TL;DR

• Bitcoin (BTC) lost momentum, dipping below $60K on Thursday and trading as low as $58K, testing monthly lows. Most altcoins followed the downward trend, with most experiencing significant price declines.
• Inflows into cryptocurrency ETFs have slowed down and even turned slightly negative in recent weeks. The total supply of stablecoins has decreased, indicating reduced demand for risk-averse assets. Trading volume for many altcoins has hit near-term lows, signaling declining market liquidity.
• Ethereum network gas fees hit their lowest level this week, at around 1 gwei. Several on-chain indicators suggest a significant portion of market capital is in a wait-and-see mode, with investors remaining cautious. The market is currently in a “relatively low” position.
• Several top 100 tokens, including ENA, XAI, DYDX, and Aptos, are scheduled for significant token unlocks next week. XAI, in particular, is expected to unlock over 70% of its circulating supply.
• Polkadot ecosystem sees significant developments this week. Next week, EthCC[7] will be held, and the much-anticipated June CPI data from the United States will also be released.

Market Analysis

Review and Insights

• After a downward trend last week, BTC rebounded slightly last weekend but pulled back mid-week. It broke through the low of last week and fell to $57,000 before rebounding to around $58,000. It is currently hovering near the low of the May 2nd monthly price test. If it breaks down, it may trigger a new round of downward trend.
• ETH followed BTC closely this week, pulling back after hitting $3500 last weekend and breaking below $3200 on Thursday. It is still some distance away from the price support line of $2900.
• Altcoins gained ground in the weekend’s market rebound, with meme coins leading the gains among the top 100 tokens. WIF and BONK surged over 20%. Subsequently, altcoins fell across the board under the influence of the broader market.
• TON has seen significant price and TVL growth recently. As a public chain, it has benefited from popular games, which have brought new users and liquidity to its ecosystem.
• Despite a small inflow of ETF funds at the beginning of the week, they turned to outflows mid-week. Stablecoin size has also declined, and the macro funding situation is not optimistic.
• According to the Ahr999 index and current on-chain activity, the market is in a “relatively low” position. Funds are in a wait-and-see mode, and trading is not active.

Weekly Focus

On June 29th, the Polkadot 2024 H1 financial report was released, revealing that the project spent $87 million in the first half of the year, leaving its treasury with enough funds to last only two years. This has raised concerns about the project’s sustainability. In a Twitter Space hosted by the Polkadot official organization on July 2nd, community members discussed these concerns and emphasized the need for strategic spending on critical infrastructure and developer support rather than low-return activities.[1] As a result of the increased attention, the trading volume of DOT and some tokens in the Polkadot ecosystem has increased. For example, on July 5th, Coinglass data showed that DOT and some tokens in the Polkadot ecosystem experienced an increase in trading volume of nearly 40%.[2]

Since June 2024, the German government has been gradually transferring BTC to exchange addresses, a move that could trigger volatility in the crypto market and exert downward pressure on Bitcoin prices. On July 4th at 8:25 AM UTC, an address labeled “German Government” transferred a total of 1,300 BTC to Kraken, Bitstamp, and Coinbase, worth approximately $75.53 million.[3] While the German government’s Bitcoin transfers and potential sales represent a small portion of Bitcoin’s daily trading volume, the event has had a significant impact on market sentiment. According to Arkham and blockchain browser data, the German government currently holds over 40,000 BTC, worth over $2.3 billion.

Apart from the German government’s BTC sales, Mt. Gox repayment progress also sparks market concerns. Mt. Gox’s trustee previously announced that it would commence distributing Bitcoin (BTC) and Bitcoin Cash (BCH) reimbursements to creditors in early July. On July 4th, addresses identified as belonging to Mt. Gox initiated test transactions, garnering widespread market attention. Despite being merely small-scale tests, these transactions have already negatively impacted market sentiment. According to data from Arkham Intelligence, the Mt. Gox reimbursements could introduce approximately 142,000 Bitcoins into the market. As the reimbursement process unfolds, these Bitcoins may gradually enter the market, amplifying sell-off pressure. In the long run, the market will require time to absorb this selling pressure and establish equilibrium within the new supply and demand dynamics.

Weekly Spotlight

While the broader cryptocurrency market is experiencing a month-on-month price decline, the TON chain’s TVL (Total Value Locked) has witnessed significant growth. This surge is attributed to the recent explosion of “click-to-earn” minigames like Not Coin, which have propelled the popularity of the TON ecosystem, attracting a steady stream of similar games.

Hamster Kombat stands out as a remarkable phenomenon within the TON ecosystem. According to its official website, the project has amassed over 200 million registered users, garnered over 48 million followers on Telegram, accumulated over 31.5 million subscribers on YouTube, and amassed over 11 million followers on X (Twitter).[4] The game’s core gameplay revolves around accumulating points by clicking on hamsters. Players can also earn additional rewards through various methods, including purchasing special cards, daily check-ins, social media interactions, and referring to new friends. The Hamster Kombat team’s promise of token airdrops has further fueled player engagement.

According to Coingecko’s data, TON’s market capitalization has surpassed $17.7 billion, propelling it to the ninth position on the cryptocurrency market capitalization leaderboard. This achievement underscores the market’s keen interest and confidence in the TON ecosystem.[5] Moreover, Gate.io has initiated the pre-trading of Hamster Kombat (HMSTR) and unveiled its token economic model. The platform will provide investors with the opportunity to buy and sell HMSTR before its official listing and trading, allowing them to set their desired trading prices based on their expectations before the token enters the open market, thus enhancing trading flexibility.

Trending Categories

Influenced by the broader market downturn, various sectors experienced varying degrees of decline. However, driven by macroeconomic factors, gold prices inched up, resulting in a slight 1.3% positive growth for related tokenized assets. Layer 0 concepts exhibited a smaller decline, primarily attributed to the recent strong performance of ZRO, which went public this week and boosted the overall concept’s growth. Other altcoin concepts, affected by the broader market and liquidity, experienced varying degrees of decline. The significant volatility in altcoin prices this week, ranging from the weekend’s rebound to the midweek’s decline, underscores the influence of the broader market on altcoins.[6]

Top Performers

According to CoinGecko data, the two top-100 projects with impressive gains at the beginning of this week were ENS and BEAM. Recently launched airdrop tokens ZRO and ZK also garnered significant market attention.

• ENS is a renowned Ethereum domain service provider. The ENS team will participate in EthCC [7] in Europe on July 8th, where they will introduce their upcoming rebranding to attendees. Simultaneously, ENS V2 is on the verge of launch, and the market holds optimistic expectations for the project, potentially contributing to the recent price surge.

• BEAM is the governance token of the gaming ecosystem Beam, initially known as Merit Circle. Its primary business involves gaming guilds. Following a brand revamp, Beam has gradually evolved into a comprehensive gaming ecosystem. In June, Beam announced its expansion into AI, infrastructure, and gaming. On July 1st, Beam initiated a $BEAM distribution event, allowing all participants in the Beam ecosystem to claim rewards within a limited timeframe.

• LayerZero is a cross-chain interoperability protocol designed specifically for lightweight message passing. It provides secure and verifiable message passing with configurable trustlessness features. According to ZRO Tokenomics, nearly 40% of the tokens will be allocated to the community. In recent days, the token price has surged from $2.5 to $4.

• zkSync is a Layer 2 scaling solution developed by Matter Labs, utilizing the latest generation of zero-knowledge proofs to preserve the security of the underlying blockchain. After listing on Gate, the token rallied to $0.2241 before retreating to $0.1575. Its current price trajectory exhibits a strong correlation with BTC’s trend.

Data Highlights

Macro Funds

As of July 4th, the total trading volume of BTC ETFs reached $912.85 million, the total market cap of BTC ETFs was $54.34 billion, and the total AUM (assets under management) of BTC ETFs was $50.97 billion. After five consecutive days of net capital inflows, BTC ETFs experienced two days of net outflows this week, indicating a weakening of external capital interest in cryptocurrency investments.[7]

Coinciding with the decline in BTC ETF net inflows, the stablecoin market capitalization slightly decreased by 0.27% to $160.952 billion, slowing down the inflow of off-chain funds. This phenomenon might be attributed to the uncertainty surrounding US interest rate hikes and the waning enthusiasm of non-crypto investors in high-risk assets like cryptocurrencies.[8]

Ethereum Gas Fee

Ethereum Gas Fee remained in the single-digit range throughout this week, reflecting low on-chain activity.[9] Among the top 5 Gas consumers, the Telegram trading bot Banana Gun ranked fourth, far exceeding well-known DeFi protocols.[10] According to a chart created by Dune @whale_hunter [11], the trading pairs with the highest trading volume on Banana Gun are RCH-WETH, SOL-SLERF, USDC-WETH, PEW-WETH, and USDT-WETH.

Bitcoin Ahr999 Index

The Ahr999 Index, also known as the “Hodling Indicator,” has remained stable around the 0.8 level for the past week. This implies that the Bitcoin price is in a fair valuation range relative to its realized value or all-time lows. [12] According to the Ahr999 Index, this could be an opportune time for dollar-cost averaging (DCA) strategies.

Ahr999 Index is a “Hodling Indicator” used to measure Bitcoin’s investment attractiveness, helping investors > > > > identify potential buying and accumulation opportunities while avoiding investments during market > overheating.
Ahr999 < 0.45: The market may be in an oversold state, suitable for buying;
Ahr999 between 0.45-1.2: The market is in a normal valuation range, recommended for dollar-cost averaging;
Ahr999 > 1.2: The market may be overheated, and the indicator does not provide operational advice.

Market Opportunities

Project Airdrops

Hot airdrop ecosystem to watch this week: the Bitcoin Layer 2 project Bitlayer

Overview:
Bitlayer is the first Layer 2 solution for Bitcoin built on the BitVM paradigm, offering Bitcoin-level security and Turing completeness. The project raised $5 million in seed funding in March, with Gate Labs among the investors. According to the project’s website, Bitlayer’s current TVL stands at $495 million, making it the second-largest within the Bitcoin ecosystem.

Airdrop Opportunities:

In May, Bitlayer partnered with projects within its ecosystem to host the first “Mining Gala Event”, with seven prominent projects airdropping over $24 million worth of assets. In June, a three-day Mining Gala Season 2 was held, airdropping approximately $1.2 million worth of assets. Based on the project’s official social media channels, multiple projects within the ecosystem continue to host similar airdrop events. Additionally, Mining Gala Season 3 is expected to launch soon, making Bitlayer a promising ecosystem to watch for airdrops.

Weekly Fundraising Report

This week saw several projects successfully complete key funding rounds, encompassing a diverse range of innovative projects and startups. According to RootData, between June 28th and July 4th, a total of 28 projects announced funding rounds, with 7 projects securing over $10 million. Notably, 4 out of the top 7 funding rounds were seed rounds. Here’s a breakdown of the top three fundraising projects:

• Iris Energy: This Australian crypto mining company has raised $413.4 million through equity offerings since mid-May. The funds will be utilized for its expansion plans.
• Sentient: This open-source AI development platform secured $85 million in a seed round from several crypto VCs. The project aims to build open-source AI models driven by community contributions, directly competing with OpenAI.
• Lombard: This Bitcoin DeFi protocol raised $16 million in funding. According to reports, Lombard will utilize these funds to expand its Bitcoin restaking ecosystem and collaborate with Bitcoin staking protocol Babylon.[13]

What to Watch Next Week

Token Unlock

According to Token Unlocks, several projects will experience significant token unlocks starting July 6th. Among these, Xai is expected to face substantial unlock pressure from both the team and investors. The estimated unlock amount is around $80 million, representing approximately 71.59% of the current circulating supply. Investors should be mindful of the potential selling pressure this may induce.[14]

Crypto Calendar

=nil; Foundation、EOS and several other projects have scheduled upgrades and new feature releases for next week. EthCC [7], Europe’s largest annual Ethereum event, will take place on July 8th, bringing together investors, crypto enthusiasts, developers, and entrepreneurs.[15]

On a macro level, several crucial macroeconomic data points will be released next week. One of the most significant for cryptocurrencies is the U.S. CPI data, which will be released on July 11. A higher-than-expected CPI number could increase investor expectations for Fed rate hikes, which would be bearish for cryptocurrencies.[16]

References

1. Polkadot X Space, https://x.com/Polkadot/status/1808154832131281280
2. CoinGlass, https://www.coinglass.com/view/polkadot-ecosystem
3. Arkham, https://platform.arkhamintelligence.com/explorer/entity/germany
4. HamsterKombat, https://hamsterkombat.io/
5. CoinGecko, https://www.coingecko.com/en/coins/toncoin
6. CoinGecko, https://www.coingecko.com/en/categories
7. CoinGlass, https://www.coinglass.com/bitcoin-etf
8. DefiLlama, https://defillama.com/stablecoins
9. Etherscan, https://etherscan.io/
10. Ultrasound, https://ultrasound.money/
11. Dune, https://dune.com/whale_hunter/banana-gun-bot
12. CoinGlass, https://www.coinglass.com/pro/i/ahr999
13. RootData, https://www.rootdata.com/zh/Fundraising
14. Token Ulock, https://token.unlocks.app/
15. PanewsLab, https://www.panewslab.com/zh/calendar/index.html
16. Jin 10, https://www.jin10.com/

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