The Market
The crypto market has entered an exhaustion phase, with BTC down ~12% from the June top reached right before the FOMC meeting and altcoins are down ~20%.
The lack on fresh capital into crypto is reflected in the slowdown in stablecoin supply
Despite inflows to the BTC spot ETF, the net buying effect on BTC is said to be limited by the BTC basis trades now available for TradFi institutions, where they can buy spot BTC through ETF and short futures on CME. While it’s hard to pinpoint the exact size of such trades, the chart below shows the Open Interest for shorting CME BTC futures has more than doubled from $3.5B to $7B since the spot ETF approval.
This explains why ETF inflows weren't able to trigger more on-chain transfers of BTC lately.
Overall trading volume on CEXes have dipped down to the end of 2023 levels from a post-FTX ATH reached in March 2024, indicating a lack of fresh capital entering the crypto market.
Interestingly, DEX trading volumes are still holding up, primarily driven by DEX activities on Solana, with a large portion driven by memecoin trading.
Despite the increased likelihood of ETH ETFs launching on July 2nd and SEC dropping investigation of Consensys last Wednesday, the ETH price has failed to break the $3900 level after the 19b-4 approval. Although the price did find higher lows in recent selloffs, positioning itself for a potential rally once the ETF is launched. Assuming the demand of the ETH ETF vs. BTC is proportional to their market cap split, and considering about 30% ETH is staked, thus limiting its supply, it’s possible $1 inflow into ETH ETF will have 1/(1-30%) = 1.4X price impact compared to a $1 inflow into the BTC ETF. The actual inflow into the ETH ETFs might be lower given that ETF issuers are pushing hard on BTC’s dual narrative as storage of values as well as proxy to crypto growth. Still, given the 60% price impact on BTC spot ETF two months into its ETF launch, we expect ETH ETF inflow dynamics could push ETH price above $5000 in Q3-Q4 2024.
DeFi Update
Summer is clearly not in crypto yet from a market price perspective. However, there are some ecosystems experiencing a summer of user and activity growth. TON has recently surpassed ETH in both daily active addresses and daily transactions.
The DEX trading volume on TON is also quickly catching up with Base, the most popular Ethereum L2 developed by Coinbase.
TON has been setting records for bringing mainstream users on-chain through gamified experiences. Notcoin, the first TON ecosystem token that’s listed on a major CEX (Binance), has accumulated more than 2 million holders and maintained on average ~300K DAUs since its launch in May. This would easily rank it as the top game by users on DAppRadar. Notcoin started as a very simple click-to-earn game but has evolved into Ton ecosystem’s go-to customer acquisition tool. Notcoin founder mentioned his vision of becoming “a hub for kickstarting other ecosystem projects while stimulating demand for Notcoin and burning some tokens in the process.” For example, Citizen, a game built on TON has announced a partnership with Notcoin, with access to the Notcoin community, the game has quickly grown to 120K DAUs in two months.
It is estimated that 400 million users use Telegram mini-apps or bots every month. TON opens the possibility to bring those users on-chain without friction with Telegram’s integration of the Ton Space wallet. Notcoin’s success has set a great example of how crypto incentives can attract users quickly. We expect a Cambrian explosion of various dApps building on TON to leverage Telegram’s user base. TON to Telegram is like Base to Coinbase, setting a precedent for how a large and profitable Web2 company could blaze a path to grow a Web3 business from within.
Top 100 MCAP Winners
Pendle (+17.90%)
Ethereum Naming Service (+12.51%)
Maker (+7.64%)
Lido DAO (+6.78%)
TRON (+3.93%)
Top 100 MCAP Losers
zkSync (-35.86%)
Chiliz (-27.30%)
Starknet (-26.18%)
Notcoin (-25.88%)
Dogwifhat (-25.09%)
About Decentral Park
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Decentral Park applies a principled digital asset investment strategy and partners with founders to enable their token-based decentralized networks to scale globally.
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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.