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Market Overview 📉
The crypto markets continue to tumble from the prior week, with Bitcoin (BTC) falling 3.6% this week. Meanwhile, altcoins have bled to new lows on TOTAL3 (the total crypto market cap excluding BTC and ETH) since February 2024. TOTAL3/BTC reached lows last seen in April 2021, signifying the extent of altcoins’ underperformance against Bitcoin.
Ethereum (ETH), on the other hand, had a slightly stronger showing this week, gaining 0.28% this week despite a market downturn. The conclusion of the SEC investigation into Ethereum 2.0 and progress in the ETH spot ETF S1 filings provided much-needed catalysts.
📌 The SEC concludes its investigation into Ethereum 2.0, which means that no enforcement action would be taken in regard to the sale of ETH as transactions of securities — Link
📌 Wallets controlled by the German government have moved $600M in BTC, selling around $195M in BTC and spooking the markets. The wallets still hold more than $3.05B in BTC — Link
📌 Bitwise submits their amendment to the spot ETH ETF S-1 filing, with analyst Nate Geraci expecting many others to follow suit in the week — Link
📌 Bernstein analysts raised Bitcoin targets to $200K by 2025, $1M by 2033, citing spot ETF flows — Link
Why does it matter?
Despite the positive catalyst stemming from the approval of the spot ETH ETF in late May, ETH has not had the run that BTC had leading up to its spot ETF launch, where BTC gained almost 90%. Despite the initial 33% surge from the approval news, ETH has since bled downwards amidst a wider market selloff. However, with the catalysts of a positive SEC decision regarding Ethereum 2.0 and the revisions on the ETH spot ETF S-1 filings, these tailwinds could provide ETH with the strength leading into the ETH spot ETF launch.
The total crypto market capitalization lost another 7.8%, about $80 billion, this week on the uncertainty stemming from the recent German government’s selling of BTC. With another $3B in BTC potentially to be sold, markets are spooked. Funding rates on coins on at least one exchange have gone negative, suggesting that short traders are aggressively trying to push prices down.
Despite the uncertainty, analysts from Bernstein turned more bullish, raising its BTC target to $200K next year. The report suggested that we are still early in the cycle and today's $60K is like June 2020's sub-$10K. Meanwhile, Bitcoin bull MicroStrategy purchased another $786M worth of Bitcoin.
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Narrative of the Week 📰
Despite the doom and gloom from the majority of altcoin traders, ETH beta coins did exceedingly well in the past week. Tokens such as LDO, CVX, ENS, RPL and CRV were some of the top performers, with CVX putting in a 70.1% move in just the past seven days.
📌 CVX saw its highest volume trading day on Binance with CVX/USDT spot trading volume reaching close to $32M while CVX perpetuals volume on Bybit hit $120M in a single day — Link
📌 ETH DeFi proves to be highly reflexive to ETH price action. A rise in ETH price results in increases in total value locked (TVL), revenues, project token values and yield, creating a flywheel for ETH DeFi tokens — Link
Why does it matter?
With the recent ETH-related catalysts and ETH’s strength despite a bleeding market, ETH beta, especially ETH DeFi tokens like CVX and ENS have responded well. Could this signify the beginning of a rotation to DeFi tokens, after they underperformed for most of this cycle? This move could be linked to the positive conclusion surrounding the SEC’s investigation into Ethereum 2.0 which could bode well for DeFi, which had always been a target for the SEC.
Notably, leading Ethereum-based meme coins, which did well on the initial ETH spot ETF announcement, did not see the same move on the recent positive news. PEPE is down 7.7% on the week and MOG is down 9.2%. This could imply a rotation from memecoins, which have performed well throughout the year, to DeFi tokens, which have utility and revenue generation that could appeal to institutional investors. With BlackRock’s interest in tokenization on Ethereum, this could bring an influx of capital and interest from institutions into safer and proven blue-chip DeFi protocols.
Major Project Updates 🗓️
📌 Tether announces Alloy (aUSDT), the next product by Tether. AUSDT is over-collateralized by on-chain Tether Gold (XAUT), combining gold’s store of value with the utility of a dollar-pegged stablecoin — Link
📌 0xMert releases news regarding the development of a new type of Solana node, known as Mithril, which enables nodes to verify blocks with lower hardware requirements than validators and RPC nodes — Link
📌 Gaming blockchain Ronin Network unveils Ronin zkEVM, a framework enabling builders to permissionlessly deploy L2s on Ronin using Polyon’s Chain Development Kit — Link
📌 Mysten Labs announces Walrus, a decentralized storage and data availability protocol built on the Sui Network. Walrus is currently in developer preview — Link
📌 Universal restaking layer, Karak Network, unveils Karak Universal Data Availability (KUDA), a distributed secure service built on Karak. The KUDA testnet will be launching shortly for builders and developers — Link
📌 Kraken was exploited for $3M by an alleged white-hat hacker, which was later revealed to be smart contract audit firm CertiK. CertiK has since returned the funds — Link
Why does it matter?
The development of a new node type for Solana which would require significantly lower hardware requirements could mark a huge step forward for decentralization on Solana. ETH maximalists have long criticized Solana for its centralization due to high costs involved in running a full validator node for the chain. However, the development of Mithril nodes reduces this hardware requirement, democratizing the block verification process on the chain to regular users.
DeFi Brief 🏦
Source: https://coinmarketcap.com/chain-ranking/
📌 Synthetic dollar protocol, Ethena, releases an update to ENA’s tokenomics, announcing ENA staking with EigenLayer competitor, Symbiotic, as well as generalized staking for ENA and sUSDe — Link
📌 Mantle announces cmETH, the next iteration of Mantle’s liquid staking token, mETH, creating a more liquid and composable version of mETH, specifically for the Mantle ecosystem — Link
📌 Solana DEX aggregator, Jupiter Exchange, announces a proposal for a revision in JUP tokenomics, proposing a 30% reduction in JUP total supply, with a 30% cut in team allocations and emissions. The team will also stake their 1st year cliff for two additional years to remove the supply shock — Link
📌 Solana-based perpetuals DEX, Drift Protocol, partnered up with Real-World Asset (RWA) platform Ondo Finance, to bring USDY to Drift Protocol as a new collateral option, allowing users to trade while earning yield — Link
Why does it matter?
With the heavy criticism over the predatory tokenomics and high FDV of newly launched tokens, several projects are now working towards improving their project’s tokenomics beyond merely a “governance token.”
Jupiter Exchange’s tokenomics adjustment to significantly reduce the supply of the JUP token and lock the team’s allocation for an additional two years showcases the alignment of team and token holders and the belief that the team has in their own protocol.
Similarly, Ethena’s newly introduced utility for ENA elevates it beyond just a governance token, with ENA being used to eventually secure the Ethena Chain via restaking.
Memecoins 🚀
📌 Pirate Wires releases a story claiming an official Donald Trump token, DJT, spearheaded by Donald Trump’s son, Barron Trump. The article is quickly supported by Mike from Pirate Wires with the contract address, drawing suspicion to its legitimacy — Link
📌 Several prominent crypto influencers, most notably GCR, bet against the legitimacy of the DJT token after Martin Shkreli stands by its legitimacy, with GCR putting up a $100M against the claim. The token was eventually revealed to be a creation by Martin Shkreli by ZachXBT — Link
Fundraises 💰
📌 ETH liquid restaking protocol Renzo Protocol raises $17M in a fundraise led by Brevan Howard Digital and Galaxy, with participation from Maven 11, Figment Capital and more — Link
📌 Account-abstraction focused L1 Particle Network raise $25M in their latest funding round, led by Spartan Capital and Gumi Crypto, with support from Morningstar Ventures and Hashkey Capital, among others — Link
📌 Solana Layer-2 chain Sonic closed their $12M Series A funding round this week, led by BITKRAFT Ventures. Other participants include Galaxy, OKX Ventures and Mirana Ventures, among others — Link
📌 Memecoin leverage trading platform Wasabi Protocol announces their $3M seed round, led by Electric Capital, with participation from AllianceDAO and Memeland, as well as angels including Luca Netz, DCF God and more — Link
📌 Cross-chain interoperability layer Router Protocol closed a strategic funding round from angels including Monad’s Keone Hon and Sommelier’s Zaki Manian alongside funds such as Wintermute Ventures, DeFi Capital and more — Link
Airdrops Abound 🎁
📌 Zero-knowledge Ethereum Virtual Machine (zkEVM) chain, zkSync, opens claims for the ZK token airdrop, distributing 17.5% of the token supply to users — Link
📌 Omni-chain interoperability protocol LayerZero releases the ZRO token airdrop, rewarding users their technology via protocols such as Stargate, Trader Joe and more — Link
📌 ETH restaking layer, EigenLayer, opens claims for the Phase 2 airdrop of EigenLayer’s Season 1, bringing the total to 113M EIGEN tokens distributed over two airdrops — Link
Tweet of the Week 📝
Source: MartinShkreli and GiganticRebirth
Was GCR betting against Martin Shkreli on your 2024 bingo cards?
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