Weekly Top Stories - 05/01/26

Welcome to Galaxy Research's Weekly Top Stories. Subscribe to get this newsletter delivered to your inbox every Friday morning.

In this week's edition, Thad Pinakiewicz previews the Kevin Warsh era at the Fed; Alex Thorn breaks down a mega-merger of Bitcoin-native companies; and Lucas Tcheyan takes a deep dive into Google’s updated distributed AI training framework and its implications for decentralized training.

Got feedback on this newsletter? Email [email protected]. We’d love to hear from you.

Market Update

The total crypto market cap stands at $2.65tn, down 0.68% from last week (when it stood at $2.66tn). Bitcoin's network value is 4.88% of gold's market cap. Over the last seven days, BTC is down 1.23%, ETH is down 1.61%, and SOL is down 2.14%. Bitcoin dominance is 58.60%, up 20 basis points from last week.

Warsh This Space: New Chair to Change Fed’s Comms Style

After clearing Senate Banking on a 13-11 party-line vote, Kevin Warsh looks set to become the next U.S. Federal Reserve chair before Jerome Powell’s term ends on May 15. The bigger market story is not the personnel win for Trump, but the possibility that the Fed is about to change its voice. The institution may soon sound different, even if the central bank’s policy rate stays where it is for a while.

Warsh has been arguing for something close to a reset at the Fed: less reliance on the post-Bernanke-era policy norm of consistent messaging anchored in the expectation theory of inflation management. Warsh wants fewer ritual reassurances, less elaborate forward guidance, less staged certainty, and a more direct critique of the pandemic-era central bank as too expansive, too tolerant of inflation, and too willing to use its balance sheet as a catchall policy tool. If Powell’s Fed tried to reduce uncertainty by narrating the path ahead, Warsh seems far more comfortable leaving markets with less script and more inference.

His path to confirmation briefly stalled for reasons that had less to do with monetary theory than with institutional optics. Democrats questioned whether a Trump-backed chair could credibly preserve Fed independence, and those concerns crossed party lines when Sen. Thom Tillis (R-NC) refused to move the nomination through the Senate Banking Committee while the Justice Department’s investigation into Powell was still open. Once the DOJ dropped the Powell probe, Tillis stepped aside and the process resumed, eventually resulting in Warsh’s successful vote out of the Senate Banking Committee on Wednesday. Sen. Elizabeth Warren (D-MA) noted that Warsh’s vote was the first party-line Fed Chair nomination vote in the committee’s history.

Powell, meanwhile, still leads a central bank that has held rates steady even as inflation refuses to climb back down to the Fed’s 2% target. The labor market remains firm, energy prices are rising again, and the final stretch of disinflation looks less secure than it did a few months ago. That leaves the Fed in an awkward position: patient, but not comfortable; on hold but not convincingly done. The near-term risk is less an imminent hike than a market that has to start treating that possibility as real again.

Powell announced on Wednesday that he will remain on the Federal Reserve Board as a governor after his chairmanship ends, which itself could have implications for the board’s composition. Warsh is not taking Powell’s governor seat, he’s filling Miran’s expiring seat, and Powell’s governor term technically runs until January 2028.

In April, Trump told Fox Business “I’ll have to fire him” if Powell didn’t leave the board, though White House Press Secretary Karoline Leavitt walked that back this week, saying Trump “will be satisfied once Kevin Warsh is confirmed as the Fed Chair.”

Our Take

For crypto, this leadership shift matters. Crypto can live with a lot, but it tends to struggle when money is restrictive and policy becomes harder to read. The last truly spectacular crypto bull market came during the depths of COVID, when rates were floored and Americans received stimulus checks in the mail. Crypto benefits from the rising tide of loose monetary policy that tends to lift asset prices when rates are low and money is cheap. Conversely, in a macro environment where monetary policy is more restrictive and less clearly explained, crypto faces structural headwinds.

Powell’s style, even when hawkish, usually narrowed the range of expectations. A shift in style under Warsh could widen it deliberately. And in a world where employment is still firm and energy prices are keeping inflation high, the short-term setup for crypto looks tougher: policy uncertainty is back, the near-term outlook is hawkish, and markets may have to adjust to trading without the Fed’s macro narrative every six weeks. - Thad Pinakiewicz

Tether Proposes Business Combination for Twenty One (XXI)

Tether Investments proposed a series of mergers that would combine Twenty One Capital (NSYE: XXI), Bitcoin financial services firm Strike, and Bitcoin mining platform Elektron Energy under single public vehicle. In a press release issued on Tuesday, April 29, Tether Investments (the independent investment arm of stablecoin issuer Tether, also XXI’s majority shareholder) announced that it intends to vote its shares in favor of 1) a merger between XXI and Strike and 2) a subsequent merger of that combined entity with Elektron Energy. XXI separately filed a Form 8-K on Wednesday morning under Items 7.01 and 9.01 (Reg FD), furnishing the press release, a deck from CEO Jack Mallers' Bitcoin 2026 conference presentation, and the full transcript of his remarks. No transaction terms, exchange ratios, governance arrangements, or timelines have been disclosed.

Mallers delivered the news during the closing keynote address at the Bitcoin 2026 Conference in Las Vegas, the same speaking slot he occupied at Bitcoin 2021 in Miami when he announced El Salvador's adoption of Bitcoin as legal tender. The conference itself, by all accounts a successful event and one of the largest Bitcoin gatherings of the year, was hosted by BTC Inc, a subsidiary of Nakamoto Inc. (NASDAQ: NAKA), another Bitcoin treasury company that has itself pivoted toward an operating-business model (more on that below).

According to the Tether Investments press release, Strike, founded by Mallers, is a global Bitcoin financial services company offering brokerage, custody, payments, and Bitcoin-backed lending in more than 100 countries, while Elektron Energy, led by founder and CEO Raphael Zagury, manages approximately 50 EH/s of mining capacity (roughly 5% of the current Bitcoin network) with all-in production costs reportedly below $60,000 per BTC and over 5,500 BTC mined across its managed portfolio. (For comparison, MARA reported ~60 EH/s of energized hashrate at its most recent monthly update, CleanSpark reported a 50.0 EH/s peak (47.3 EH/s average) for March, and Riot reported 42.5 EH/s deployed at the end of Q1.)

Mallers would remain CEO of the combined company, while Tether has recommended Zagury serve as President, pairing what it described as "Mallers' product, brand, and consumer Bitcoin leadership with Zagury's capital markets, operating, and execution experience." Notably, proposed combined-entity President Raphael Zagury is a central figure in ongoing parallel litigation between Swan Bitcoin and Tether in California and U.K. courts, in which Swan alleges that Zagury and other former Swan executives conspired with Tether in 2024 to expropriate Swan's bitcoin mining joint venture.

Alongside the merger proposal, Mallers used his Bitcoin 2026 keynote to announce a series of Strike product updates that read as a preview of what an integrated XXI/Strike platform would offer: a new $2.1 billion credit facility from Tether to finance Strike's Bitcoin-backed lending book, a new "Volatility Proof Loans" product allowing borrowers to pay a fee to opt out of liquidation on price drawdowns, the publication of Strike's first lending proof-of-reserves report (with planned quarterly external audits), segregated on-chain collateral addresses for larger loans through Strike's private client desk, and a reduction in Strike's lowest Bitcoin-backed loan rate to 7.49%. The combined entity, Tether wrote, would integrate "Bitcoin treasury, mining, financial services, lending, capital markets, and strategic consolidation into one integrated platform." XXI shares closed down 1.7% at $7.83 on Tuesday but rose roughly 8% after hours on the news. XXI currently holds 43,514 BTC, making it the second-largest public corporate Bitcoin holder behind Strategy.

Our Take

The pure-play digital asset treasury (DAT) trade is on longer working for most and DATs are responding by bolting on operating businesses. (We wrote about this trend in a report two weeks ago). When XXI was first announced in April 2025, the pure-play bitcoin treasury vehicle was the hottest structure in crypto capital markets, with most DATs trading at sustained premiums to bitcoin NAV. That trade has decisively unwound. A growing share of DATs, including Strategy itself at times, now trade at or below 1.0x mNAV, and XXI itself listed at a $10 PIPE price in December and has drifted lower since.

The strategic logic of this week's announcement is straightforward: with the pure-play DAT structure no longer commanding a premium, controlling shareholders are converting their treasury vehicles into operating companies that can generate cash flow, justify a multiple on something other than BTC-per-share growth, and compound bitcoin holdings through retained earnings. There's a notable juxtaposition in the fact that the Bitcoin 2026 Conference, the venue for this week's announcement, was itself hosted by Nakamoto's BTC Inc subsidiary, acquired in February 2026 as part of Nakamoto's own pivot toward an operating-business model (though one that Nakamoto had telegraphed from the beginning).

Mining and exchange/financial services have historically been the two highest cashflow, most durable Bitcoin-only business models, so it is no surprise these are the verticals XXI is targeting first. Strike, and others) have proven the most durable customer-facing businesses in the space. Strike is profitable, regulated in dozens of jurisdictions, and operates one of the strongest brands in Bitcoin-only consumer financial services; Elektron is apparently among the largest private miners globally. Bringing both under XXI creates a fully vertically integrated stack from energy to coin to credit, financed by a $2.1 billion Tether lending facility. Mallers sits on both sides of the Strike transaction and Tether sits on both sides of Elektron, so the board will need a special committee, fairness opinions, and likely a majority-of-the-minority vote to get this through cleanly.

Most importantly, this transaction underscores how rapidly Tether's empire is expanding, and how XXI is increasingly serving as Tether's onshoring vehicle into US public markets. When we covered the original XXI launch in April 2025, Tether contributed roughly 36,210 BTC alongside Bitfinex and SoftBank to seed the company. CEO Paolo Ardoino disclosed at Bitcoin 2026 this week that Tether now controls more than 140,000 BTC, while USDT circulation has climbed to roughly $189 billion, generating substantial revenue from US Treasury reserves that Tether has directed toward bitcoin, energy, AI, biotech, payments, and now mining (Elektron) and financial services (the Strike credit facility). Until now, almost all of this has been held privately by an El Salvador-domiciled investment vehicle, opaque to public-market investors and outside the reach of US securities laws.

By rolling Elektron and Strike into a US-listed, NYSE-traded vehicle, Tether is effectively migrating significant pieces of its operating empire onshore into a regulated, audited, US-reporting structure. A combined XXI/Strike/Elektron, capitalized with 43,500+ BTC, ~50 EH/s of hashrate, 100+ country distribution, and a $2.1 billion lending facility, would arguably become the most strategically significant publicly traded Bitcoin-only company other than Strategy, and unlike Strategy it would have meaningful operating cash flows alongside its treasury. – Alex Thorn

Google’s DeepMind Releases Distributed Training Framework as Compute Crunch Deepens

On April 23, Google DeepMind released Decoupled DiLoCo, a new approach to training large AI models across multiple data centers connected over standard internet bandwidth rather than the exotic networking inside a single supercomputing facility. In a real-world test, DeepMind trained a 12 billion-parameter model across four U.S. regions and reported that the run completed more than 20 times faster than conventional methods, with effectively no loss in model quality.

The architecture works by breaking a training run into independent "islands" of compute that sync periodically rather than in lockstep. The result is a system that tolerates failed nodes, mixed hardware generations, and the latency of the open internet. These are conditions that have historically made distributed training impractical. For a deeper dive into the underlying technology and training mechanisms used in decentralized research, refer to Galaxy Research’s September report on Decentralized AI Training: Architectures, Opportunities, and Challenges.

The release comes as supply constraints compound across nearly every layer of the AI hardware stack. The Wall Street Journal reported Tuesday that Meta is extending some server lifespans by a year to manage a memory shortage expected to persist through 2027, and Samsung executives told analysts Thursday the gap will widen further next year. Leading AI supply-chain research firm SemiAnalysis reports that rental prices for Nvidia’s H100 GPUs are up ~40% since October and all new Blackwell capacity through September is already booked. The strain has even reached the model layer: the White House told Anthropic this week it opposes expanding Mythos to 70 additional organizations, with officials reportedly concerned Anthropic doesn't have enough compute to serve new clients without degrading the government's own access.

Our Take

DeepMind's release is the latest technical public datapoint in a quiet shift away from the assumption that frontier training must happen inside one tightly coupled building. Microsoft opened what it calls its first "AI superfactory" in November 2025, connecting facilities in Atlanta and Wisconsin via 120,000 miles of dedicated fiber explicitly designed to train models across geographically distant sites as a single distributed supercomputer. As far back as 2024, OpenAI also began pursuing distributed methods to coordinate training across its Stargate campuses.

For crypto, the DeepMind release validates an architectural direction that decentralized AI projects have been pushing for years. The original thesis behind networks like Prime Intellect, Nous Research, Gensyn, Bittensor, and many others was always gated by a physics problem. Indeed, many of the leading decentralized training projects have benefited from the work DeepMind is doing, incorporating their own versions of DiLoCo (such as Sparse DiLoCo and OpenDiLoCo) that innovated in areas like communication overhead. The results are starting to show.

In March, Bittensor's Templar subnet trained Covenant-72B, a 72B-parameter model run across more than 70 globally distributed Nvidia B200 nodes over commodity internet. The algorithm used, SparseLoCo, descends directly from DeepMind's original DiLoCo work and the training run was even cited in DeepMind’s technical paper.

The important distinction here is between distributed and decentralized training. Distributed training refers to models trained across geographies but by permissioned entities. Decentralized training opens that participation to anyone, coordinated through a permissionless, incentivized network.

Distributed training is a prerequisite for decentralized training, but decentralized training introduces a host of other issues. Protocols need to verify that contributors are doing the work they claim, defend against poisoned updates and adversarial participants, and design token incentives that hold up over time. Just weeks after Covenant-72B was trained, the founder of the team behind it dumped his tokens following a dispute with Bittensor's leadership, leaving tokenholders zero'd, a clean illustration that the algorithms have outpaced the incentive layer.

The stakes are larger than they appear from a research paper. Frontier AI is on track to be one of the most concentrated industries in modern history with a handful of companies controlling the models and sitting on multi-year GPU offtake agreements that restrict access to the best resourced. Decentralized training is one credible architectural alternative that can both alleviate hardware supply constraints and access. - Lucas Tcheyan

Other News

Ⓜ️MegaETH launches long-awaited MEGA token

💊Pump.fun burns $370m in PUMP, commits 50% of future revenue for burns

📱Meta rolls out stablecoin payments four years after Libra’s demise

📈Securitize partners with Computershare to tokenize U.S. stocks ...

🗳️...while Ondo and Broadridge enable proxy voting for tokenized stocks

💸PayPal reorgs into 3 business units, including “payment services and crypto”

♊Winklevoss twins’ Gemini gets derivatives clearing license from CFTC

🇺🇸U.S. national debt surpasses GDP for first time since WWII

🥃Trump to lift tariffs on scotch whisky after king’s U.S. visit

Charts of the Week: Aave’s (Partial) Return to Normal

In the wake of the $290 million rsETH exploit, utilization rates for stablecoins and WETH on Aave were pinned to 100%, meaning all assets supplied to the application had been borrowed. This held borrow rates unusually high and left no liquidity for users to freely withdraw their assets from the market.

Over the last week, however, utilization rates on USDC and USDT began to normalize and are only marginally over their target utilizations (the utilization rate at which the market is considered to be in equilibrium). A boost provided by the Aave bailout, which included stablecoin deposits by a number of organizations, has contributed to reducing the pressure on Aave markets.

As of Ethereum block height 24994396 (April 30, 2026, at 17:23:59 UTC) the utilization rate of USDC was back down to 93.03%, slight above its target rate of 92%.

At that same point in time, the utilization rate of USDT was down to 92.98%, a hair above the target rate of 92%.

By contrast, the utilization rate for WETH remains elevated at 99.16%. WETH is commonly used in looping strategies that give users leveraged exposure to the Ethereum staking rate. These trades become uneconomical and users close their positions when the borrow rate exceeds the Ethereum staking rate, as is now the case. With the rsETH market frozen (effectively freezing a block of borrowed WETH used for rsETH-backed looping trades) and users closing their uneconomical positions, the utilization is stubbornly elevated. – Zack Pokorny