TL;DR

• BTC price stabilized and rebounded, driven by reduced negative news and positive ETF inflows.
• ETH followed BTC’s trend, rebounding after a dip, with $2,900 acting as a key support level.
• Altcoins saw a moderate rally, particularly in TON ecosystem and modular blockchain concepts
• BTC ETFs experienced four consecutive days of net inflows, while stablecoin market capitalization increased by approximately 0.98% over the week, indicating improved liquidity.
• Several sectors received funding this week, though the scale decreased compared to the previous week. Several projects also announced airdrop progress.
• Project activities were abundant this week, with a significant Ethereum community offline conference on the horizon. Some conferences in the US may impact market sentiment.

Market Analysis

Review and Insights

• BTC price dipped below $54,000 on July 5th, reaching a recent low and accompanied by a surge in trading volume. A subsequent rebound pushed prices above $58,000, followed by a retracement to around $54,000. The prices then fluctuated upwards, reaching $59,000. As of July 10th, 4 PM, BTC failed to stabilize above $58,000 on the daily chart.
• Following BTC’s lead, ETH breached the crucial support level of around $2,900, as emphasized in the weekly report on July 5. After dropping, the price quickly rebounded above $2,900. As of 4 PM on July 10, ETH attempted to break through $3,100 but retreated, now fluctuating between $3,000 and $3,100.
• Altcoins, influenced by BTC, experienced a modest general upward trend, with some concepts seeing more significant gains, such as modular blockchain and Ton ecosystem concepts.
• The broader market rebound can be attributed to reduced selling pressure from the German government and a combined approach of over-the-counter (OTC) and exchange trading for Mt. Gox asset payouts. On the funding side, BTC spot ETFs have seen net inflows for three consecutive trading days, bringing new buying demand into the market.
• The issuers of ETH spot ETFs has officially submitted an amendment to the S-1 filing. The official approval timeline for ETH spot ETFs will soon be revealed, representing a potential long-term positive for ETH.

Weekly Focus

Critical Phase Approaching for ETH Spot ETF Approval

The much-anticipated decision on ETH spot ETF applications is nearing. The outcome of the ongoing S-1 (registration statement) filing review will determine if and when ETH spot ETFs can commence trading. The Block’s June 29th report revealed that the SEC returned the S-1 filings to ETH ETF issuers, requesting revisions and resubmission by July 8th. [1] As illustrated below, six ETH spot ETF issuers, including VanEck and 21Shares, have already submitted their revised S-1 filings before the deadline. Unlike the 19b-4 filings approved in May, the S-1 filings have a 30-day time limit only for the initial review. Formal approval may involve multiple rounds of comment letters, rejections, and resubmissions.

Spot ETFs require issuers to directly hold ETH, and their value is directly linked to the market price of the held ETH. This implies that once approved, ETH could become an entry point for a large amount of capital from outside the crypto sphere, generating direct demand for ETH and potentially driving its price upward in the medium to long term. Following the official launch of ETH spot ETFs, investors might develop a new appetite for spot ETFs of altcoins like ETH, which would also be a positive development for the industry. For instance, the Chicago Board Options Exchange (CBOE) has confirmed that VanEck and 21Shares, two asset management firms, plan to introduce exchange-traded funds (ETFs) based on Solana. On July 9th, the two issuing companies submitted their 19b-4 filings for Solana ETFs to the SEC.

Pendle TVL Plummeted

According to data from DeFILlama, as illustrated below, the total value locked (TVL) of Pendle (a yield swap protocol) has significantly declined from its ATH (all-time high) of approximately $7 billion in early June. As of 4PM on July 9th, the TVL is around $3.682 billion, nearly half of its peak value.

Based on on-chain data analysis, the decline can be attributed to three main factors:

Liquidity Pool Maturities: Pendle has a large number of restaking liquidity pools, each with a set maturity date. Several key pools, including Ether.Fi’s eETH, Renzo’s ezETH, Puffer’s pufETH, Kelp’s rsETH, and Swell’s rswETH, recently matured. As participants withdraw their funds upon maturity, this has led to a large-scale withdrawal of liquidity.

Decline in TVL Asset Prices: The primary sources of Pendle’s TVL are ETH and its derivative tokens. In early June, ETH was priced at $3,900 per token, recently dropping to around $3,000, with a low near $2,800. This represents a decline of approximately 21%. In ETH terms, the TVL ATH was about 1.95 million ETH, while the current value is 1.2 million ETH, a drop of around 38.5%.

Reduced Liquidity Pool Attractiveness: The attractiveness of some restaking liquidity pools to users stemmed from potential airdrop opportunities. However, major participants like Ether.Fi and Renzo have already officially launched their tokens and conducted airdrops, significantly reducing the appeal of these pools to capital.

In the short term, with ETH price reaching support levels, the impact of price on TVL is likely to diminish. Combined with the ETF situation, asset prices are a positive factor in the medium to long term. In addition, new liquidity pools are being introduced through collaborations between Pendle and restaking protocols like Karak and Symbiotic, similar to EigenLayer. Airdrop expectations from these new partners will further attract user funds. In summary, the likelihood of another significant TVL drop is reduced, and in the medium to long term, TVL is expected to try to return to ATH and potentially surpass it.

Further Sell-Off of BTC by Two Previously Highlighted Addresses

In the previous weekly report, Gate Research focused on two BTC-holding addresses identified as belonging to the German government and Mt. Gox. According to Glassnode statistics, as of July 10 at 12 PM, the address associated with the German government had been transferring varying amounts of BTC to exchanges, institutions, and crypto trading organizations such as Kraken and Cumberland every day since July 4. As of 12 PM, the remaining BTC balance of this address was 23.964K. The Mt. Gox address transferred approximately 2700 BTC on July 4 but has shown no further activity since.

Based on BTC price movements and trading volumes, the BTC transferred from the German government address would have a minimal impact on the crypto market, which sees daily trading volumes of nearly $30 billion (approximately 51,000 BTC). The market panic primarily stems from uncertainty about potential future sell-offs by the large holding addresses. With the German government address having sold around 55% of its tokens, the potential sell-off pressure has reduced. Mt. Gox will likely sell a portion of its tokens through OTC methods, meaning the impact of large holders on BTC prices will be further minimized.

Weekly Spotlight

Layer 2 project Blast has recently unveiled its Phase 2 user rewards program, aiming to incentivize DApp development and Blast App usage by allocating 100 billion BLAST tokens. Users will have the opportunity to earn Blast Points based on their holdings of ETH, WETH, USDB, and BLAST tokens, while Blast Gold will be distributed based on DApp engagement and competition performance.

In the second quarter of 2024, the total value locked (TVL) in the Blast ecosystem’s DApps reached $2 billion, with over 1.5 million users and more than 200 DApps launched, making it one of the fastest-growing public chains. Top venture capital firms Paradigm and CGV FoF led a $25 million investment in Blast in November 2023. With increasing community activity and trading volume, BLAST tokens serve as governance and incentive tools within the ecosystem. The total supply of BLAST tokens is 100 billion, with 50% allocated to the community and the remainder distributed to core contributors, investors, and the foundation. Most tokens will unlock linearly over time. The Blast team announced governance guidelines on June 26, further solidifying its position as the world’s sixth-largest on-chain economy.[2]

Trending Categories

Modular Blockchain - The sector performed well over the past 7 days, with a gain of 32.4%, a market capitalization exceeding $2.4 billion, and a 24-hour trading volume of over $340 million. Modular blockchains aim to enhance scalability, security, and customization by layering different functionalities of the network while maintaining decentralization and security.

Appchains - This sector saw a 5.6% increase over the past 7 days, with a market capitalization of $909,294,715 and a 24-hour trading volume of $22,322,172. Appchains provide a customized blockchain environment for specific applications, allowing each DApp to have an independent blockchain optimized for its needs, thereby improving performance and functionality.

Parallelized EVM - The sector experienced a slight increase of 4.3% over the past 7 days, with a market capitalization nearing $1.07 billion and a 24-hour trading volume of $94,800,174. Parallel EVM technology significantly improves network throughput and performance by enabling multiple transactions to be executed simultaneously, addressing efficiency issues of traditional EVMs and presenting new opportunities and challenges for blockchain technology development.

Top Performers

SATS - SATS is a BRC-20 token created to honor BTC’s founder, Satoshi Nakamoto. UniSat has announced the launch of Swap functionality based on the BRC-20 protocol on the Bitcoin mainnet and Fractal Bitcoin, using BRC-20 SATS as gas fees.[3] Since the market plummet on July 5, the SATS token has increased by 72.0%.[4]

TIA - According to CoinGecko data, the price and trading volume of Celestia’s token TIA have surged recently. Celestia is an innovative modular blockchain network aiming to provide a highly scalable and cost-effective system, allowing users to easily deploy their own blockchains. By decoupling execution and consensus mechanisms and incorporating Data Availability Sampling (DAS) technology, Celestia aims to overcome the blockchain trilemma and achieve better scalability. The token’s price has risen by 32.0% over the past 7 days.[5] However, multiple data indicators like MACD do not support this rally, suggesting it may be a short-term adjustment.

NOT - According to CoinGecko data, the trading volume of the token NOT from the Telegram game Notcoin has significantly increased, indicating a potential bullish breakout. Notcoin allows users to earn in-game tokens through a simple click mechanism, aiming to attract a broad user base to the world of cryptocurrency. The game’s design intends to simplify traditional cryptocurrency operations, enabling users to easily experience and learn about blockchain technology. Over the past 7 days, the price of Notcoin’s token has shown a significant increase of 26.4%, reflecting market recognition and interest in its gamified approach and accessible cryptocurrency experience. As more users engage with and learn about cryptocurrency through Notcoin, the project has the potential to further promote cryptocurrency adoption.[6]

Data Highlights

Macro Funds

As of 12 PM on July 11, the total trading volume of BTC ETFs reached $1.398 billion, with a total market capitalization of $51.958 billion and total assets under management (AUM) of $50.292 billion. From July 5 to 10, BTC ETFs experienced net inflows for four consecutive days, with a net inflow amounting to $758 million, providing some financial support for BTC’s recent rebound.

Simultaneously, while the net inflow of BTC ETFs increased, the market capitalization of stablecoins rose slightly by 0.98% to $162.519 billion, indicating an increase in funds in the market.

Ethereum Gas Fee

This week, Ethereum’s gas fees remained in single digits, reflecting reduced on-chain activity. Among the top 5 gas consumers, the Telegram trading bot Banana Gun still holds the fourth position, surpassing many well-known DeFi protocols. The Telegram trading bot Maestro has become the sixth highest gas consumer. This protocol offers tools such as multi-chain (BSC and ETH) sniper bots, wallet trackers, and whale bots.

Bitcoin Ahr999 Index

The Ahr999 index, also known as the “Hodling Indicator”, has continuously decreased to the 0.7 level over the past week. This indicates that the price of Bitcoin relative to its realized value is now within a normal valuation range. According to the Ahr999 index, this could be a good time for dollar-cost averaging.

Market Opportunties

Project Airdrops

Airdrop project to watch this week: Fuel

Introduction: Fuel is a modular execution layer (Rollup OS) specifically designed for Ethereum Rollup, aiming to drive the development of high-throughput blockchains with sustainable states. The Fuel Points program was set to launch on July 8, aiming to provide future incentives to contributors during the Fuel mainnet release process.

Participation Mechanism: Through the Fuel Points program, participants will be rewarded at various stages of network deployment—from the public testnet to the Fuel mainnet. Users can earn Fuel Points by depositing assets such as ETH, WETH, USDT, etc., into the Fuel Points program portal. These points will accumulate daily based on the USD value of the deposited assets. Early depositors are expected to earn more points and receive additional incentives and higher loyalty rewards upon the mainnet launch.

Eligible Assets: Currently eligible assets for the program include: ETH, WETH, eETH, rsETH, rETH, wbETH, USDT, USDC, USDe, sUSDe, ezETH, and stETH.

For detailed tutorials and reward mechanisms, please check <Introducing the Fuel Points Program>

Weekly Fundraising Reprot

Several projects secured key rounds of funding this week, covering various sectors such as DeFi, identity solutions, payment card services, DeFi infrastructure, CDP protocols, and gaming platforms. According to RootData, from July 5 to July 11, a total of 13 projects announced their funding rounds.[7] Compared to last week, the number of funded projects slightly decreased, and only 3 projects raised over $5 million, indicating a reduction in the total amount of funding. Below are the top three projects in terms of fundraising this week:

• Rome Protocol raised $9 million, focusing on building a shared sequencer network on Solana to provide high-performance services.
• Term Finance raised $5.5 million in a strategic round, aiming to create a non-custodial, scalable fixed-rate lending protocol.
• Dora secured $5.5 million in investment to develop its multi-chain search engine and browser.

What to Watch Next Week

Token Unlock

According to data from Token Unlocks, the market will see several important token unlock events next week. Aptos (APT) will unlock 2.49% of its current circulating supply, valued at approximately $63 million. Immutable (IMX) will unlock 2.15% of its circulating supply, valued at approximately $41.6 million. Ethena (ENA) will unlock 0.87% of its circulating supply, with an estimated market cap of approximately $5.6 million.[8]

On July 9, the Xai team, highlighted in the previous weekly report, provided an update on their token unlock status. The team has agreed to relock the tokens that were set to unlock in July for an additional six months. This reduces the team unlock amount from approximately 85 million to around 17.7 million tokens. In total, about 107.9 million tokens will be unlocked in July. Currently, XAI’s circulating supply is around 300 million tokens. The 107.9 million tokens will increase the circulating supply by about 36%, making up approximately 26% of the new total circulating supply.[9]

The unlock details are as follows:

Crypto Calendar

In the upcoming week, the blockchain and crypto industry will witness several key events. Some important macro data releases will significantly impact the industry.

On July 12, ETH Global Brussels [10] will take place in Brussels, focusing on the development of Ethereum technology and innovations in dApps. Meanwhile, the U.S. House of Representatives plans to vote on a significant measure to overturn President Biden’s veto of the SEC’s cryptocurrency custody accounting standard (SAB 121). This standard, announced in 2022, has been controversial because it requires custodians to account for customers’ cryptocurrency holdings as liabilities, potentially affecting banks’ protection of digital assets.

Additionally, the European Central Bank’s interest rate decision[11] this week could profoundly affect global financial and crypto markets. Investors and industry participants should closely monitor these events to respond promptly to market developments.

References:

1. TheBlock,https://www.theblock.co/post/302687/sec-returns-s-1-forms-to-ethereum-etf-issuers-with-at-least-one-more-round-to-go-source
2. Blast Q2 2024,https://assets.blast.io/en/q2-2024.pdf?ref=blog.blast.io
3. Unisat-Wallet.Medium,https://unisat-wallet.medium.com/2024-07-unisat-swap-product-important-update-e974084074a1
4. Gate.io, https://www.gate.io/zh/futures/USDT/SATS_USDT
5. CoinGecko, https://www.coingecko.com/en/coins/celestia
6. CoinGecko,https://www.coingecko.com/en/coins/notcoin
7. RootData, https://www.rootdata.com/Fundraising
8. Token Unlocks, https://token.unlocks.app/
9. X, https://x.com/XAI_GAMES/status/1810386333145379142
10. PanewsLab, https://www.panewslab.com/calendar/index.html
11. Jin 10, https://jin10.com/

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