The Market
It has been a volatile week for Bitcoin. It started the week close to $70K, briefly went above $70K, encouraged by the May CPI report showing a slowdown in inflation last Wednesday, but then gave it all up and retreated to $66K as the Fed decided to hold rate steady in the FOMC meeting, with the dot plot showing reduced rate cut expectations from the Fed governors. Compared to the last FOMC meeting in March, where more than half of the governors projected more than 50 bps of rate cuts in 2024, the June meeting shows that the majority of predictions are around a 25-50 bps cut this year. The projection for 2025 remains very volatile, although the average projection also shifted up, indicating a lower magnitude of rate cuts.
The crypto and TradFi market diverged in performance last week. Both the fixed income and equities markets reacted positively to the FOMC meeting, ending the week with gains, while the crypto market sold off. We believe the crypto market tends to overreact to macro shifts and front-run the TradFi market when it comes to macro expectations. With limited growth in new money entering crypto, as demonstrated by the slowdown in Stablecoin supply, crypto investors are anxiously waiting for a turn in liquidity conditions to fuel further rally.
The altcoin market was hit harder last week, with the market cap of the total crypto market excluding the top 10 (OTHERS) selling off by approximately 10%. So far, BTC has led the altcoins in performance YTD, but as our analyst Max Good pointed out, altcoins outperformed BTC by 2.5X in the last rally from Nov '23 - Mar '24. We expect the market to trade sideways as we head into summer, but there are a few catalysts, such as the ETH ETF launch and updated rate outlook in the July FOMC, that could increase the risk appetite in the crypto market.
DeFi Update
Solana DEX transactions reached new highs in June. The number of DEX transactions on Solana has far exceeded other chains, thanks to Solana’s high speed and low cost.
Excluding SOL and Stablecoins, the biggest volume contributor remains memes, representing over one-third of the total trading volume.
Raydium, the Solana DEX with the most meme trading volume, has risen to benefit the most from this trend. Now taking more than 50% share of the total Solana DEX trading volume, Raydium’s trading fees have surpassed Solana’s overall revenue on some days in March, April, and June.
Another winner of the memecoin boom on Solana is Metaplex, most well known for its NFT infrastructure on Solana, supporting 99%+ of all Solana NFT issuance. Metaplex’s Token Metadata, is also directly involved in the creation of fungible tokens on solana, including memecoins created through platforms like Pump.Fun and others. Metaplex’s fungible token creation has skyrocketed since March this year, benefiting from the boom in Solana memes. We consider Metaplex a great horizontal play on the growth of the Solana ecosystem, as it serves as the asset issuance infrastructure layer on Solana, benefiting from not only NFT but also fungible token issuance.
Top 100 MCAP Winners
Oasis (+19.83%)
Uniswap (+13.99%)
Bitcoin (+13.85%)
Toncoin (+12.59%)
Lido DAO (+4.91%)
Top 100 MCAP Losers
Wormhole (-31.40%)
FLOKI (-26.32%)
ORDI (-25.04%)
Arweave (-21.99%)
Worldcoin (-18.87%)
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.