The Ledger: Bitcoin Tops $5000, Elon Musk for Dogecoin CEO, Charles Hoskinson

I’ll admit it. When I woke up in the middle of the night last week to a flurry of notifications that Bitcoin had surged 23%, to over $5,000, in a matter of an hour, I was skeptical.

I scanned Twitter. The first thing I saw was a tweet from the CEO of one of the world’s largest crypto exchanges, Binance, proclaiming himself “honestly clueless.” CZ, who was arguably in the best position to know what was going on, asked his followers, “Anyone know any news?”

The next thing I noticed: An account, @BTCWonderland, noting that there was a “rumour spreading on Chinese social media” that “the SEC is going to pass Bitcoin ETF.”

In that tweet, which featured a screenshot of a WeChat discussion (translated by my colleague Lucinda Shen), someone named Aaron says, “Just received the newest reliable news. The U.S. SEC has just approved a Bitcoin ETF [clapping face emojis]…Last month I just added more leverage to buy up BTC (victory signs). This is freaking perfect timing.”

I did another search, and quickly came across a tweet of an obviously fake screenshot impersonating the official account of the U.S. Securities and Exchange Commission. “Our Office of Compliance and Examinations has approved one of two Bitcoin ETF applications,” the fake tweet read–as if the SEC actually tweeted clickbait-style blind items (click to find out which one it approved!). Similar fake tweets were showing up on Facebook.

I checked the time. It was still April Fool’s day on the West Coast–though in China, where rumors were apparently spreading, it was well into the afternoon of April 2nd. Was it possible this rally was just the result of a joke, lost in translation? There was even an actual joke article spreading quickly across social media, headlined, “SEC Drops the Bomb: Approves Bitcoin ETFs.” Although the article was labeled as a joke, that didn’t stop some international blogs from picking it up as news.

Of course, if Bitcoin buyers were bidding up the price based on a misunderstanding, then the price should just as quickly deflate. That didn’t happen. While Bitcoin initially gave back some of its gains, it’s currently bouncing up again, topping $5,300 earlier today and now hovering just below that level. That’s more than $1,000 above where Bitcoin traded last Monday.

And still, no one can really put their finger on what’s driving this rally. Chris Burniske, a partner at the venture capital firm Placeholder whose book Cryptoassets applies economic principles to cryptocurrency, told me he had “little insight beyond massive buys in Asia” on the first night in April, which may have set off a chain reaction. Reuters reported there was a $100 million Bitcoin order that came in overnight. Other analysts read meaning into technical thresholds the Bitcoin price had surpassed, which might convince some investors to buy. Some observed that Google searches for Bitcoin had spiked around the same time–but it wasn’t clear if the searches were just a reaction to the rally itself, with people looking for a cause of the surge.

In the meantime, several top investors seem to be waiting and watching to see if this rally is the real deal before buying in. For now, Lewis Fellas, chief investment officer of Bletchley Park Asset Management, a U.K.-based crypto hedge fund, says he’s “also skeptical.” If this does turn out to be a sustained leg up in the Bitcoin price, it could mean the joke’s on us, the skeptics who sat on the sidelines. But for the many who bought into the last big rally in late 2017, only to lose their investments last year, some caution might pay off.

HAMPTONS, HERE WE COME

We’re now just a little more than two months out from Fortune’s inaugural Brainstorm Finance conference in Montauk, N.Y., which The Ledger team is co-chairing. Our stellar lineup just keeps growing, and now includes CEOs including Circle’s Jeremy Allaire, Mastercard’s Ajay Banga, Western Union’s Hikmet Ersek, Clovyr’s Amber Baldet, and many more. You can apply to attend here, or join us via the livestream in June.

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Jen Wieczner
@jenwieczner
jen.wieczner@fortune.com

DECENTRALIZED NEWS

To the Moon… PayPal makes its first blockchain investment. Japan births a cryptocurrency unicorn. VCs have invested more than $334 million in blockchain companies so far this year. Crypto startup Celo raises $30 million. More banks are testing blockchain for home sales. Private jet tokens escape SEC oversight. Messari launches CoinMarketCap alternative…with slightly lower Bitcoin price.

…Rekt. Wall Street’s big entry into crypto hasn’t materialized. Goldman Sachs isn’t interested in investing in some of the hottest fintech startups. SEC issues guidance on digital assets, but delays decision on two Bitcoin ETFs. Canadian Mounties seize Land Rovers in ICO crackdown. Bithumb hacked by suspected insider.

BALANCING THE LEDGER

Click to watch?

On the latest episode of Balancing the Ledger, we caught up with Charles Hoskinson, the Ethereum co-founder who now runs Cardano. He told us how he’s trying to make that blockchain better than Bitcoin and Ethereum, his hiring spree in Ethiopia, why he thinks decentralization can succeed, and more.

MEMES AND MUMBLES

Doge to the moon? Dogecoin, the cryptocurrency that began as a joke, took a Twitter poll last week–fittingly, on April Fool’s Day–on who should be its CEO. Elon Musk, the CEO of Tesla, won by a landslide, beating out candidates including Ethereum creator Vitalik Buterin and Litecoin creator Charlie Lee.

While Musk is busy being CEO of Tesla, SpaceX, Neuralink, and The Boring Company (among his many endeavors), he also embraced his new role:

It’s not the first time Musk has tweeted about cryptocurrency, though it appears to be the first time he’s tweeted about Dogecoin, as well as his first crypto tweet since he settled with the SEC over, well, his tweeting. Luckily, this new job likely won’t take up much more of Musk’s time: Dogecoin probably wasn’t serious about hiring a CEO.

FOMO NO MO’

Andreessen’s pivot. In Fortune’s October issue last year, my colleague Robert Hackett profiled Katie Haun, a partner at Andreessen Horowitz overseeing cryptocurrency investments. In the story, Hackett quotes one of the VC firm’s co-founders, Ben Horowitz, predicting, “It’s possible that most of what we do ends up being crypto. Then we’ll probably have to reconsider how we’re organized.”

Fast forward six months later, and Andreessen Horowitz has indeed decided to reorganize–trading in its venture capitalist designation and registering instead as a financial advisor, according to a cover story in the latest issue of Forbes. As a financial advisor, the firm will be free of some restrictions that limited how much it could invest in crypto as well as how it could operate, as described in this excerpt:

Which brings us to crypto. Last year the firm raised a $350 million fund in the up-and-down area. But until recently partners Chris Dixon and Katie Haun would meet in private with Horo-witz, their fund technically a separate legal entity from the rest of the firm. That meant they had different emails addresses and their own website, because of legal constraints on funds that register as traditional VCs. While Andreessen Horowitz was an early investor in crypto marketplace Coinbase and was one of many firms to catch cryptocurrency fever in 2017, it’s one of the few that doubled down even after the price of bitcoin and ether flatlined. SEC regulations consider such investments “high risk” and limit these stakes, as well as secondary purchases and fund or token investments, to no more than 20% of a traditional VC fund.

We hope you enjoyed this edition of The Ledger. Find past editions here, and sign up for other Fortune newsletters here. Question, suggestion, or feedback? Drop us a line.