1. Conclusion
1. Summary of the macro level and future forecasts Last Friday, the Fed's preferred inflation indicator rose modestly and household spending remained stable, suggesting that policymakers may be able to achieve a soft landing, thus weakening the need for the Fed to cut interest rates by 50 basis points in September. However, Wall Street still expects that there may be a significant rate cut in November or December. In the future, the market will continue to pay close attention to changes in the labor market and the upcoming employment data. Although interest rate cuts have become a high probability, the resilience of the economy and the moderate rise in inflation may limit the extent of interest rate cuts, especially when economic fundamentals remain stable. 2. Market changes and early warnings in the crypto industry After experiencing a multi-day rebound, the cryptocurrency market lacked upward momentum and continued to show weakness last week. The gains of most currencies continued to retreat. BTC fell to around $57,100 again, and ETH fell to $2,400. Most people believe that the market is in the process of a second bottoming out, and market sentiment is still panic. The market is still waiting for more macro data signals to guide. It is worth noting that this month, the prices of Bitcoin and Ethereum fell by 8.6% and 17.3%, while the global stock and bond index rose by about 2% during the same period. It can be said that mainstream currencies have significantly underperformed mainstream traditional assets this month. 3. Industry and track hot spots Ethereum continues to perform poorly, and the community points part of the reason to the Ethereum Foundation and Vitalik Buterin. The Ethereum Foundation's recent transfer of 35,000 ETH has attracted widespread attention and doubts from the community. Community members pointed out that the foundation's annual expenditure report lacks transparency, which makes people doubt the use of its funds. Vitalik Buterin's views on decentralized finance (DeFi) in recent discussions have caused controversy. His remarks were interpreted by some community members as a misunderstanding of DeFi, believing that he failed to clearly express the potential value and application of DeFi. This poor communication may have caused the community to doubt his leadership ability, further exacerbating the uneasiness about the future development of Ethereum. In addition, MakerDAO's brand upgrade and its new stablecoin USDS and freezing function have sparked debate about decentralized stablecoins.Although stablecoins play an important role in the cryptocurrency market, the problem of centralized control has gradually emerged, especially when the freezing function is introduced, which is contrary to the original intention of decentralization and casts a shadow on the future of DeFi. This incident not only shows that DeFi projects need to make compromises under regulatory pressure, but may also lead to the division of the community. Nevertheless, in the long run, this may prompt the DeFi field to make deeper innovations and changes, and explore new technical solutions to balance compliance and decentralized attributes.
2. Macro data review and key macro data release nodes next week
Last week, U.S. stocks rose for four consecutive months. The Dow Jones Industrial Average rose 0.94%, setting an intraday record high. In Europe, Germany's DAX 30 index fell slightly by 0.02%, Britain's FTSE 100 index fell slightly by 0.04%, and France's CAC 40 index fell by 0.13%. Asia-Pacific stock markets also basically closed higher after experiencing fluctuations at the beginning of the month, among which the Hang Seng Index performed particularly well, rising by more than 3.7%. The Nikkei 225 index rose 1.5% in the month;
Bitcoin August Trend Source: Investing.com
The crypto market showed a volatile downward trend last week. Bitcoin and Ethereum both fell by about 10% during the week, and Bitcoin hit a low of $57,230 during the session. Data shows that Bitcoin fell 8.6% in August. The focus this week will be the US non-farm payrolls report. Federal Reserve Chairman Powell hinted at a rate cut in September due to slowing inflation and moderate growth in the labor market.
U.S. job growth slows Source: Bloomberg
Several important data will be released next week. The US will release the August non-farm payrolls report, July job openings data, weekly initial jobless claims and ADP employment data, which will affect the Fed's decision to cut interest rates. The market expects the Bank of Canada to cut interest rates for the third time in a row. Europe will release the Eurozone policy statement, German factory orders and industrial production data, Eurozone three-month GDP data, and the final UK manufacturing and services PMI data.
3. Industry data sharing
1. Overall market performance · Spot BTC ETF
Last week, iShares was still the main buyer of BTC spot, which bought more than $7.6 B of BTC in the past 7 days. This shows that even if the price of BTC falls below the $60,000 mark again, the downward range is slow. This kind of trend is usually the result of uninterrupted batch purchases by ETFs, so it can be interpreted as a positive for the entire market. · Spot ETH ETFETH buyers obviously still had low buying sentiment last week. From the chart, it is almost flat. The total weekly purchase amount of major ETFs did not even reach $1 billion. The asset management giants are currently unwilling and have a low proportion of ETH as their asset allocation. ETH's road to becoming "digital silver" is still difficult. 2. Public chain data · Layer 1 Summary
Last week, the EVM-based new public chains had completely different market trends. The public chain TON was affected by the arrest of its founder and suffered continuous selling of funds, and performed the worst. However, after the founder was released on bail, TON is expected to have a strong rebound performance. The old public chain Fantom unexpectedly became the best performing public chain last week, which may be due to the good news that its renamed Sonic Labs is about to launch a new version of the test network. In addition, AC’s appointment as CTO also brings confidence to Fantom users. As L1 upstarts, SEI and APTOS also delivered good results in the past week due to the continuous development of their ecosystem. · Layer 2 Summary
This week, as the entire market weakened again, L2 funds fled as a whole, and the overall TVL had a net outflow of nearly 10% in a single week. Among the top ten protocols, except for Base, the leader of the ZK system, Scroll, and the OP main network, which have been strong recently, and the decline is less than 10%, the remaining protocols have all fallen by more than 10%. Among them, Blast is worth noting, its total locked value (TVL) has fallen by 62% from its historical high, and the number of daily active users has dropped to the lowest level in six months. In early August, the network lost more than $300 million in liquidity, and TVL fell from $1.1 billion to $785 million, the lowest point in six months. 3. DEFI sector · RWA Last week, the on-chain RWA assets were generally stable, but suddenly fell off a cliff on Sunday. After analysis, it is possible that the RWA sector of the BTC ecological re-pledge protocol Solv protocol plummeted 76% in 24 hours over the weekend, so DeFi users need to pay attention to the risks of this protocol. Restaking
This week, the re-staking sector has seen a slight weakening. Due to the sluggish market trend last week, the DeFi yield has declined, resulting in a decrease in on-chain transactions and lending activities, and the Restaking yield is bound to be reduced to a certain extent. However, with the rise of BTCFi in the BTC ecosystem, the Restaking of BTC and its related assets will have a strong imagination space. 4. Analysis of hot tracks and projects · What is the impact of the arrest of the founder of TON on the crypto market, and what kind of meme tokens are beneficial to it? After the release of the founder of TON, the panic on the TON chain gradually subsided, and TVL stabilized. Therefore, if there are no major changes in the future, the TON ecosystem is likely to rebound again. Of course, crypto users should be aware that the alarm of this incident has not been completely lifted. · MAKER DAO changed its name to SKY. Is the TOKEN upgrade good or bad? MakerDAO was once a pioneer in the decentralization of the DeFi field. Its DAI is a stable currency that is not controlled by a central authority. However, with the launch of USDS, its concept seems to have run counter to its original intention. It is reported that USDS may introduce a freezing function similar to the centralized stablecoins USDT and USDC. Under certain circumstances, the issuer of USDS or the relevant governance entity can freeze the user's funds. The designer of USDS claims that the freezing function is to prevent risks and ensure compliance. But this also raises a fundamental question: if a decentralized stablecoin can be remotely controlled, and this centralized control requires users to rely on the goodwill and compliance of the issuer to some extent, rather than completely controlling their assets. In this way, the meaning of DEFI no longer exists. · Can Babylon trigger the next bull market? Babylon is a protocol that aims to use the security of Bitcoin to provide security for other PoS chains. Babylon can provide a secure, cross-chain-free, and custody-free native staking solution for PoS chains including BTC layer 2, and promote cross-chain interoperability. It is often compared to the Eigenlayer of the Ethereum ecosystem. The core principles include: - Remote staking: using Bitcoin's UTXO model and script system to achieve staking, confiscation and rewards for Bitcoin. - Timestamp Server: Provides an immutable timestamp for events by recording the events of the PoS chain on the Bitcoin blockchain.- Three-layer architecture: Bitcoin as the bottom layer, Babylon as the middle layer, and PoS chain as the upper layer. Babylon is responsible for recording the checkpoints of the PoS chain to Bitcoin. 5. Potential sectors this week
· Fractal Bitcoin Fractal Bitcoin is another Bitcoin expansion solution developed by the UniSat team. By using the BTC core code, it innovates an unlimited expansion layer on the main chain to improve transaction processing capabilities and speed, while being fully compatible with the existing Bitcoin ecosystem. At present, the test network wallet address has exceeded 10 million. Analysis of its application scenarios may include: as a BTC pioneer network, OP_CAT test field; a low-cost way for project parties and users to participate in the BTC ecosystem; and driving the development of micro-transactions. Its ecology is currently in a very early stage, so users are reminded to guard against risks while participating. · Satlayer is a Bitcoin re-pledge platform based on Babylon. SatLayer is a universal security layer that unleashes the full potential of Bitcoin. By being deployed as a smart contract on Babylon, SatLayer enables Bitcoin pledgers to use their BTC as a verification service to protect various types of decentralized applications or protocols. The ecosystem design of SatLayer is relatively simple, with several important participants: - Re-pledgers: Re-pledge BTC packaged assets to SatLayer. - Operators: Choose Bitcoin Verification Service (BSV) to provide security and receive re-staking rewards from it. - BVS: Use BTC to launch its crypto-economic security PoS network or application. SatLayer's income mainly comes from BTC staking income on Babylon and additional staking income from SatLayer BVS. In addition, it also includes its composability, which can be used to use satAssets in other BTCFi to generate further income. Referring to the similar protocol Solv protocol in the same track, Satlayer can provide an objective income to re-staking BTC users at least in the early stage, so it can become the market focus in the short term to a certain extent.
4. Regulatory policies
Although there have been no significant changes in global regulatory policies during the week, the encryption industry is penetrating into various fields at an unprecedented speed, and the regulatory attitudes of various governments towards the encryption industry are also gradually changing and improving. Russia: Russia plans to start testing the use of cryptocurrencies for cross-border payments. Under the new law signed by President Vladimir Putin, the payments will be made under the supervision of the Russian Central Bank, but the ban on cryptocurrencies as legal tender is not lifted and remains limited to cross-border payments. This move shows that Russia hopes to use cryptocurrencies to ensure that economic activities under international sanctions are not affected. New Zealand: New Zealand’s Revenue Minister has introduced a tax bill proposing the implementation of the Organization for Economic Co-operation and Development’s (OECD) Crypto-Asset Reporting Framework (CARF). If the bill is passed, New Zealand's crypto asset service providers (CASP) will be required to collect and report users' transaction information, and fines will be imposed on non-compliant CASP and crypto asset users. Nigeria: Nigeria’s recent approval of two digital asset exchanges is a welcome development for the industry, said Obinna Iwuno, head of the Nigerian Blockchain Advocacy Group. He believes that Nigeria, as a major player in cryptocurrency trading in Africa, should take the lead in regulating and issuing licenses.
