August came in swinging. Trump's back with more tariffs and the market's feeling jumpy.
I'm betting this month stays choppy. The Fed meets next month and we could finally see a possible rate cut.
Meanwhile, the big money is still loading up on BTC and ETH.
Stay calm, play defense, and we might just tee up for another run before the year's out.
Here's what we got today:
Crypto market check. What's happening to our bags?
Stablecoin sector overview. Top projects in the ecosystem.
Around the web. Linea released ETH-aligned tokenomics, Orca launched Wavebreak, and more.
Today's email is brought to you by Mezo — the Bitcoin finance app.
Here's your Edge 🗡️!
Markets
State of the crypto markets
Crypto markets are like toxic girlfriends. One day, you are euphoric. The next day, you are depressed.
Until the end of July, everyone was bullish. Then August 1st hit, and suddenly, bears were everywhere. Yesterday? Back to bullish.
We can't flip-flop every day. Let's zoom out and take stock of the market.
Macro, Trump, & Tariffs
Like it or not, macro factors move crypto prices. And a bunch of them can explain last week's crash.
First up, President Donald Trump. He had new Tariff announcements last week. High tariffs that'll affect many nations will take effect starting August 7. Trade disruptions from it will be obviously bad for US companies and stocks. Crypto also fell alongside it.
The FOMC rate decision was also last week. Inflation was higher than the +2.0% target. So as expected, the Fed kept rates as-is.
To pile on, US labor market data disappointed. We were expecting +100k new jobs. We got just +73k. That kind of weakness scares investors. So alongside risk assets, BTC fell on Friday.
The labor data has a flip side as well. It'll incentivize the FED to cut the rates to stimulate the economy. The probability for the September cut has gone up significantly.
Now, what's next? Will we keep getting bad news?
It's a mixed bag. The probability of Rate cuts is high, and that's good for gold and BTC. But a weakening economy is bad for risk assets. So not good for high-risk alt plays.
TradFi Moves in Crypto
TradFi is a big player this cycle. The two instruments they use for exposure are ETFs and Treasury companies.
ETFs were doing really well. Spot ETH ETFs had a record 20-day inflow streak. But last week ended with massive outflows.
Investors pulled $812 million from Bitcoin funds on Friday. That's second only to the $1.15 billion outflow on February 25.
Ethereum ETFs lost $153 million on Friday. Yesterday, it was $465M, the largest outflow in ETH history.
Total Ethereum Spot ETF Net Inflow
Earlier, I proposed that bad Labor market data caused people to sell risk-on assets. These ETF data support that theory. Institutions are selling the risk-on assets.
But we don't have to worry too much about ETF data. Imo, this is better seen as a lagging indicator. They're reacting to past events.
Announcements from Treasury companies paint a bullish picture. According to Cointelegraph, 16 company statements from the last week alone promise $7.8B in buying pressure.
Both BTC & ETH stand to benefit from this.
Regulatory updates
Whatever you say, the Trump administration has delivered a lot for the crypto industry. We've already covered significant updates like the GENIUS Act.
In the last week alone, there have been many bullish developments.
SEC has approved in-kind redemption for crypto ETFs.
A new proposal from Cboe looks to fast-track ETFs by letting qualifying funds skip the SEC's case-by-case approval.
SEC announced a new initiative called "Project Crypto". It explicitly aims to "modernize the securities rules and regulations to enable America's financial markets to move onchain."
Those are insanely bullish announcements. Project crypto has many game-changing proposals like simplifying the licensing regime, innovation exemption, and more.
So don't flip-flop with the market mood every 10% move. Zoom out.
Bitcoiners hold their wealth in BTC. And they hate selling the best asset in the world.
But if they just HODL, how can they live? How to pay for rent, coffee, & other bills?
Enter Mezo. It lets you live off of your BTC without ever selling it, with their native Bitcoin loans
MUSD is the secret sauce. It's a stablecoin created through the Collateral Debt Position (CDP), the proven decentralized mechanism for stablecoins. It's 100% backed by BTC.
You can borrow MUSD against your BTC and use it for your daily life.
Deposit your BTC.
Borrow MUSD at a fixed 1% interest rate against your BTC.
Here's the important part: Your BTC remains yours. When you pay the loan and interest back, the BTC goes right back to your wallet. So you still have the BTC exposure.
While you can borrow MUSD up to 90% of the collateral BTC value, you might get liquidated when the price dumps. A 40%-50% LTV is safer with active management.
Mezo Vaults also enables you to earn yield on MUSD easily. As of writing, it averages to ~30% in APY.
Stablecoins are the most successful crypto product.
And recently, it got regulatory legitimacy as well. The GENIUS Act aims to establish a clear framework for banks, companies, and other entities to issue stablecoins.
It's already 1.1% of the USD supply. And according to JP Morgan, they're projected to grow from today's $250 billion market to a staggering $1 - 2 trillion by 2028.
If you want some exposure, here are the top plays..
Category #1: Blockchains
Ethereum
It dominates the stablecoin market. The pie graph below shows the TVL market share of stablecoins.
Ethereum has >50% of the stablecoin TVL. While Tron has 31%, it's seen as Justin Sun's centralized chain. And Solana only has ~4%.
Keeta Network
Keeta is a high-throughput, compliance-ready blockchain protocol built specifically to handle fast payments, similar to a crypto-native version of Visa or Stripe.
It has piloted integration with payment giants, including Visa.
Offers instant finality for stablecoin payments, enabling merchant adoption.
Compliance-ready design is a significant advantage. It makes Keeta suitable for regulated stablecoin transactions.
Category #2: Issuers
While Tether and Circle are top issuers, they don't have crypto tokens. So I'm ignoring them here.
Ethena
We've talked about Ethena several times. They've two stablecoins
USDe is backed by staked ETH (stETH) and hedged short positions. Yield from this strategy is shared with users as sUSDe.
USDtb is backed by BUDL from BlackRock. They're planning to convert it into a stablecoin compliant with the Genius Act.
Ethena is crushing on all metrics as well. The TVL is at an all-time high of ~$9.7B. $ENA is also up 130% in the last 30 days.
Sky (Formerly MakerDAO)
It's the issuer of USDS (formerly DAI) stablecoin.
It primarily uses the proven Collateralized Debt Position mechanism to back USDS. The SubDAO/Star mechanism allows it to scale USDS using other mechanisms as well. Theoretically, there can be a subDAO that implements Ethena's strategy.
Giza Protocol
Now, we're moving to projects with exposure to multiple narratives.
Giza enables fully autonomous, AI-driven agents to optimize DeFi yields 24/7, maintaining non-custodial control of assets.
Giza's flagship ARMA agent specializes in stablecoin yield optimization.
Giza has already autonomously routed over $400 million in on-chain transactions.
It actively manages millions in $USDC, autonomously reallocating funds across leading lending protocols like Aave, Morpho, Compound and Fluid.
It consistently maintains 8 - 15% APY on USDC stablecoins.
F(x) Protocol
It's a protocol that splits ETH & BTC into the following.
fxUSD: A decentralized stablecoin that pegged to $1.
xPOSITION & sPOSITION: Smart leveraged tokens (up to 7x) for ETH and BTC trades with built-in protections against liquidations and zero recurring funding costs.
It has quietly amassed $180M+ in TVL. It's a high-risk, unique product with a low market cap.
Category #3: DeFi
There are a ton of DeFi projects that stand to benefit from stablecoin growth.
Ondo Finance offers tokenized RWAs using USDY.
Aave is the top DeFi protocol by TVL. $GHO is its stablecoin.
Maple issues SyrupUSDC to share yield from lending to real-world institutions.
Curve, the DEX focused on stable assets, has its own unique stablecoin called crvUSD.
Pendle enables yield trading. Since ~all stablecoins have yield-bearing versions, Pendle can benefit by creating yield-markets for them.
Stablecoins are a sector with massive potential. It can disrupt $195T cross-border flows and trillions in payments. This should definitely be on your radar.
🚀 DeFi Catalysts
Linea released its tokenomics. 20% of the gas fee from the chain will be used to burn ETH. Linea is the first L2 to do so.
Lido V3 stVault infrastructure will be used to bring native yield to Linea L2. All bridged will automatically be used to earn ETH.
Orca launched its launchpad known as Wavebreak. It claims to have anti-bot technology. It incentivizes volume through rewards to traders.
F(x) Protocol released its shorting feature. sPOSITIONs will enable native, fixed-leverage shorts with 0% funding cost and minimal liquidation risk.
Pump.fun launched Creator Fees for Community Takeovers (CTOs). The new community has to fill out a form to claim the Creator Fees.
Centrifuge released its v3. It'll enable fund managers to manage liquidity across multiple chains from a single interface.
Pump.fun introduced the revenue dashboard. It tracks daily revenues and $PUMP buybacks.
Heaven, a new launchpad that'll focus on "ICM projects" that share value with tokenholders, is doing its Initial Coin Offering.
EigenLayer has released the redistribution. It'll allow AWS to redirect slashed funds instead of burning them.
Phantom has acquired Solsniper, a trading platform on Solana. It'll be another piece in Phantom's strategy to build a DeFi superapp.
Alpen is a new L2 on Bitcoin. Their public testnet has gone live.
📰 Industry News
eToro is launching trading of tokenized US equities, ETFs, and futures. It'll start as ERC20 tokens on the Ethereum chain.
PayPal, the fintech giant, announced the "Pay with Crypto" feature. It'll allow users to pay its merchants with more than 100 different cryptocurrencies.
SEC allowed crypto ETFs to create and redeem shares using Bitcoin and Ethereum directly, instead of cash.
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, here's how 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 today.
🚀 The DeFi Edge Ventures- We identify, invest, and help amplify DeFi Protocols that positively impact the Crypto space.
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