🔎Why is crypto pumping?
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In today’s newsletter:
🔎Why is crypto pumping?
📊 On-chain alpha
😂 Crypto meme of the week
🗞️ The latest DeFi news
🔎Why is crypto pumping?
It's crazy how fast things change in this industry.
30 days ago, the sentiment around ETH hit rock bottom. There were barely any ETH bulls left on the timeline.
Yet despite this, ETH is up 55% since then.
And many other altcoins performed extremely well too.
Now, there are a few key questions: What caused this surge? And what’s next?
In my opinion, these are the main reasons for this pump:
Better macro conditions
Like it or not, crypto is extremely reliant on the macro conditions.
We’ve also seen this when Trump announced a major set of tariffs in April, and all financial markets (including the crypto market) heavily crashed.
Fortunately, things have significantly changed for the better since then:
Trump eventually decided to suspend most new tariffs for 90 days
The US reached a trade deal with the UK in early May and indicated that many more deals will be announced soon
The US-China tariff war was paused for 90 days just a few days ago
If there’s one thing that financial markets hate, that is macro uncertainty and sudden major changes that are announced overnight.
Fortunately, the uncertainty caused by the US’s new tariffs is starting to no longer be an issue as the US seems to be open to reducing its tariffs as part of trade deals.
Ethereum’s Pectra Upgrade
As most of you already know, Pectra Upgrade went live just a few days ago.
This significantly improved Ethereum’s on-chain UX by enabling batched transactions and gas abstraction, while also making L2 transactions cheaper.
On top of this, BlackRock has recently met with the SEC to seek guidance on staking for its spot Ethereum ETFs.
Historically, when BlackRock wants something from the SEC, they usually get it, so we might see a staked ETH ETF approved soon.
Ethereum’s successful Pectra Upgrade, coupled with the recent BlackRock <> SEC meeting to discuss staking, might explain why ETH has been outperforming BTC.
What’s next for the market?
In the short term, I think that the new trade deals that will be announced between the US and other countries could have a positive impact on prices.
Another positive sign is that the recent BTC rally has been driven mostly by spot buying, not leverage, which makes it more sustainable.
Besides this, there are also ongoing discussions about a potential Ukraine-Russia ceasefire. Unfortunately, it seems unlikely that an agreement will be reached soon, but a ceasefire would be an amazing thing for humanity and also for the markets.
There are also some reasons to be less optimistic:
The probability of a US recession happening in 2025 is still very high (39%) according to Polymarket, although it has significantly decreased lately
The FED Chair doesn’t seem to be willing to cut the interest rates anytime soon
Retail interest for crypto remains low, and it’s unlikely to see a proper altseason if retail investors don’t come back
Despite this, things are definitely looking much better for crypto right now than they were 1-2 months ago.
The past few months also made one thing clear:
The demand for Bitcoin will continue to rise in the long run as the trust in the current financial system keeps eroding and money printing continues.
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On-chain Alpha🔎
Stablecoin usage on Base is surging
Crypto Meme😂
The latest developments in DeFi
Circle launched native USDC on Sonic L1
Chainlink, J.P. Morgan, and Ondo Finance teamed up to enable cross-chain settlement for tokenized U.S. Treasuries
Superstate introduced Opening Bell - a platform that enables companies to launch tokenized equities on Ethereum and Solana
Uniswap introduced one-click swaps
mETH Protocol announced the Restaking Alchemist, a incentive campaign which will randomly reward 50 new cmETH restakers via a raffle. To qualify, you need to restake at least 0.02 mETH for cmETH
Virtuals Protocol released the staking mechanism for $VIRTUAL
Arbitrum DAO approved a 35M ARB allocation for tokenized US Treasuries
Rumpel introduced the Auto-Seller, enabling its users to sell their airdrop points automatically
Ethereum announced the Trillion Dollar Security initiative, aiming to upgrade Ethereum’s security to help bring the next billion users on-chain
Kamino Finance released the checker for the Kamino Season 3 airdrop
LayerZero introduced Hyperbridge, which enables bridging assets to Hyperliquid
Fluid announced plans to make $FLUID a multichain asset via Chainlink’s Cross-Chain Interoperability Protocol
Ripple has agreed to a $50 million settlement with the SEC
Coinbase will join the S&P 500, becoming the first crypto-only firm in the index
That’s all for this week!
Until next time,
The DeFi Investor
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