Cryptoassets continued their downward trend as recession fears weighed heavily on risk assets ahead of today’s key jobs data report. Macroeconomic trends, political and regulatory uncertainty, market flows, as well as on-chain trading behavior have all been playing critical roles in driving crypto prices, acting as significant catalysts for market volatility. The ongoing uncertainty in these areas has resulted in erratic price movements across the crypto market and heightened investor concerns. After today’s mixed jobs report, market conviction is growing around a potential 50 basis point rate cut by the Fed in September. The US economy added fewer jobs than expected in August, with only 142,000 nonfarm payroll jobs added, compared to the forecasted 165,000. Despite this, the unemployment rate ticked lower. Meanwhile, US equities are on track to end the week in negative territory, with the Nasdaq shedding over 2.5%, driven in part by a significant decline in Nvidia shares. Crypto-focused stocks also struggled, with Coinbase (COIN) falling below $160 for the first time since February, while large-cap bitcoin miners Marathon (MARA) and Riot Platforms (RIOT) both hit annual lows, down 41% and 57% year-to-date, respectively.
Political and regulatory uncertainty also continues to weigh on crypto space. While a recent poll indicates that crypto holders are more likely to vote for Donald Trump over Vice President Kamala Harris in the upcoming US presidential election, national polls have shown a slight shift in favor of the Democrats. Prediction market data from Polymarket, however, suggests Trump currently holds a 53% chance of winning the 2024 election, compared to 46% for Harris. Elsewhere, US agencies have ramped up lawsuits and crypto enforcement actions in recent weeks, targeting major players like OpenSea, Uniswap Labs, and Robinhood (see stories below).
Meanwhile, US spot bitcoin ETFs saw $211.15 million in net outflows on Thursday, recording their seventh consecutive day of negative flows whereas ETH ETFs have accumulated a total of $562.31 million in net outflows since their listing in July, largely driven by Grayscale’s ETHE. In cash markets, ETH’s 5% market depth on US exchanges has dropped by 20% since the introduction of spot ether ETFs in the US amid poor market conditions and seasonality effects, according to CCData. Ethereum futures trading volumes on the CME also dropped to a 9-month low in August, reflecting a decline in institutional interest in Ethereum-related financial products.
On-chain data have been mixed recently. At $436 million, August experienced the second largest monthly on-chain lending market liquidations in history, behind May 2021, which at the time saw about $671 million in liquidations. The key driver behind these unusually high sums of on-chain lending liquidations was the weakness in the price of ETH which recorded a 22% decrease in August, with monthly drawdowns as low as 35%. On the upside, the illiquid portion of BTC has risen to a record high of 74% of the circulating supply – a bullish signal – as buyers “HODL” their BTC. The high level reflects the increasing scarcity of BTC in the market and a potential bullish impact on its price as a lack of BTC in the market means a pick-up in demand could have an outsized bullish impact on the cryptocurrency’s going market rate.
Market Overview
The global cryptoasset market capitalization currently amounts to roughly $2.08 trillion – down from $2.18 trillion last week, with bitcoin accounting for 54%. Among the Top 30 cryptoassets by market cap, Uniswap (UNI) outperformed, gaining about 6.6% over the week. The price of bitcoin (BTC) fell by another 5.1% to $56,652 while the price of ether (ETH) decreased by 5.5% to $2,389. The total value locked (TVL) in DeFi is sitting at $78.7 billion, with Ethereum (excluding Layer 2s) accounting for about 57% of TVL. Arbitrum One remains the largest Layer 2 by value locked, accounting for more than 40% of the $33.5 billion in assets.
This Week’s Headlines
- Crypto-friendly United Texas Bank faces cease and desist order from Federal Reserve
- Robinhood to settle $3.9 million penalty with California DOJ over past crypto withdrawal restrictions
- Uniswap Labs settles with the US CFTC for $175,000 on charges related to derivatives trading
- SEC charges and settles with crypto-focused Galois Capital over custody issues
- Switzerland’s fourth-biggest bank, Zürcher Kantonalbank, offers retail customers bitcoin and ether
- Ripple CEO says new stablecoin Ripple USD (RLUSD) “very close” to launch
- ZKsync developer Matter Labs trims workforce by 16% amid changing market environment, according CEO Alex Gluchowski
- Blockstream launches third series of security token providing bitcoin mining exposure
- Bored Ape Yacht Club’s ApeCoin unveiles new initiatives ahead of the launch of ApeChain network
Notable Deals and Fundraising
- Robot Ventures raises $75 million for its latest crypto venture capital fund
- Halo Capital – a new crypto venture fund founded by Alan Howard’s Son Daniel Howard and Bhavin Bhad – raises $25 million
- Stablecoin infrastructure provider WSPN raises $30 million in seed funding
- Web3 security firm Hypernative raises $16 million in Series A funding
- Stablecoin-based remittance platform Kredete raises $2.25 million to help African immigrants build credit and send money home
