeem shares and issue back SOL to investors (GBTC could not); still, this example shows no premium is guaranteed and SOL is a much more volatile asset than BTC. As long-term Solana bulls, this feels opportunistic and that a lot has to go right to capture the premium on exit. We prefer to invest directly into the SOL token, a time-tested and highly liquid asset.

CONCLUSION

  • Risk assets (US equity markets) in the near term will continue to be driven by tariff de-escalation and the Fed’s willingness and ability to cut in advance any deterioration in hard economic data (if any).  
  • Regardless of how risk assets trade we remain bullish on BTC given its trading like a gold / risk hybrid with convexity to the upside.  
  • Alts will follow BTC eventually, we continue to accumulate revenue generating alts which drive value back to the token.  
  • We are not bullish on SOL MSTR copycats and rather to continue to directly into SOL.

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The value of digital asset investments may fall as well as rise, and you may get back less than you originally invested. It is therefore important that you understand the risks involved before investing. This report represents RockawayX’s view at a point in time, and information included has been sourced from third parties, such as companies in RockawayX-managed portfolios. While these sources are considered reliable, RockawayX has not independently verified this information and makes no warranties regarding its current accuracy or suitability for specific situations. We may also take the opposite view/position from that stated in this report. This is because our view may change as facts or circumstances change.

This material constitutes general advice only and not personal financial product, tax, legal, or investment advice, and does not take into account the specific investment objectives, financial situation or individual needs of any particular person. We recommend consulting with your own professional advisers on these topics. Any mention of securities or digital assets is for illustration only and does not imply a recommendation or constitute an offer of investment advisory services. Furthermore, this material is not intended for use by current or prospective investors and should not be used as the basis for any investment decisions regarding funds managed by RockawayX. Any potential investment in RockawayX funds would be subject to documentation such as a private placement memorandum, subscription agreement, and other relevant materials, which should be carefully reviewed in their entirety. The investments or portfolio companies mentioned may not represent all investments made by RockawayX, and past results do not assure similar outcomes in future investments.

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