The crypto market cap has been largely sideways this month, with Bitcoin (BTC), Ether (ETH), and stablecoins accounting for more than 75% of the entire $2 trillion market. As conditions turn bullish, many investors tend to move into mid- and low-cap altcoins in an effort to boost returns.
Cryptocurrency observations with thanks to the team at CKC Fund.
On a yearly basis, the crypto market cap has doubled since January 2024. Experiencing rapid growth in 2024, the US tokenized treasuries market recently surpassed the $2 billion mark — signalling a growing shift to tokenized treasuries over their traditional counterparts.
The USD-pegged stablecoin market has also seen growth throughout the year, with the asset-backed stablecoin market hitting a new all-time high AUM of over $168 billion. A growing stablecoin AUM often indicates that investors are trading out of digital assets — or moving their USD into stablecoins in order to enter positions.
It’s also worth noting that these stablecoins are increasingly being used in everyday transactions — particularly in countries with weak and/or highly inflationary currencies.
Ethereum ETF launch
Launched last month, US Ethereum (ETH) Spot ETFs ended August with nearly $7 billion in net assets — representing 2.3% of the total ETH supply. Despite this, there is an ETH ETF net outflow since launch (of nearly $0.5 billion) due to over $2.5 billion leaving the Grayscale Ethereum Trust ETF (ETHE).
The Bitcoin ETFs, launched earlier this year, had nearly $54 billion in net assets — corresponding to 4.6% of the total BTC market cap. The total net inflow since launch sits at $17.6 billion (as of 8/30/2024), with the discrepancy accounted for by Grayscale’s Bitcoin Trust (GBTC). Like Grayscale’s ETHE, it has seen an outflow of nearly $20 billion since the BTC ETFs became available (largely due to its higher fee structure).
Hong Kong-based Bitcoin ETFs collectively saw their AUM hit $2 billion this month as well. Their in-kind digital asset model may allow them to differentiate themselves from the digital asset spot ETFs offered in the US (which use a cash-creation model). For Bitcoin and other crypto ETFs, in-kind redemption may help preserve liquidity and reduce capital gains. However, regulators like the SEC have tended to favor cash redemption for Bitcoin ETFs, requiring conversion of the crypto to cash during redemption.
- Podcast: ARK Invest’s CEO Cathie Wood on US markets and active ETFs
- NAGA launches first trading app to be integrated into Telegram
- Why European investors are not being offered active ETFs
Memecoins and other trends
From August 6 – 27, AI tokens recovered nearly 80% — growing from an $18.2 – $32 billion market cap. This is likely due to a recovering BTC price and renewed investor confidence in the AI sector.
Prediction market activity has seen a notable uptick in 2024, particular in August with nearly $475 million being wagered on one platform — Polymarket — alone. These prediction markets allow knowledgeable investors to monetize insights into outcomes of elections, sports, the weather, and a plethora of other outcomes.
Coinbase sees first AI crypto exchange
Crypto exchange Coinbase announced that they oversaw their first crypto transaction between AI agents. While AI agents can’t own bank accounts, they can have crypto wallets. This opens up the possibility for these AI agents to automatically book hotel reservations, flights, and other tasks.
A new silicon chip advancement could see 6G wireless internet service arrive this decade. 6G would double 5G network speeds and reduce latency by approximately 90%. This would enable high-definition VR/AR streaming, the control of robotic swarms, and other technologies and applications previously not possible.
France arrests Pavel Durov
France arrested Telegram CEO Pavel Durov and he faces charges related to conspiracy, fraud, money laundering, and more. Many have speculated that this may be politically motivated and some see it as a warning to those who support free speech.
This echoes the legal edicts that X has been issued with in Brazil. It is likely that these enforcement actions could incentivize the creation of more privacy-focused messaging and social media apps that leverage blockchain technology.
Crypto and the US election
The current US SEC and administration’s critical approach to the crypto ecosystem has resulted in regulatory actions against Ripple, Kraken, Coinbase, and others. The SEC even sent a Wells notice to NFT marketplace OpenSea.
Responding accordingly, many in the US crypto community have rallied around pro-crypto political candidates, and various leading crypto companies and thought leaders have publicly donated to pro-crypto candidates and PACs. Some speculate that this could swing multiple tight election races.
