CMC Market Pulse delivers actionable market insights, giving you all the key narratives and developments you need in under 5 minutes.
Market Overview 📉
Crypto markets started this week looking promising before selling off sharply, with BTC falling more than 13% at its lowest and ETH, more than 17% down at the weekly lows. The bulk of the move, which occurred on July 4, saw more than $420M in long positions liquidated across the market. Despite an already low funding rate at the beginning of the week, funding rates across both BTC and ETH continue to fall, indicating an increase in short positions or a decrease in levered long positions. Meanwhile, Bitcoin’s correlation with the S&P 500 and NASDAQ has dropped to its lowest level since October last year. Both equities index closed at new all-time highs following strong labor market data.
ETH reversed its trend from the prior week, underperforming against BTC this week, likely due to the delays in the spot ETH ETF, which weighed on the market.
📌 The spot ETH ETF expected launch date is further delayed, with Bloomberg analyst, James Seyffart expecting 15th July or later — Link
📌 The German Government continues to move BTC into exchanges and other wallets which are suspected to belong to OTC desks or institutional trading services. Despite transferring 1,300 BTC, they are still holding more than 40K BTC — Link
📌 Donald Trump’s stance on Bitcoin has sparked conversations within the US political circles about the use of Bitcoin as a strategic reserve asset — Link
Why does it matter?
ETH strength during the market weakness throughout June has largely been attributed to the expectations surrounding the spot ETH ETF. Many investors have pinned their hopes for a market reversal with hopes of positive inflows for the spot ETH ETF. However, the delays in S-1 approvals for the ETF has slowly begun to weigh on investors, dragging ETH down together with the sinking markets over time.
Additionally, the overhang of $23B worth in BTC between the German government, Mt. Gox distributions and the US government continue to cast doubt over the market, leading to weak price action across all cryptocurrencies.
Despite the weakness, altcoins held their own against BTC, with TOTAL3/BTC falling only 2.8% since the week prior. Additionally, the chart also held the lows formed on Monday despite the aggressive downward move from BTC and ETH, potentially indicating that the selling on altcoins is completed or close to it. Altcoins have seen a drastic selloff since March highs, with strong Q1 performers like AtlLayer (ALT) and Celestia (TIA) down 80%.
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Narrative of the Week 📰
With the crypto markets hit hard, new narratives are dried out. Regulatory-wise, EU’s new MiCA laws surrounding stablecoins kicked off, challenging the position of top stablecoin Tether as exchanges scramble to delist Tether issued products to remain compliant with regional laws.
📌 Circle announces the compliance of their two stablecoin products, USDC and EURC, with the new EU stablecoin laws under MiCA — Link
📌 Curve’s 3Pool saw a minor imbalance over the weekend, with the percentage of USDT in the pool rising to over 66% from the usual 33% — Link
📌 French bank Societe Generale unveils an update to its Ethereum-based stablecoin, EURCV, in compliance with the MiCA laws — Link
Why does it matter?
Despite Circle’s increased compliance with regulations in both the US and EU, Tether’s dominance as the top stablecoin by market capitalization has only grown, reaching 70% of the total stablecoin sector by the end of H1 2024. USDT remains the most traded token and is the base pair for almost 70% of spot trading volume on CEXs. This has resulted in Tether hitting a record net profit of $4.52 billion in Q1 2024.
With the new regulations in the EU placing pressure on Tether support from centralized exchanges as well as Circle stepping up to stay compliant with MiCA’s new laws, Tether’s position at the top no longer seems as secure as it used to be. This sentiment manifested itself in an imbalance in Curve’s 3Pool, which indicates the selling of USDT into the pool for alternative stablecoins. The fears sparked a minor 0.25% depeg on USDT as well, although veterans attribute the move simply as FUD.
Major Project Updates 🗓️
📌 Pudgy Penguins’ parent company, Igloo Inc. acquires NFT-focused chain, Frame, to contribute towards Abstract Chain, a blockchain focused on driving consumer crypto adoption — Link
📌 Zero-knowledge rollup, StarkNet, announces DeFi Spring 2.0, an incentive program allocating a total of 90M STRK tokens to incentivize liquidity on decentralized exchanges (DEXs), lending and derivative platforms — Link
📌 On-chain quest platform Galxe kicks off migration from their existing token, GAL, to their new token, G, to support the upcoming launch of the Gravity Chain — Link
📌 TON-based gaming platform Notcoin unveils a $50M gaming accelerator with Helika, aimed at helping game studios, mobile apps, and indie developers build on the TON blockchain — Link
📌 The Bittensor chain was paused for 24 hours following an attack on several wallets linked to Bittensor validators, where over 32K TAO (~$8M) was drained — Link
Why does it matter?
One of the main narratives for this cycle has been the mass adoption and onboarding of retail crypto users through the use of consumer crypto applications. As arguably one of the most successful NFT collections in terms of real-world penetration, Pudgy Penguins is well-poised to execute a strategy centered around consumer crypto adoption.
The Abstract Chain will utilize the ZK Stack from zkSync and EigenDA to provide an efficient and low-cost environment to build on, seeking to achieve mass adoption through the creation of crypto’s largest on-chain community.
DeFi Brief 🏦
📌 BitDAO-backed L2, Mantle, launches “Methamorphosis”, a 100 day program allowing users to accrue points on their mETH positions, which will convert to COOK, the new governance token for the Mantle liquid staking program — Link
📌 Liquid staking token (LST) backed stablecoin protocol, Gravita Protocol, introduces gravETH, an LST built in collaboration with liquid staking platform, StakeWise, and node operator network, NodeSet — Link
📌 Liquid restaking platform, Renzo Protocol, partners with Mellow Protocol to launch pzETH, Renzo’s liquid restaking token for EigenLayer competitor, Symbiotic — Link
📌 Options and perpetuals DEX, Aevo, launches Aevo Strategies, which enables users to gain access to sophisticated trading strategies on Aevo such as delta-neutral basis trades — Link
📌 BackedFi introduces bNVDA, a tokenized version of the publicly listed NVDA stock, enabling self-custody and 24/7 trading of the asset — Link
Why does it matter?
As the market continues its three month decline, attention has gradually shifted away from memecoins and back to fundamentals-backed projects. Unsurprisingly, one of the sectors which continues to ship new launches is liquid staking and restaking, a popular narrative from earlier in the year. This increase in attention could largely be attributed to the recent launch of EigenLayer competitor, Symbiotic, which has seen more than $1B in deposits since its launch less than a month ago.
Moreover, with the spot ETH ETF approval pushing ETH into further legitimacy, spot ETH holders have been seeking more yield-bearing options to put their assets to work, leading to a rise in new programs and assets targeting this group of users.
Meme Coins 🚀
📌 Celebrity meme coins never seem to go away, as MMA fighter Khamzat Chiamev launched the SMASH token, which quickly rugpulled within a day of its launch, as exposed by ZachXBT — Link
📌 Solana-based lending platform, MarginFi, leaks plans to launch mrgnswap, a DEX to allow traders to long or short newly launched meme coins with leverage — Link
📌 The US presidential race heats up as election-themed meme coins are used as speculative assets to bet on the outcomes. Following Biden’s horrendous debate showing, Kamala Harris became the leading candidate to replace the President. The kamala horriss (KAMA) meme coin rallied 250% this week — Link
Fundraises 💰
📌 Web3 AI firm, Prodia Labs, raises $15M in a seed round led by Dragonfly Capital with support from HashKey, Symbolic Capital, OKX Ventures, Artichoke and Folius, among others — Link
📌 OpenLedger raises $8M in a seed round led by Polychain Capital and Borderless Capital, with participation from HashKey Capital, Hash3, and angels including Sandeep Nailwal — Link
📌 AGI-focused project, Sentient, raises $85M in a seed round co-led by Peter Thiel’s Founder Fund, with Pantera Capital and Framework Ventures. Other participants include Delphi Digital, Primitive Ventures and the Spartan Group, among others — Link
📌 Oracle network, Redstone, raises $15M in a Series A funding round led by Arrington Capital, with participation from the Spartan Group, Amber Group, Chorus One and more — Link
📌 Bitcoin liquid staking solution, Lombard, announces a $16M seed round raise, led by Polychain Capital, with support from Mirana Ventures, Franklin Templeton, Robot Ventures and more — Link
Airdrops Abound 🎁
📌 Solana liquid staking platform, Sanctum, announces plans for the upcoming CLOUD airdrop, splitting 10% of the token supply evenly based on capital contributed and social contributions — Link
📌 Solana restaking layer, Solayer, unveils Episode 1, enabling depositors from the past two epochs to claim additional rewards from deposits, referrals and more — Link
📌 UX-optimized DeFi layer, Infinex, begins crate season, where users can deposit and stake in their Infinex accounts to earn crates to win a share of a $5M prize pool — Link
📌 Optimistic rollup, Kroma Network, announces eligibility for the upcoming KRO airdrop, which extends to holders of specific Kroma NFTs, Galxe quest participants, Kroma gamers and Kroma Guardians, among others — Link
Tweet of the Week 📝
Source: blockgraze
The bloodbath in the markets has left even spot holders feeling the pain.
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