The Market
It has been a dramatic week with Biden announcing his withdrawal from the presidential race last Sunday, the launch of the ETH spot ETF last Tuesday and Trump’s speech at the Bitcoin Nashville conference this Saturday. The implied vol on both BTC and ETH has reached high levels last seen in Q4 2023, when the market experienced price discovery related to an imminent BTC spot ETF launch.
Since Biden’s announcement, the prediction market indicated a steadily climing probability of a Kamala win, as more Democratic leaders endorsed her candidacy last week, threatening Trump’s lead. Although it is expected that Kamala is more pro-tech than Biden, she has not made any clear stance on crypto policies, unlike Trump’s explicit endorsement of the industry. Given that over 20% of swing state voters consider crypto a key issue in this election, we expect the democrats will tread carefully when it comes to their crypto policy stance. We believe a Democrat win will be more bearish for crypto in the short term, but in the long term, the trend of blockchain adoption is unstoppable.
Source: Polymarket
The day-one ETH ETF inflow of around $100M is definitely encouraging compared to BTC's day-one inflow of $200M, especially given expectations that ETH ETF inflows will only be 20-30% of BTC's. However, it’s too soon to evaluate how the flows will progress over the coming days. We don't believe the price trajectory of ETH will follow BTC’s after the ETF launch, as BTC spot approval is more fundamental, following years of SEC deliberation and setting a precedent for crypto spot ETFs, whereas ETH ETF approval is more about when rather than if. Additionally, while BTC's price peaked around two months post-ETF approval, ETH also had a significant rally during the same period, suggesting positive market sentiment; the ETH ETF rally will likely start from a higher base. We believe ETH’s price could be more reflexive of the ETF flows, given it lacks natural sellers like miners and has about 30% of its supply staked.
On the macro side, the Q2 GDP and inflation numbers reported last week have both slightly exceeded expectations. Still, PCE inflation is down significantly from 3.4% in Q1 to 2.8% in Q2. The ISM survey, widely considered as the leading economic indicator, is showing more weakness in both the manufacturing and service sectors compared to the GDP growth. This contributes to why the market expectations on the September rate cut haven’t wavered despite the upside surprise.
Source: CBOE Fed Watch
DeFi Update
While the crypto market is going through a sluggish summer, the TVL and trading volume have picked up. The trading volume, especially, is not far from the heightened levels we saw in the last bull market. What’s different this time is the DEX trading volume market share vs. CEX is climbing to an ATH level of 15%.
Source: DeFiLlama
Solana has contributed almost equally to Ethereum in the DEX market share, serving as a big driver for the overall DEX market share growth. Furthermore, tokens on Solana and Base contributed 95%+ of the new token supply on DEXes, indicating the vitality in both ecosystems, although many of these new tokens are memes.
Solana’s DEX ambition doesn’t stop here. Jupiter has announced their Giant Unified Market Initiative (GUMI), aiming to bring all assets - whether they are crypto tokens, RWAs, stocks or forex - to Solana and index them on Jupiter. This is the ultimate vision for the future of Finance enabled by the blockchain, where anything and everything could have a tokenized format and trade in a permissionless and frictionless fashion. Technically it’s doable on Solana given its superior chain performance - Solana’s vision has always been building a Nasdaq on blockchain. Business-wise, Jupiter has achieved PMF, and the savvy founders are always at the forefront of pushing DeFi innovation. Regulatory-wise, it’s still a gray area given Uniswap’s battle with the SEC and the regulatory challenges TradFi tokenization faces. Still, crypto pioneers will trudge ahead, and one thing I know for sure is that Jupiter is my preferred venue over any other CEX to trade Solana ecosystem tokens.
Top 100 MCAP Winners
Helium (+19.50%)
Jupiter (+9.91%)
SATS (+8.95%)
JasmyCoin (+8.65%)
Pyth Network (+7.54%)
Top 100 MCAP Losers
Lido DAO (-16.15%)
Notcoin (-15.37%)
Fantom (-14.17%)
Ronin (-13.06%)
Core (-12.99%)
About Decentral Park
Decentral Park is a founder-led cryptoasset investment firm comprised of team members who’ve honed their skills as technology entrepreneurs, operators, venture capitalists, researchers, and advisors.
Decentral Park applies a principled digital asset investment strategy and partners with founders to enable their token-based decentralized networks to scale globally.
The information above does not constitute an offer to sell digital assets or a solicitation of an offer to buy digital assets. None of the information here is a recommendation to invest in any securities.
About the Author
Kelly is Portfolio Manager and Head of Research at Decentral Park Capital. Investing across sectors with a thesis driven, deep research approach.
Prior to this, Kelly has led research and product efforts at CoinDesk Indices and Fidelity Digital Asset Management. Kelly has been a TradFi investor for 15 years before joining the crypto space.
You can follow Kelly on Twitter and LinkedIn for more frequent analysis and updates.