Frontier Lab Crypto Market Weekly Report | W33
BTC and ETH Weekly Overview
Market Performance
This week, the cryptocurrency market exhibited a volatile trend:
- Bitcoin: Unlike the U.S. stock market and other risk markets, Bitcoin did not follow the upward trend. Instead, it experienced a decline. This downward movement mainly occurred during the weekend when market liquidity was extremely weak. Additionally, the movement of BTC from Mt. Gox addresses this week sparked concerns that Mt. Gox is preparing for its final compensation payout, triggering a sell-off in the market.
- Ethereum: Similarly, Ethereum followed the broader market trend with a decline, failing to establish an independent trajectory. However, its drop was less pronounced compared to Bitcoin, indicating relative strength. On the spot ETF front, outflows continue, suggesting that the majority of investors currently have limited interest in Ethereum investments.
Key Events
The Fed’s Rate Cut in September
- The market has fully priced in the expectation that the Federal Reserve will initiate a rate cut in September. The current debate centers around whether the cut will be 25 basis points (BP) or 50 BP. Based on economic data released throughout the week, the consensus leans towards a 25 BP cut, reflecting a conservative, defensive monetary easing approach.
U.S. Macro Data
- On Monday, the U.S. released its one-year inflation expectation, which stood at 2.97%, lower than market expectations. This briefly increased the likelihood of a 50 BP rate cut in September. However, on Wednesday, the seasonally adjusted CPI for July came in at 2.9%, with core CPI at 3.2%. Additionally, Thursday’s initial jobless claims came in at 227,000, lower than both the expected value and previous readings. These numbers suggest that the U.S. The economy is more resilient than anticipated, reducing the market’s expectation of a 50 BP rate cut in September.
Increased Geopolitical Uncertainty
- Following last week’s symbolic gesture by Iran, where a Muslim red flag was raised in a mosque signaling a vow for revenge, Iran had yet to take retaliatory action against Israel. However, on Thursday, the Iranian Revolutionary Guard attacked three U.S. military bases in Lebanon. In response, the U.S. deployed two carrier strike groups and an Ohio-class nuclear submarine to the Middle East, causing a rapid escalation of tensions in the region.
- Meanwhile, Ukraine intensified its attacks on Russia’s Kursk region and launched assaults on the Zaporizhzhia Nuclear Power Plant. On Monday night, one of the plant’s cooling towers caught fire, raising concerns about a potential nuclear leak and heightening the uncertainty surrounding the Russia-Ukraine conflict.
Continued Movement of Mt. Gox Addresses
- On Wednesday, a Mt. Gox address saw the movement of $2 billion worth of BTC, leading to speculation that this was a test transaction in preparation for Mt. Gox’s final round of compensation payouts. The expectation is that the remaining 40,000 BTC held by the address will soon be fully distributed, causing a market downturn. From a different perspective, however, this event signals the imminent closure of the decade-long Mt. Gox saga.
Altcoin Market Overview
Overall Performance
This week, market sentiment improved to 13%, up from last week’s 9.2%, though it remains in the “fear” range. The rise in Altcoin sentiment was primarily driven by the stronger performance of Altcoins compared to Bitcoin and Ethereum. This week’s Altcoin movement can be viewed as a corrective rebound following last week’s rally.
However, the crypto market’s decoupling from traditional risk markets like the U.S. stock market indicates a lack of strong internal momentum. With no major hotspots in the market and the ongoing tug-of-war between bulls and bears fueled by external macroeconomic factors, there has been limited capital inflow into Altcoins. As a result, this week’s Altcoin rebound is likely to be unsustainable in the absence of further significant catalysts.
Top Performers of the Week
Top 5 Gainers in the Market Over the Past Week (Excluding tokens with low trading volume and meme coins, data source: Coinmarketcap)
The top 5 tokens showing the highest percentage gains this week were distributed across various sectors, without a clear concentration in any specific category. These tokens were spread across the L1s, NFTs, ETH-L2, DXE, and cross-chain sectors. However, the strength of this week’s rebound outpaced that of the previous week, indicating that many projects are beginning to catch up with the overall market recovery. This suggests that the market is seeing a broad-based rally rather than isolated gains, with multiple sectors showing signs of renewed momentum.
Meme Token Leaderboard
While the Meme coin sector experienced a stronger rebound this week compared to last, the overall presence of Meme coins in the top 50 gainers has noticeably declined. Instead, tokens from various other sectors have increasingly populated the leaderboard. This indicates that, despite the improved performance within the Meme coin sector, its rebound was generally weaker than that of other sectors. The market’s focus appears to be shifting away from Meme coins, with investors favoring tokens from a broader range of sectors that are driving the market’s recovery.
Social Media Hotspots
Based on data from LunarCrush’s top five daily gainers and Scopechat’s top five AI scoring tokens:
The most frequently featured theme this week was L1s (Layer 1s). The tokens that made it to the rankings are listed below (excluding tokens with low trading volume and Meme coins):
From the table, it is evident that the Layer 1 (L1) projects receiving significant attention on social media this week have generally followed an upward trend. Most of these L1 projects have outperformed both Bitcoin and Ethereum in terms of price action during the week. However, no specific market events seem to have triggered this rise, suggesting that this week’s stronger performance by L1s is likely a corrective bounce, making up for the relatively weaker rebound seen last week. This catch-up rally reflects a broader market shift, with L1 projects gaining traction and attracting renewed interest.
Topic Tracking
Weekly Performance by Sector: SocialFi Outperforms, AI Lags Behind
- SocialFi Sector: This sector delivered the best weekly returns, with TON as its dominant player, accounting for 94.19% of the sector’s market capitalization. This week, Binance launched a Toncoin mining project, which served as a significant bullish catalyst for TON, driving strong price gains. The positive performance of TON significantly contributed to the outperformance of the entire SocialFi sector.
- AI Sector: In contrast, the AI sector had the weakest performance this week. Most AI-related tokens exhibited a downward trend, with very few showing any signs of recovery. This indicates that market attention and capital are currently not focused on the AI sector. While AI tokens had an impressive run earlier this year, they have been in a steady decline in recent months. Despite this downturn, the sector still maintains positive returns year-to-date.
Next Week’s Crypto Events
- Tuesday (August 20): OORT Summit; Binance.US suspends services for users in Washington state.
- Wednesday (August 21): Devcom & Gamescom.
- Thursday (August 22): U.S. Initial Jobless Claims for the week ending August 17; Coinfest Asia 2024; Terraform Labs bankruptcy case concludes, initiating preliminary crypto loss claims.
Outlook for Next Week
- Bitcoin: As more macroeconomic data is released this week, expectations of a U.S. recession has eased slightly, and the Federal Reserve is now expected to cut rates by 25 basis points in September, dispelling earlier speculation of a more aggressive cut. However, given global geopolitical instability and differing views on future rate cuts, Bitcoin is likely to continue wide-ranging fluctuations leading up to the Fed’s rate decision.
- Ethereum: Continued outflows from Ethereum spot ETFs this week indicate that Ethereum’s current price level lacks significant appeal. Consequently, Ethereum is unlikely to establish its own trend and is expected to remain closely correlated with Bitcoin, experiencing broad oscillations.
- Altcoins: While Altcoins showed stronger performance than the broader market this week, catching up from last week’s lag, the absence of substantial capital inflows into crypto space means that Altcoins lack sustained upward momentum. Next week, Altcoins may conclude their catch-up rally and move in sync with the broader market, engaging in similar volatility.
