Market Optimism Fades

GM Anon,

Just a few weeks ago, many users were expecting a bullish move upward, but that optimism seems to be fading for now. However, don't despair! A parabolic move is still on the horizon—it’s just not happening quite yet.

On that note, here’s some valuable advice from Ansem.

Before diving in, be sure to check out this in-depth article published over at Crypto Pragmatist covering the Telegram situation.

TLDR

• Initial optimism for a bullish move has faded, with potential for a price dip or range around $56K

• The upcoming FED decision on interest rate cuts could impact Bitcoin’s short-term volatility and long-term growth

• Ethereum's revenue has dropped over 90% in 2024 due to migration to L2 solutions and lower fee generation

• A lack of demand for Ethereum ETFs reflects broader concerns about Ethereum’s current market trajectory and declining activity

• Major meme tokens like PEPE and GIGA have experienced significant price declines, reflecting current waning market enthusiasm

• Despite the broader downturn, high-value sales like CryptoPunk 6915 for $1.5M suggest renewed interest in blue-chip NFTs

• BAYC has shown upward momentum over the past 30 days, potentially signalling that major traders are re-entering the NFT space

• Platforms like Pump.fun and Sunpump are leading in memecoin launches, though most projects have struggled to retain value long-term

FED Cuts & Past Week In Review

All crypto eyes are on the looming Fed decision to possibly cut rates.  According to Bitfinex analysts, this month’s U.S. interest rate decision is expected to heavily impact Bitcoin’s short-term volatility and long-term direction. 

Analysts predict that a 25 basis point rate cut could trigger long-term price growth for Bitcoin as liquidity rises and recession concerns ease. A more aggressive 50 basis point cut may lead to a temporary price spike, followed by a correction due to escalating recession fears.

Historically, Bitcoin has experienced volatility in September, with an average return of -4.78%. Bitcoin’s correlation with traditional assets like the S&P 500 means its price will be influenced by global economic conditions, including actions by central banks around the world. As the U.S. economy benefits from disinflation and wage growth, uncertainties in the housing market and job concerns remain. 

In other news the Trump family is collaborating with Aave to launch a new web3 venture called World Liberty Financial (WLFI). This project is focused on promoting the mass adoption of stablecoins and DeFi through a stablecoin lending protocol.  

Despite security audits and notable partnerships, the project has faced scrutiny due to ties with developers from a previous DeFi platform that was hacked. Meanwhile, the Trump family continues to expand its presence in the crypto space, despite Donald Trump’s previous criticism of digital assets.

• Trump vows to make US 'world capital of crypto,' picks Musk to lead government overhaul

• Binance CEO says CZ is banned from managing or operating the exchange

• Future Forward PAC to accept crypto donations via Coinbase Commerce for Kamala Harris' campaign

• Robinhood settles $3.9M penalty with California DOJ over past crypto withdrawal issues

• Switzerland's ZKB, the fourth-largest bank, launches crypto services

• EigenLayer to distribute 86M tokens in season 2 'stakedrop' to stakeholders

• Donald Trump leads Kamala Harris by 7% in Polly Market's 2024 presidential prediction

• Lara and Tiffany Trump's X accounts hacked, users warned about suspicious links

• Ripple CEO teases stablecoin launch, rules out US IPO

• Former Mt. Gox CEO to launch new crypto exchange focused on transparency

• Polygon developers transition MATIC token to POL

• Siemens issues €300M digital bond on blockchain for instant settlement

• Crypto-friendly United Texas Bank hit with cease and desist from Federal Reserve

• SEC delays decision on 7RCC's spot bitcoin and carbon credit futures ETF

• CFTC files charges against Uniswap for illegal derivatives trading

• Vitalik Buterin refutes claims of selling Ether for profit

• Nvidia faces $279B market loss as AI crypto tokens crash to $20B

• Polymarket handles $1.4B, NegRisk gains traction over CTF markets

• Samsung supports Sony's blockchain project led by Soneium development team

• CFTC recovers $18M in crypto from alleged Ponzi scheme tied to commodity pools

• Ripple CEO predicts Gensler’s departure, regardless of election outcome

• EigenLayer introduces 'major update' to restaking contracts

ETH & ETFs

Ethereum's daily revenue has hit a low in 2024, marking a significant decline of over 90% year-to-date. This drop can be attributed to several factors, including the migration of activity to L2 solutions, which offer cheaper and more scalable alternatives. 

The introduction of "blobs" to improve efficiency on Ethereum has also reduced the need for transactions on the main Ethereum network, cutting into its fee revenue. The sharp decline in fees, combined with a broader market downturn, has raised concerns about the network's ability to sustain its current valuation.

Coupled with this, ETH ETF flows have remained negative, signalling a lack of demand for this financial product.

Many are concerned about Ethereum's trajectory and how it might reverse its current challenges. However, despite these worries, Ethereum remains the leading platform for DeFi, with approximately $45B currently locked into various DeFi protocols on the network.

Major Coins

Over the past week, leading cryptos have trended downward, with BTC falling by 5.6%, ETH by 5.9%, and SOL by 6.3%. Solana, in particular, has seen a notable drop in activity and volume, suggesting the potential for a cooling-off period in its market. Meanwhile, Ethereum’s ecosystem is beginning to show signs of renewed activity after a prolonged period of stagnation. On the other hand, some smaller tokens, like HNT, AVAIL, and RLB, experienced impressive double-digit gains during this same period.

• HNT (18.7%)

• AVAIL (15.7%)

• RLB (14.6%)

• STRK (8.3%)

• CET (6.7%)

• UNI (6.4%)

• FTN (6.4%)

• BDX (5.2%)

• BSV (4.6%)

• FLUX (4.6%)

• ORDI (4.1%)

• XMR (4.0)

• SUI (3.7%)

• LTC (3.5%)

• SATS (2.8%)

• 1INCH (2.7%)

• DASH (2.5%)

• OM (1.1%)

• AAVE (1.0%)

Memes

The meme sector's latest trend is the emergence of meme launchpads, with platforms like Pumpdotfun, Sunpump, and now Ethervista gaining traction. These platforms allow users to quickly launch tokens within their respective ecosystems. However, while some tokens from these launchpads have reached impressive market caps, the majority tend to lose value rapidly, and very few have managed to establish lasting communities, unlike earlier projects such as GIGA or MICHI. The long-term impact of these launchpads remains uncertain.

One notable development is the revenue these launchpads are generating. Earlier this week, Sunpump surpassed Pumpdotfun in revenue, which is significant given how new Sunpump is to the scene. This shift indicates a possible capital rotation from Solana to the Tron ecosystem in the meme token space.

It’s been a tough week for major meme tokens, with several experiencing significant declines in value, reflecting broader market trends and diminishing speculative enthusiasm. Key tokens hit hard by the downturn include:

• PEPECOIN (-22.5%)

• POPCAT (-17.6%)

• WOLF (17.2%)

• GIGA (-15.0%)

• MOG (-14.4%)

• SUN (-24.5%)

• SUNDOG (-10.9%)

• PEPE (-9.4%)

• GINNAN (-8.6)

• MICHI (-8.4%)

• PORK (-4.9%)

• WIF (-1.1%)

Despite the underperformance of major meme tokens, some newcomers are generating excitement in the market. Tokens like POX, VISTA, and IVFUN have shown promising action, though VISTA has sharply retraced from its launch success. 

• POX (592.8%)

• IVFUN (103.9%)

• NEIRO (50.4%)

• KOIN (37.9%)

• OMIKAMI (37.1%)

• MAGA (17.5%)

• WHY (16.2%)

• CAT (14.7%)

• FWOG (14.5%)

• SUNCAT (8.7%)

NFTs

While Ordinals have been a bright spot in the NFT space, Ethereum-based NFTs have largely underperformed in recent months, struggling to maintain momentum amidst challenging market conditions. However, there's been a recent surge of interest that could signal a potential shift. One major indicator of this is the sale of CryptoPunk 6915, which recently sold for a staggering $1.5M, despite the overall bearish market.

This high-profile sale suggests that certain high-value, blue-chip NFTs like CryptoPunks are still seen as valuable assets, holding investor attention even during downturns. This could point to a larger trend of NFTs on Ethereum regaining their footing, particularly as interest in digital art and collectibles continues to mature and stabilize across the blockchain space.

Furthermore, collections like BAYC have been showing notable upward trends in the last 30 days, despite the overall market uncertainty. This movement has raised speculation that major NFT traders could be re-entering the space, strategically deploying capital in preparation for an upcoming NFT season.

Recent project updates by BAYC also indicate a renewed interest in NFTs could be brewing.

Data Points

BTC volatility

BTC’s price range is becoming increasingly volatile and unstable, with larger and more sustained swings. This signals that the market may soon break out of its current range and move in a new direction.

• The "chopsolidation" phase is characterized by growing intraday and intraweek price swings, suggesting rising instability in Bitcoin's price movement.

• The data shows that Bitcoin's price fluctuations are becoming more dramatic, both up and down, compared to previous periods.

$70K BTC short massacre 

If Bitcoin reaches $70K an estimated $21B in short positions could be liquidated. This could create a massive surge in buying pressure, pushing the price higher as short-sellers scramble to cover their positions​.

• Historically, BTC has experienced sharp price movements when large amounts of short positions are liquidated. If BTC reaches key levels around $70K analysts suggest it could climb even higher to $80K.

• The anticipation of such a large short squeeze has led to increased bullish sentiment among investors, with many expecting that BTC’s price could break new highs once these shorts are forced out of the market​.

Pumpdotfun killing SOL momentum?

The massive surge in memecoin launches on the Solana blockchain, particularly through Pumpdotfun, has coincided with a halt in Solana’s price rally. This suggests that the influx of memecoins may be affecting Solana's growth potential.

• Solana has become a hub for memecoin creation, largely due to platforms like Pumpdotfun, which makes it simple and affordable for users to launch their own tokens. This led to an influx of memecoins on the Solana network.

• While the ease of launching memecoins has increased activity on Solana, it also introduces risks like market oversaturation and a higher likelihood of scams, as only a small fraction of these tokens are expected to succeed​.

That’s a wrap for today’s insights! We hope you found value in this issue. Until next time, stay sharp, anon!