One of crypto's biggest problems? It forgives too easily.
This week, SBF started tweeting again. The dude is literally in jail. What are we doing?
Meanwhile, 3AC villains Su Zhu and Kyle are still around. They're active on CT, doing podcasts like they didn't wreck billions. And now, it looks like they've blown up another venture.
If we keep giving second chances to known scammers, we shouldn't be shocked when crypto stays full of them.
Here's what we got today:
Explaining the crash. Some possible reasons.
PumpFun's Big Move. They're launching its own DEX.
Around the web. Time.fun relaunched on Solana, SAFE vulnerability was responsible for the Bybit hack, and more.
Today's email is brought to you by Gearbox — DeFi's credit layer.
We're supposed to be in bull market... so why's everything red?
In the last 14 days:
$BTC is down ~11%.
Ethereum dumped ~12%
Solana has crashed ~28%.
Total crypto market cap is down ~20%.
What's going on? Let's look at some possible factors behind this crash.
(Quick disclaimer: I don't have a crystal ball. Nobody can predict prices 100%. Always take market analysis with a grain of salt.)
#1. Bybit hack & other shenanigans.
North Korea (Lazarus group) hacked Bybit and stole ~$1.5 billion. The negative sentiment from this could've contributed to the crash. Last week, we talked about this in detail.
But to be honest, it wasn't the only bad thing that happened in the last couple of weeks.
$TRUMP launched, sucked all the liquidity, and paused the AI Agent narrative.
Melania Trump launched her memecoin and destroyed the momentum of $TRUMP.
Presidents of the Central African Republic and Argentina launched memecoins and dumped them. This ruined the memecoin narrative.
Big influencers like Dave Portnoy explicitly pumped and dumped on his audience.
Hayden Davis admitted to all the (almost) crimes involved in the memecoin market.
Sentiment was already weak. So, when the first signs of a pullback appeared, short-term traders panicked and rushed for the exits.
#2. Macro. Macro. Macro
In the medium term, this is the most important factor in deciding prices.
The markets were expecting the interest rate to come down. But it stayed high. Plus, inflation is cooling down as fast as hoped. So the market isn't seeing an immediate rate reduction.
This means no fresh liquidity to chase high-risk assets like crypto.
Arthur Hayes' blogs are great for tracking the intersection of crypto and macro. Back on January 28th, he had said that BTC may go down as low as $70-75k. Read his full analysis here.
#3. Trump admin & TradFi market
Many assumed that a Trump administration would be bullish for the markets. But some of his recent economic policies have been… well, not so market-friendly.
He launched tariff wars with major trade partners. He raised tariffs on imports from China by 10%. From next week, there'll 25% tariffs on imports from Canada and Mexico.
These created massive uncertainties. Markets don't like that. So the TradFi markets aren't in great shape either. For the past 5 days, S&P has been down by 3.06%.
TradFi is exiting crypto positions as well. ETF net flow is a good indicator. In the last 7 days alone, BTC EFTs had >$1.8B in net outflows.
#4. Market manipulation concerns.
Alright, now for the conspiracy theory section.
There wasn't any major negative news for Bitcoin. Still, it dumped >$10k in 2 days.
Bybit recently lost ~$1.5 in ETH. They'll want to buy $ETH. So if the market crashes massively, it'll be easier for them to fill the hole.
Some believe that many massive whales coordinated to liquidate leveraged positions. >360k traders were wiped out. In the last three days, >$2.3 billion was wiped out from the long positions. (These only include data from exchanges.)
The highly leveraged nature of crypto created liquidation cascades and increased volatility. But people have legitimate reasons to be suspicious.
A recent news adds fuel to the fire. Aleksei Andriunin, founder and CEO of cryptocurrency firm Gotbit, has been extradited to the United States on charges of market manipulation.
But this doesn't mean market manipulation definitely occured. It's just a conspiracy theory on crypto Twitter.
#5. And other stuff
There's one more thing worth mentioning. 11.2M SOL (worth ~$1.52 billion) will be unlocked on March 1st. This potential sell pressure is massively bearish for $SOL.
Last week, Ethereum tested its upcoming upgrade on Holeski testnet. And it faced some issues in the beginning. This could've contributed to the negative sentiment. But it doesn't have any long-term impact.
Some people are claiming that the bull market has ended.
Historically, 20% drawdowns have been common in bull markets. Crypto's fundamentals are stronger than ever.
My approach is "wait and see." I have my watchlists ready. I'm not eager to catch a falling knife. If there's a strong reversal, I'll bid hard.
As one crypto giant expands, its ally is taking the hit.
What happened? Pump.fun, the top memecoin launchpad, is building its own DEX.
This makes sense for them. Primarily, it'll allow them to capture trading fees from the DEX trading volume.
There can be tech reasons as well. They can experiment with different pool mechanics to find the best-suited one for memecoins.
For example, they can choose to direct some of the trading fees to the memecoin creator/community. Or they can try to limit toxic MEV. And so on.
But this has some major collateral damage.
Raydium is in MAJOR trouble
the price over the past 3 months
Raydium is the go-to decentralized exchange on Solana. When memecoins graduate on Pump.Fun, the liquidity was deployed to Raydium.
A ton of Raydium activity was from Pump.fun memecoins. In 2024, 36% of the DEX's $154 million swap revenue came from pools created by PumpFun.
If PumpFun use their own DEX, Raydium will lose all these activity. That's extremely bearish. Since Feb 24th, the token is already down >40%
But for all this doom and gloom, we're assuming one thing: Pump.fun's DEX will be successful.
Will the PumpFun DEX flop?
If PumpFun lose activity, then the new DEX wouldn't get much volume.
Since crypto twitter turned against memecoin narrative, many expected Pump.fun to die down. But that's not happening.
PumpFun has maintained the percentage share of total crypto revenue stable at 15%. While there's a decline in absolute revenue, it's attributed to the general downturn.
(There are data circulating that shows massive decine in PumpFun activity. But I don't find those reliable. Blockworks data is more trustworthy.)
They've even released a new mobile app. They might find even more users using the app.
So, the memecoins and PumpFun aren't going away.
Technical risks are another concern for the DEX. But I don't think it'll be deal breaker. Since crypto culture is open source, they can learn from other DEXes. Plus, they have massive treasury to conduct as many audits as they want.
Bottom line? Pump.fun's DEX will likely succeed. And Raydium? It's in for a rough ride.
🚀 DeFi Catalysts
Reserve Protocol introduced the Reserve Index Protocol. It enables Index DTFs that offer market or narrative exposure in a single click.
Sushswap introduced RP6. It is an update to their aggregation system. It has Universal Bridge Integration, Curve Metapool Support, and more.
Gearbox Protocol has expanded to Sonic, the new version of Fantom. Sonic users can now passively lend, borrow or leverage using Gearbox.
Ethena is expanding to MoveVM-based chains. They'll start with deploying on Aptos. sENA will get Echelon rewards as points as well.
Berachain has started the Governance Phase 1. Teams can submit their RFRVs for BEX or non-BEX / general smart contract pools.
Solv Protocol has launched SolBTC.BNB on the BNB chain. The current limit for the token is being filled fast.
Axelar Network shipped the Cobalt update. 98% of network gas fees will be burned and the rest will go to a community grant pool.
Skate Shuffle went live on Aptos. It enables 1-click interactions with Pendle, Lombard, GMX, and more.
Hop Protocol released Hop V3 with Hopper Mode. It boasts of ~0.1s confirmation times and improved pricing.
Aave v3.3 upgrade is live. It changes bad debt & liquidation management. This sets the stage for removing "Umbrella".
Jupiter Exchange upgraded its token search feature. It should surface better suggestions using the organic score and other metrics.
🚀 New Launches
Time.fun relaunched on Solana. It allows users to tokenize their time and creates a market for it.
Timeswap is now live on the HyperLiquid chain. The first pool allows users to lend or borrow USDT using wHYPE as collateral.
Kasu Finance went live on Base. Users can now access up to 25% APY on USDC in their private credit platform.
📰 Industry News
Bybit hack wasn't due to any opsec failure of Bybit, as I speculated last week. The failure was on the web2 aspects of Safe multi-sig provider.
Greyscale launched its Decentralized AI Fund. It gives accredited investors diversified exposure to $NEAR $TAO $RENDER $FIL $GRT $LPT.
DISCLAIMER: I'm NOT a financial advisor. This content is for education and information purposes only. Crypto and DeFi are risky and speculative. Please do your research before investing. Whenever you're ready, there are 3 ways we can help you:
⚙️ The DeFi Edge PRO- Designed for busy people who want to stay ahead of the curve. Leverage our research to save you hours each week, and to see what we're personally investing in. Join the waitlist.
🚀 The DeFi Edge Ventures- We identify, invest, and help amplify DeFi Protocols that positively impact the Crypto space.
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