The ETH ETFs are coming in hotter than the milk we’re just now remembering we left in the car (ooops).
They took in more investor dollars yesterday than on their debut (with investors buying up 40,700 ETH) — totally ignoring the market implosion in the process!
Which continues to back up the theory we floated yesterday:
If the big-dogs of the traditional financial world are buying the dip, the bull run is still on.
So if all goes to plan — where to from here?
Simple: base → climb → crunch.
Base = investors continuing to buy at what they see as a bargain, creating a price base that will be hard to break down from.
Climb = as more investors try to get in at these prices, ETH will begin to recover.
Crunch = supply crunch. At a certain point, ETH’s demand will outweigh its supply, pushing Ether to new all time highs.
Here – have another story about institutions and ETH!
This time, we’re talking about Lido who have just launched ‘Lido Institutional,’ a B2B-focused white glove service targeted at large customers like crypto funds and asset managers who hold ETH.
Who/what is Lido?
Lido is the largest liquid staking platform which means it lets customers lock up their ETH, but also provides them with a special token – stETH – to hold, trade, use as collateral etc. while their ETH earns interest.
(Pretty neat).
According to data from Dune, Lido controls ~28.75% of all staked ETH on Ethereum.
And now they’re taking that dominant position and building on it by creating an offering specifically focused on institutions.
How’s the new offering work?
The main advantage of Lido Institutional seems to be that they’ve figure out a way to avoid the commingling of institutionally-owned stETH with stETH owned by Lido’s retail investors.
With the ETH ETFs being launched, that’s a huge unlock for institutions to get access to ETH, without literally buying ETH.
But the thing about ETH is, while historically its value does go up year-on-year, one of it’s main advantages is all of the other things you can do with it – like staking.
(Meanwhile, the ETH ETFs are not allowed to stake their ETH holdings).
So basically, Lido Institutional is a slightly more sophisticated alternative to the ETH ETFs for hedge funds to get access to ETH – plus it’s more decentralized and it almost certainly will provide a greater return (that’s the whole point of staking).
Pretty smart by Lido to ride the coattails of the explosion of ETH purchases by institutions.
ETH ETF daily inflows are booming, US futures contracts are up, and ARK bought $17.8M of Coinbase stock, and $11.2M of Robinhood — indicating big market players are still bullish.
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Is the bull run over?
Short answer: nah, probably not.
How’re we coming up with such deep technical analysis?
We’re watching what the big-dogs are doing (and you should too).
Here’s what’s happening:
The Ethereum ETFs recorded their second-largest daily inflows to date on Monday
US futures contracts are up (indicating the market is betting the US economy will rebound in the near future)
ARK bought $17.8M of Coinbase stock, and $11.2M of Robinhood on Monday
Add this all up and what do we see?
The big-dogs are buying the dip — which indicates the hundreds of uber-smart analysts these financial institutions have on their payroll are looking at market data, comparing it to where we are in the relevant market cycles and saying:
“I reckon we’re good. Let’s go shopping.”
(Or however MBA types tend to talk).
Point is: the big-dogs see opportunity in the market, not doom — and that’s a pretty reliable indicator we are still in a bull market.
As thanks for their un-intentional guidance, we will be placing an offering of their favorite things (a Patogonia vest, tub of Zyn, and White Claw) at the foot of their god.
After Monday’s crash, Bitcoin is up 8%, Ethereum is up 11%, and Solana is up a whopping 20% — but black swan events like this have a tendency to take weeks to recover from (not days).
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If you’ve never fallen out of a tree after your older cousin said he’d break your Nintendo 64 if you didn’t reach the top in the next 5 mins…
Lettuce explain how it works:
You rarely fall straight down.
Typically, you bounce between the branches, making flailing grabs before you’re met with the hard, unwelcoming embrace of the ground.
Same tends to go for black swan market crashes like the one we’re in now.
After Monday’s crash, Bitcoin is up 8%, Ethereum is up 11%, and Solana is up a whopping 20%.
That’s cool!
But have we hit a tree branch, or solid ground?
We’re not here to give a definitive answer, but a warning…
Cause right now you may have be experiencing some intense FOMO.
“If I had’ve bought in when everyone was panicking, I’d be way up rn! I don’t want to miss any more gains…time to take a 100x long.” — you, probably.
This is a great way to get w-r-e-c-k-e-d.
So before you ape in, remember:
Black swan events like this have a tendency to take weeks to recover (not days).
Check out all the tree branches we hit in 2020, before bottoming and grinding mostly sideways for months:
The takeaway:
If you can’t keep yourself from entering the market — the safest way to do so is by dollar cost averaging in (buy a little each week).
If the devil on your shoulder has a gun to your head, forcing you to take on leverage (borrow cash to buy more crypto), here’s how to soften downside risk:
Low leverage
Low position sizing
Stop losses tighter than the skinny jeans you wore in middle school
Alright, that’s everything — be safe out there folks!
If you live in the US, chances are on Tuesday morning you were struck with news articles (good, bad, ugly – depending on your algorithm) about Kamala Harris picking Minnesota Governor, Tim Walz, as her running mate.
As a result, two degen-related things happened in crypto:
The ~$123M crypto pool of bets placed on Polymarket for who Harris’ running mate would be was divvied out (which was at just 4% odds of Walz winning as of Friday last week).
Tim Walz meme coins flew up in value (before crashing right back down).
For example, the one week old ‘tem walz’ Solana-based meme coin went all the way up to having a market cap of almost $1M, and then came all the way back down to a market cap of ~$250k as ‘investors’ sensed a bubble and pulled their money out.
So, what’s the moral of this story?
Firstly, crypto is crazy. Even if it doesn’t feel like real money because it’s in token form, that’s real money that’s being played with on meme coins.
Solana-based meme coins have been one of the big catalysts for the growth of the crypto industry as a whole in the past year or so, and chances are, more and more meme coins will continue to be launched about trending news.
But before you get sucked into the lure of those potential green candles, remember that putting money into ‘tem walz’ is not a long term investment strategy; so make sure you’re only ‘investing’ what you can afford to lose.
$4T left the global markets as investors closed their Yen carry trades, leading to a crash in stocks, commodities, and crypto — but this could be the catalyst for hard rate cuts and liquidity injections, leading to a blow off top for crypto markets in 2024.
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If you opened your trading apps yesterday morning only to be accosted by a sea of red and want to know what happened — we’ve got you.
It all started with the Japanese ‘carry trade’…here’s what that is:
When a central bank raises its interest rates, its underlying currency typically goes up in value.
(E.g. The US dollar has been gaining strength over the past 18 months as the Federal Reserve continued to raise/hold interest rates).
…on the cooler side of the pillow — if a central bank keeps its rates low, its currency stays cheap.
(E.g. Exactly what the Bank of Japan has been doing, leading to a weaker/cheaper Yen).
And herein lies the opportunity for a ‘carry trade.’
Investors take out loans in Yen (with lower interest rates / repayments) to buy other assets that are gaining value, quicker (e.g. the US dollar, stocks, commodities, etc).
It works beautifully!
…until it doesn’t.
See, the Bank of Japan (BoJ) recently raised rates from 0.1% to 0.25% (making the Yen more valuable in the process), while the US Federal Reserve is expected to start lowering rates (which will make the US dollar less valuable).
Which means those carry trades are about to become less profitable, and require higher interest repayments.
So traders are selling out and taking their profits…only problem is:
There is (or at least, was) about $4 TRILLION dollars locked up in these carry trades.
So $4T of sell pressure just hit global stock, crypto, and commodity markets…
Add that to the pre-existing uncertainty surrounding potential war in the Middle East and the results in the upcoming US federal election…
And you get yesterday’s market crash.
From Sunday till the time of this writing, Bitcoin went from a high of $61k to a low of $49.5k, Ethereum went from a high of $2.9k to a low of $2.1k, and Solana went from a high of $145 to a low of $110.
Say it with us now: “Oooft!”
“…so, we’re all doomed?” — the market rn.
Let’s take a moment to remove our fingers from the panic button, and zoom out a bit.
Bitcoin, Ethereum, and Solana all shed insane amounts of value last week.
Why? Bear with us as we cook for a second…
Imagine if an aircraft had a five minute delay on any steering adjustments made by the pilot…
(It’d make flying Spirit, or any Boeing airplane, that much scarier).
Weirdly enough — that’s kind of how the Federal Reserve pilots the US economy with interest rate adjustments.
Every time they tweak interest rates, it takes — wait for it…
Eighteen whole months for the effects to show in the economy.
Which means when economic data starts flashing warning signals, it’s often too late, and the Fed can’t adjust quickly enough to stem any bleeds.
Over the past year or so, the Fed has been trying to thread a needle that looks like this:
Weaken the economy enough so that we don’t enter hyperinflation…while also avoiding a recession (aka: pull off a ‘soft landing’).
Which is kinda like trying to fillet a fish with a hammer.
About a month back, we started to see signs that the economy was weakening, though only mildly — which is good if we want a soft landing.
…but over the past week, we saw signs that this economic weakening is accelerating, with data that showed payrolls were lowering while unemployment was increasing at a much faster rate than expected.
With that fear came a grueling market sell off.
BTC dumped from ~$70k to ~$57.1k, ETH took a dive from ~$3.4k to ~$2.6k, and Solana shed value from ~$193 down to ~$130.
Thunder Funder allows retail investors to buy-in to early stage Bitcoin-related companies, while those same companies can crowd raise up to $5M in funds (all while staying compliant with regulations).
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You know the term ‘picks and shovel businesses’?
It exists because in the Californian Gold Rush of the mid-1800’s, it wasn’t the gold miners that made the greatest fortunes, but the folks providing products/services to the miners.
(E.g. Wells Fargo, which provided shipping and banking services).
Yeah, well — pick and shovel businesses are still generating massive wealth for their owners in the modern day.
See: Jeffrey Preston Bezos’ Amazon, which makes more from its internet services business than it does from its retail business (wild!).
…and we’re seeing the same thing start to take shape in the crypto space, where the sum of the services supporting crypto are producing higher returns than most cryptocurrencies themselves.
Which is why this Thunder Funder crowdfunding portal caught our eye.
Take GoFundMe, tweak it so only Bitcoin-related companies can pitch their products, and you’ll have a pretty good idea of what Thunder Funder is.
The platform allows retail investors to buy-in to early stage Bitcoin-related companies, while those same companies can crowd raise up to $5M in funds.
(All while staying compliant with regulations).
The takeaway:
Anyone/everyone can now get direct exposure to the modern day gold rush.
July is officially over (can you believe it??) which means we can now take a backwards look at what happened in the crypto markets last month.
Today we’re going to focus on a battle that’s as old as t…
Well it’s actually only a bit over four years old – but in crypto years, that’s a long time.
We’re talking about Ethereum vs. Solana!
(Specifically, the amount of usage of DEX’s built on Ethereum compared to those built in Solana).
For the first time ever, Solana beat out Ethereum in terms of overall trading volume for the month (see header image 👆).
Which is interesting in itself – but what’s more interesting is why this might be the case.
Ultimately it comes down to three main things:
Branding! Seriously, if Twitter is anything to go by, the number of times we’ve heard people talking about Solana as a ‘fun’ blockchain to build on is straight up weird.
Meme coins. The undisputed champion of the current cycle’s narrative so far are meme coins.
Those developed on the cheaper blockchain options (Solana and Base) have blown up, while classic NFT projects like Bored Apes built on Ethereum have tumbled in value and trade volume.
Finally: cost, community and creativity. The more the web3 industry matures, the less people seem to be willing to spend money on gas fees.
Solana is not only 100-1000 times cheaper for gas (transaction) fees over Ethereum (depending on network congestion), these days Solana really doesn’t have any less functionality than Ethereum either.
Plus, the way Solana has bridged the gap between the developer community and the users is something to admire.
While this seems like an ad for the Solana blockchain – it’s not!
Both Ethereum and Solana have their unique place in the web3 ecosystem.
But data don’t lie!
And based on the current trajectory, when we extrapolate this data out a few weeks, months or years, it looks like Ethereum could be in for a rough ride.
Cross-chain compatibility means the ability of different blockchains to recognize and interpret each other’s data and assets, regardless of their underlying architecture.The blockchain ecosystem has become multi-chain, with hundreds of public blockchains, layer-2 networks, appchains, and other networks, and potentially thousands more public and private blockchains with trillions in value flowing onchain in the coming years.
Given this rapid expansion of disparate onchain ecosystems, the need for seamless cross-chain communication and interaction between blockchains has never been more important. As a result, cross-chain interoperability has become a cornerstone of the blockchain ecosystem, with Chainlink CCIP being established as the universal cross-chain standard across both public and private blockchains.
Cross-chain compatibility is the ability of different blockchains to understand each other’s data and assets. In this blog, we explain cross-chain compatibility and how it compares to cross-chain interoperability.
What Is Cross-Chain Compatibility?
Cross-chain compatibility means the ability of different blockchains to recognize and interpret each other’s data and assets, regardless of their underlying architecture. This compatibility provides the foundation for a blockchain ecosystem where data and value can flow freely across different networks through cross-chain interoperability.
Cross-chain compatibility is achieved through the use of cross-chain interoperability infrastructure, such as:
Protocol-level: A cross-chain interoperability protocol standardizes cross-chain interactions. Chainlink’s Cross-Chain Interoperability Protocol (CCIP) provides a universal framework for connecting blockchains, unlocking a unified Internet of Contracts where data and value can flow seamlessly across a multitude of onchain environments.
Application-level: Cross-chain applications facilitate the transfer of assets and data between different blockchains. Transporter and XSwap are crypto bridging apps built on Chainlink CCIP that enable users to securely transfer their tokens across blockchains.
Cross-Chain Compatibility vs. Interoperability
While often used interchangeably, cross-chain compatibility and interoperability have distinct meanings:
Cross-chain compatibility—The ability of different blockchains to recognize and interpret each other’s data and assets.
Cross-chain interoperability—The ability of different blockchains to interact with each other through a blockchain interoperability protocol. Interoperability elevates compatibility to the next level, enabling complex interactions like cross-chain smart contracts.
Chainlink’s Role in Cross-Chain Compatibility
Just as TCP/IP is a universal standard that underpins the Internet, Chainlink CCIP serves as a universal standard that underpins the Internet of Contracts. By establishing cross-chain interoperability between blockchains, CCIP also enhances cross-chain compatibility missing from the blockchain ecosystem as native capability.
Architectural overview of CCIP.
CCIP establishes a universal connection between public and private blockchains so that arbitrary data, tokens, and/or messages alongside tokens can be sent between chains. CCIP supports Programmable Token Transfers that enable transferring tokens, messages, or both tokens and messages simultaneously within a single cross-chain transaction, enabling complex, multi-step cross-chain transactions.
CCIP prioritizes end-to-end system security, providing the blockchain ecosystem with native level-5 cross-chain security to unlock a secure multi-chain economy. CCIP utilizes multiple decentralized networks to secure a single cross-chain transaction and incorporates additional security measures, such as the first-of-its-kind Risk Management Network—a separate, independent network that continuously monitors and validates the behavior of the primary CCIP network, adding an extra layer of security by independently verifying cross-chain operations.
These advanced features and more are why major financial institutions and market infrastructure providers are already collaborating with Chainlink on using CCIP to unlock the potential of blockchain technology and tokenized assets, including Swift, DTCC, ANZ Bank, and Fidelity International and Sygnum.
Cross-Chain Use Cases Enabled by CCIP
By standardizing cross-chain interactions, CCIP enables a wide range of use cases that increase cross-chain compatibility, including:
Cross-chain tokenized assets—Tokenized assets that can be utilized across any blockchain, with key data points moving with them as they move across chains.
Cross-chain DvP—Cross-chain Delivery vs. Payment (DvP) transactions that ensure that the transfer of assets and the corresponding payment occur simultaneously.
Cross-chain lending—Lending applications that allow users to deposit collateral on one blockchain and borrow assets on another.
Cross-chain liquid staking/restaking—Liquid staking tokens (LSTs) and liquid restaking tokens (LRTs) that can be used across multiple networks in the DeFi ecosystem.
Cross-chain NFTs—NFTs that can be minted on a source blockchain and received on a destination blockchain.
Cross-chain gaming—Blockchain-agnostic gaming experiences that enable players to transfer in-game assets between chains.
Cross-chain data storage—Data storage solutions that let users store data on a blockchain and execute computations on it from a different chain.
Scaling a Compatible Onchain Finance Ecosystem With CCIP
As thousands of banks continue to launch their own blockchains and DLT networks to tap into the tokenized asset megatrend, the need for a global blockchain interoperability standard that enables secure cross-chain interactions will continue to grow. Additionally, as more DeFi activity moves to rollups and other layer-2 networks, the ability to interact cross-chain will become increasingly essential.
CCIP provides the universal interoperability standard that allows seamless cross-chain compatibility and interoperability between public and private chains, which is necessary for realizing onchain finance at scale.
