🔎ETH's grand comeback
weekly valuable insights
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In today’s newsletter:
🔎Why is ETH pumping?
📊 On-chain alpha
😂 Crypto meme of the week
🗞️ The latest DeFi news
🔎Why is ETH pumping?
The past few years have been incredibly rough for ETH holders.
But it looks like the worst is behind us.
To be frank, this rally initially caught me by surprise, as Q3 is historically boring for crypto, and I expected the real fun to begin in Q4. Still, I certainly don’t mind seeing my portfolio hitting new ATHs earlier.
The question is, though, what’s driving this ETH pump? And how long can it last?
There seem to be multiple factors that contributed to this surge.
The institutional interest in ETH is surging - BTC surprised many TradFi ppl with its performance, and ETH is now seen as a catch-up play
Just today, spot Ethereum ETFs hit a new ATH in daily inflows.
ETH balance on exchanges recently hit the lowest level since 2016
Ethereum is seen as the top RWA chain and everyone is bullish on tokenization
Treasury companies are starting to buy ETH - in my view, this is the main driver of the current ETH rally.
Michael Saylor’s Strategy firm alone bought over $30 billion of BTC in total. Without it, BTC would probably now be trading at a significantly lower price.
Now we’re seeing other companies copying Saylor’s strategy for ETH.
For instance, SharpLink Gaming, a Nasdaq-listed company, has already bought ETH worth $972.6M in total - and it’s not planning to stop anytime soon
This doesn’t include the ETH bought by other TradFi investors via the spot ETH ETFs - which is likely to further increase after the spot ETH ETFs go live.
Speaking about SharpLink Gaming, the company purchased ~$213M ETH just last week between July 7 and July 13. And it’s worth keeping in mind that new ETH treasury companies are launching almost every week.
Obviously, this creates a significant buying pressure.
You might ask - where do these treasury companies get their money from?
The way they work is the following:
Treasury companies like SharpLink Gaming that hold a certain asset typically trade at a premium on the stock market to the value of their underlying token holdings.
This allows them to raise funds by issuing stock shares that are sold via ATM sales, and then use the money obtained to buy ETH (or other assets).
As long as SharpLink Gaming stock keeps trading at a significant premium to the value of its ETH holdings, its team can repeat this strategy over and over again.
So far, most crypto treasury companies have no plans to sell their ETH or BTC.
Is this model sustainable in the long run?
Probably not. I’d even say that these treasury companies are a bubble in the making.
However, Saylor’s Strategy has been using this strategy to buy billions of dollars worth of BTC for a long time. There’s a saying I like: “When I see a bubble forming, I rush in to buy, adding fuel to the fire.”
I think there’s a very good chance that ETH and many altcoins will go higher. There will be some dips along the way, but the cycle top seems very unlikely to be in yet.
At some point, though, this bubble will pop. I don’t see this happening anytime soon, but it’s something to keep in mind. Make sure you take profits from time to time.
Yet as long as ETH keeps surging, most altcoins will keep performing well too.
For now, enjoy the pump🫡
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On-chain Alpha🔎
Hyperliquid reached a new ATH in open interest
Crypto Meme😂
The latest developments in DeFi
Sonic introduced Spark - a no-code AI platform for building Web3 apps
Pendle announced a product for institutions to access crypto-native fixed yields
Mantle opened beta access for UR - a user-friendly on-chain neobank
Silo Finance hit $100M in deposits on Avalanche in just 20 days after its deployment. Silo v2 is a novel risk-isolated lending protocol
Base introduced Base Pay - enabling users to shop for anything using USDC
Avail released the Nexus upgrade - transforming Avail into a superchain where all dApps feel like they are on a single chain
Lombard announced it’s upgrading LBTC into a yield-bearing BTC asset. Yield-bearing LBTC will launch on July 22
TopCutFinance launched Precision Markets, a new DeFi primitive, on Arbitrum. TopCutFinance rewards users for highly accurate price predictions
Injective teased the filling for an INJ Staked ETF
Hyperliquid reached a new all-time high in open interest
Portal to Bitcoin introduced its token PTB. Portal is a custodyless cross-chain swap solution for native BTC
Nasdaq-listed Sonnet announced it raised $888M to buy HYPE
Kaito introduced its capital launchpad and announced Espresso’s upcoming ICO
Ethereum announced plans to launch an L1 zkEVM in less than a year, which will enable on-chain privacy and increase its scalability
Trench Exchange, a new advanced trading platform, was introduced
Berachain introduced Proof of Liquidity v2, aiming to increase the demand and utility for BERA
Fantasy Top, Blast’s flagship app, is migrating to Base
That’s all for this week!
Until next time,
The DeFi Investor
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