BOJ Rate Hike Spurs Market Turmoil: Bitcoin Fails to Keep Pace

The Bank of Japan's second rate hike of the year triggered an unwinding of carry trade positions and a broad sell-off in global capital markets during the week of 04 August. While the U.S. equity markets swiftly rebounded from their losses, the crypto market failed to mirror this recovery. Bitcoin initially showed a gradual recovery, reaching its August opening levels, but subsequently tumbled further, closing the month near the $58,000 mark. At the same time, Bitcoin ETFs experienced their second month of net outflows since inception, recording a net outflow of $92.2 million in August. However, data from CoinGlass reveals that Bitcoin balances on exchanges dropped to a 2024 low of 2.39 million BTC, compared to the high of 2.72 million BTC, indicating a growing tendency among investors to hold Bitcoin rather than liquidate positions.

Babylon Debuts Bitcoin Staking

On August 22, the Bitcoin ecosystem reached another milestone with the introduction of staking as a new use case. Babylon launched the first phase of its mainnet with an initial cap of 1,000 BTC, which was fully subscribed within just three hours by approximately 12,700 users. This surge in participation caused a temporary spike in Bitcoin gas fees, with median transaction fees soaring to as high as 800 sat/vB.

Ethereum’s Struggles Persist

Ethereum ETFs saw a positive net flow in August, recording a net inflow of $6.2 million, compared to a significant net outflow of $541.8 million in July. Meanwhile, Grayscale's ETHE outflows slowed considerably, declining from $1.97 billion in July to $583 million in August. In spite of this, Ether's price has faced substantial downward pressure since the launch of Ethereum ETFs. While near-term supply concerns may persist, we believe that Ethereum's core value propositions, particularly in the DeFi sector, remain robust and sustainable, in contrast to Solana's more speculative, meme coin trading-driven nature.

Sui Charting its Own Path

Sui emerged as one of the standout performers in August on the back of Grayscale's launch of new trust products and strong endorsements from key opinion leaders (KOLs) and investors. Comparisons to Solana have arisen, with some suggesting that Sui could be the next "Solana killer." Our analysis, however, reveals that Sui's on-chain data aligns more closely with that of Ton. While it might be too early to say Sui will be able to challenge Solana, we think Sui has its unique value proposition and development path, particularly in the GameFi verticals thanks to its technical design of the parallel execution and object-oriented storage model. For detailed analysis of Sui, please refer to our recent article “The Rise of the SUI Public Chain”.

Ton Community Backs Telegram Founder Pavel Durov

The Ton ecosystem faced significant turmoil following the arrest of Telegram founder Pavel Durov in France, resulting in a 20% drop in Toncoin's price and a 30% decline in Total Value Locked (TVL). Despite that, the broader crypto community rallied behind Durov, with developers, numerous platforms and exchanges adopting the "Resistance Dog" (REDO) meme coin avatar as Toncoin’s logo on different social channels, symbolizing their support of the “Digital Resistance” movement.

We view this incident as largely event-driven, with limited long-term impact on the Ton ecosystem’s fundamental development. The Ton Foundation's proactive efforts to foster ecosystem growth remain evident, and this incident could even strengthen community cohesion and consensus.

SunPump on Tron Taking a Slice from Pump.Fun

Pump.Fun has been the leading platform for launching meme tokens in this current market cycle, but recent data indicates a slowdown in new token creation and revenue generation. Meanwhile, SunPump, a competing platform on Tron, has gained traction among meme coin traders. In just three weeks, SunPump has facilitated the creation of over 63,000 meme tokens and generated over 25 million TRX in revenue, highlighting a shift in trader interests towards Tron’s expanding meme token ecosystem.

Stablecoins Issuance Continues to Climb, with $4 billion Added in August

Despite the overall market downturn, the issuance of stablecoins has recovered from the lows of May. In August, an additional $4 billion in USDT and USDC was issued, bringing levels back to those seen in November of last year.

Currently, the market is in a period of stagnation due to a lack of liquidity and market narratives. However, we believe that the strong inflow of stablecoins suggests that the market has not entered an absolute bear market phase akin to early 2022 when stablecoins started flowing out. With the upcoming macroeconomic events, such as potential interest rate cuts and the election, there remains ample liquidity to fuel a market rally.

Disclaimer

The content provided in this report is for illustrative purposes only and is intended to offer insights into the cryptocurrency market. It is not, and should not be interpreted as, investment advice or recommendations. The information contained herein is based on sources believed to be reliable; however, we do not guarantee its accuracy, completeness, or suitability for any purpose, and it should not be relied upon as such. Any opinions expressed reflect a judgment at the date of publication and are subject to change without notice. Readers are advised to conduct their own research and due diligence and, where appropriate, seek professional advice before making any investment decisions. The authors and publishers of this report accept no liability for any loss or damage arising from the use of the information provided.

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Macro Monthly Outlook(August）