Breaking Down Macro, Institutional, On-Chain, Regulatory, Business, and Market Trends in Crypto

Welcome back, dear readers!

After some much-needed vacation, the D.Center’s crypto insights are back in a fresh new format.

Crypto-related events have become so diversified that we’ve decided to structure them a bit to give you a clearer view of what’s happening in crypto.

In this newsletter, we’ll categorize recent events that have marked the crypto world into 6 key areas:

• Macro 🌍: Interest rates, geopolitical issues, macroeconomic metrics
• Institutional 🏦: Crypto spot ETFs, TradFi adopting crypto
• Crypto Business 💼: CeFi, Web3, and other ventures driving the crypto space
• Regulation ⚖️: Crypto-related legislation, political statements
• On-chain 🔗: DApps activity, Bitcoin hashrate, blockchain stats
• Markets 📈: Crypto prices, derivatives, sentiment

Each of these categories is important for understanding the crypto space, and we will explain them in connection to the bigger picture. In each newsletter, we’ll highlight the categories where the most significant events occurred.

Our month-long break provides a great opportunity to showcase all these categories and offer you a comprehensive overview of the current state of the crypto space through this lens:

Macro: markets recover from the Japanese shock

Institutional: crypto ETF inflows slow down

Regulation US Republicans propose to make Bitcoin a reserve asset

On-chain: Bitcoin miners capitulate

Business: Web3 activity increases

Markets: the Tron surprise

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Macro 🌍: markets recover from the Japanese shock

Macroeconomic factors like interest rates, inflation, and monetary policies shape investor sentiment and capital flows into the crypto market. The correlation, however, is complex: rising rates often drive investors away from riskier assets like cryptocurrencies, but at the same time, economic instability or high inflation can boost demand for cryptos (mostly Bitcoin) as a hedge. The U.S. macroeconomic situation exerts the most significant global influence due to the country’s financial and economic dominance.

At the beginning of August, news from Japan rocked global finance. The country’s central bank raised interest rates to 0.25%, marking only its second hike in 17 years. This hurt not only the Japanese stock market (Nikkei 225 index tumbled nearly 22% over the following trading days), but also the international carry trade. This practice involves investors who borrow low-interest yen to buy assets denominated in higher-interest currencies, like the dollar. The carry trade unwinding explained the sharp drop in the US stock markets (Nasdaq -8%) and the crypto market. Bitcoin price lost 24% over the weekend following the news, correcting to -10% since.

The US stock market has regained its level before the drop, but there is still some nervousness in the air, some analysts considering it overpriced. Others, however, point at the weakening job market, which could push the Fed to lower interest rates, potentially boosting both stock and crypto markets. The next big event to watch is the annual central bankers’ symposium in Jackson Hole on August 22-24.

UPD August 23: Jerome Powell went “full dovish” and declared that “The time has come for policy to adjust” and that “there is a good reason to think that the economy will get back to 2% inflation while maintaining a strong labor market”

Institutional 🏦: crypto ETF inflows slow down

Institutional adoption, such as Bitcoin ETFs or large-scale investments by major financial institutions, legitimizes crypto as an asset class and attracts more traditional (and deep-pocketed) investors. This increased participation drives liquidity, reduces volatility, and often leads to higher valuations, further integrating cryptocurrencies into mainstream financial markets.

Crypto ETFs were not immune to the broad sell-off, experiencing $528m in outflows. However, this corrected the following week, where $176m in inflows indicated that some investors saw the price dip as a buying opportunity. Last week saw very timid inflows of $30m across the ETFs, strongly influenced by sharp outflows from Solana-backed products. $39m of Solana outflows are attributed by CoinShares to the sharp decline in trading volumes of memecoins, on which the number-one “Ethereum killer” heavily relies.

Regulation ⚖️: US Republicans propose making Bitcoin a reserve asset

Regulation always lags behind innovation, and crypto is no exception. Legal frameworks across different jurisdictions impact crypto’s potential to become fully integrated into our lives and economies.

On July 27^th,  a historic event took place in Nashville, USA. Republican presidential nominee Donald Trump publicly endorsed Bitcoin at the Bitcoin2024 conference and announced a series of pro-crypto promises, including:

• Providing Bitcoin miners with ample electricity due to an increase in oil production;
• Establishing a Presidential Bitcoin Advisory Council to create comprehensive crypto regulations within 100 days;
• Opposing Central Bank Digital Currencies (CBDCs) as a threat to personal freedom;
• Supporting the right to crypto celf-Custody;
• Creating US Bitcoin Strategic Reserve, keeping all of the Bitcoin currently held by the US government [currently 213k BTC] as a strategic national stockpile.

Following Trump’s speech, Republican Senator Cynthia Lummis presented a bill outlining a further boost to the country’s BTC reserves. It outlined the purchase of 200,000 BTC every year over five years, for a total of 1 million BTC.

The synergy between Trump’s endorsement and Lummis’ proposal created a powerful momentum, bringing high the crypto space’s hopes. The Democrats are yet to pronounce on this topic, although rumors say that Kamala Harris’ team has reached out to prominent democratic crypto personalities to “ask questions”.

Prominent politicians publicly de-demonizing crypto and showing how it could help their country are a positive sign for crypto, which would solidify its presence in the US media space. Crypto gains credibility in the US and this gives hope for the entire space’s future. Whoever wins in November.

On-chain 🔗: Bitcoin miners capitulate

Blockchains are transparent by design, which allows us to monitor their on-chain metrics in real-time. Such metrics are crucial for understanding the crypto space, as they provide insights into network health, user activity, and overall adoption, which help investors gauge the performance of different blockchains and DApps.

At the beginning of this month, we witnessed what may have been Bitcoin miner capitulation. This event occurs when miners, facing low profitability due to declining prices or rising costs, are forced to shut down operations and sell off their holdings, often driving prices down further.

On August 5^th, the outflows from miners’ addresses to exchanges (supposedly to sell) spiked after BTC price momentarily touched $49k. Daily miner outflows hit 19k, as miners profit margins (light blue area in the graph) were squeezed to 25%, the lowest since January.

Miner capitulation events typically occur near local bottoms during bull markets. Since 2023, spikes in miner outflows have coincided with local bottoms in March 2023 (after the US banking crisis) and January 2024 (“sell the news” correction following the US Bitcoin spot ETF launch).

Crypto Business 💼: Web3 activity increases

Crypto businesses drive demand for both native cryptocurrencies, used to pay network fees and execute transactions, and project-specific tokens, which grant access to services, governance rights, or rewards within specific platforms. As Web3, CeFi, and various crypto projects grow and gain users, the increased token utility boosts the overall crypto market.

As shown by the recent data from DappRadar, DApps activity has surged since 2023, with the number of unique active wallets (UAW) on the top 12 blockchains increasing 15-fold.

Currently, the most popular DApps are built on opBNB (layer-2 on BNB chain), NEAR, and Ronin, which register 30 million, 19 million, and 12 million daily UAW, respectively.

Crypto gaming and social platforms are leading the Web3 sectors, with gaming studio Boomland now registering 2.4 million monthly UAW, and decentralized content distribution platform Revox almost 10 million monthly UAW.

DeFi, however, is struggling to attract more users, with the current total value locked (TVL) of $146 billion “only” 2.5 times the amount in January 2023 (data: DeFiLlama). Ethereum remains the leading blockchain by TVL, with $100 billion, of which $27 billion is locked in Lido, a liquid staking protocol.

Markets 📈: the Tron surprise

The crypto market reflects people’s ideas about the current valuations and future price expectations of various cryptoassets. They are influenced by all of the above factors: macro, institutional, business, on-chain, and regulation, as well as all kinds of rumors and speculations.

With a 59% market dominance, Bitcoin is undeniably the force that has dragged along the entire crypto market in this cycle. It’s not surprising that its price is among the most resilient to global market movements. $BTC plunging 17% following the BoJ announcement was largely correlated with the global crypto market cap sliding 18%.

Ethereum, the leader of the web3 space (for how long?), fared much worse. $ETH lost 27% and has struggled to recover that loss ever since.

However, a surprisingly good performance was observed from Tron, the native coin of its eponymous layer-1 blockchain. $TRX dropped only 5% and then not only recovered the loss, but even gained another 26%.

This surprising spike may reflect the blockchain’s growing specialization, albeit different from what its founder Justin Sun originally intended. Promoted as the future key decentralized tool for content creation, Tron is yet to fulfill that promise. However, in the meantime, thanks to its high transaction throughput and low fees, the blockchain has emerged as a new stablecoins hub.

Indeed, Tron has attracted the world’s leading stablecoin issuer Tether, and positioned itself as the blockchain of choice for $USDT transactions. As of today, an impressive 36.5% of all stablecoins circulate on Tron (data: Dune). For Tether, it has even become the leading blockchain: the company issued over $60 billion of USDT on Tron compared to $52 billion on Ethereum.

That’s all for today! We’d love to hear your thoughts on the new format, please let us know your thoughts by commenting here or on our LinkedIn and X !