Market Metrics

Total Crypto Market Cap: down 13.8% to $1.931T
Total AI Sector Market Cap: down 17.3% to $18.2B

Top Movers (24 hrs):

📈 Dojo Protocol (DOAI): up 1% to $0.0188
📈 TriasLab (TRIAS): up 0.6% to $5.59
📈 Thought (THT): down 0.8% to $0.01321

Daily News

🟠 Jump Trading has been market dumping hundreds of millions of dollars of ETH on the open market over the past few weeks, with particularly rapid selling occurring in the past 24hrs. This seems like particularly strange behaviour so there is speculation they have an urgent obligation to cover.

🟠 Greg Osuri announced he was in the process of replacing Claude with Llama 3.1 on Akash Network so that the tech stack is fully open source.

🟠 

Market Meltdown - What’s Going On?

In the past 24 hours, we've witnessed a bloodbath across the crypto markets, with major coins plummeting 20-30%. We’ve been around crypto since 2016 and have endured our fair share of market crashes, so we thought we’d explain what’s going on and our thoughts on the possible bull and bear case for the next few months. Long term we are always bullish magic internet money.

The key thing with these sudden crashes is to survive. This means no leverage and taking time away from the screens when feeling emotional. There is a reason why people say “Comfy in spot” — 1 BTC will always equal 1 BTC. If you think like this, market dumps become less scary.

Now, let's dive into the perfect storm of factors that have led to the crash over the past 24hrs:

• US Jobs Report: Weaker-than-expected job growth and higher unemployment have spooked investors, signaling potential economic weakness and driving capital away from riskier assets like crypto.

• Recession Fears: Off the back of the jobs data, there are growing concerns about an impending economic downturn are pushing investors towards safer havens, historically leading to significant market declines across all asset classes.

• Japanese Yen and Interest Rates: The Bank of Japan's first interest rate hike in 17 years has strengthened the yen, forcing investors to unwind the yen carry trade and sell other assets, including crypto, to cover their positions. The created a liquidation cascade in some Asian markets.

• Geopolitical Tensions: Escalating conflicts, particularly in the Middle East, are fueling market volatility and uncertainty, causing investors to flee from perceived high-risk investments.

• Stock Market Sell-off: A massive $3 trillion wipe-out in the stock market has had a spillover effect on crypto, as many investors view digital assets as part of their overall risk asset allocation.

• Crypto Liquidations: The market decline triggered a surge in forced liquidations, creating a vicious cycle of selling pressure and further price drops. Traders were liquidated for over $1 billion over the past 24hrs.

• Jump Trading Dump: Jump Trading's aggressive selling of hundreds of millions in ETH over recent weeks, particularly in the last 24 hours, has fueled speculation about urgent financial obligations and the selling on an illiquid Sunday had a huge negative impact on ETH’s price.

While these factors explain today's market meltdown, some are more than just short-term hiccups. Some of these factors will continue to play out of the coming weeks and months.

To get a more well rounded perspective and potentially help you escape the emotional turmoil you might be in, here’s what we see as key points for both the bullish and bearish cases for crypto over the next few months. If you find one of these cases resonating strongly, you should consider doing some deeper research to decide what makes the most sense for your portfolio. Here’s our take:

Bull Case:

1. Institutional Appetite: Despite the market downturn over the past few months, institutional interest remains robust. BTC ETF flows have continued to be positive, with behemoths like BlackRock steadily accumulating. This suggests that smart money sees value at these levels and is playing the long game. As these funds continue to gobble up supply, we could see a supply shock once retail sentiment turns positive again. ETH ETF flows began to flip green last week before the stock market experienced the shake down. This week will be interesting.

2. Macro Tailwinds: With global rate cuts on the horizon, including in the US, we're likely to see an uptick in M2 money supply. Historically, this has correlated strongly with Bitcoin bull markets. As liquidity floods the system, a portion will inevitably find its way into crypto markets, potentially catalyzing the next upward cycle.

   

3. Regulatory Thaw: The regulatory nightmare of 2022-2023 appears to be fading. There's growing bipartisan recognition of crypto's importance, potentially paving the way for more constructive policies. As the regulatory environment stabilizes, it could remove a significant overhang from the market. If we see Trump win the US election, it is likely the US will become friendlier to crypto overnight which could remove a lot of uncertainty and allow larger investors to enter the market with more conviction (read: more capital).

4. Borderless, decentralized money: Yes, that’s it. If you aren’t fully aware of how useful a borderless digital currency is, try to transfer money to someone in a different country. See how much it costs, how many details you need for that person and, depending on which country it’s going to… well, good luck getting it through without being interrogated.

Bear Case:

1. Economic Deterioration: If unemployment spikes significantly (say, to 5-6%), we could see forced selling across all asset classes, including crypto. In such a scenario, people would prioritize basic needs over speculative investments. This could trigger a cascade of selling, potentially pushing prices to new lows.

2. Innovation Drought: Beyond pump.fun, we haven't seen killer use cases emerge from the crypto space recently. Without tangible utility driving adoption, it may be challenging to justify another speculative mania phase. The market needs real innovation, not just more pump-and-dump memecoins, to drive sustainable growth.

3. Institutional Disillusionment: While ETF flows have been a bright spot since January, a prolonged period of stagnation could change the narrative. If we see a prolonged period of negative flows for the Bitcoin ETFs and poor flows on the ETH ETFs, it could signal that institutional interest has peaked. Given that retail enthusiasm is already subdued, this could remove a crucial support for prices of Bitcoin and Ethereum.

4. Macro Headwinds: There's a bearish case to be made around global deleveraging. If we see a wave of foreclosures and bankruptcies, coupled with continued monetary tightening, it could spell trouble for all risk assets. Crypto, being at the far end of the risk spectrum, could be particularly vulnerable in such a scenario. If Harris is elected in the US and does not change her tune on crypto, we could also see further crackdowns on the industry, driving innovation out of the US and creating uncertainty for investors.

These are by no means the whole picture for either case, but they are some key things to think about over the coming months. As a crypto investor, it is extremely important that you take action to survive and preserve capital. If you are over invested or leveraged to the hilt, you may want to consider taking some chips off the table so you don’t lose everything.

In saying that, today is not the day for emotion. Try not to let short term price action throw you off course. If you aren’t over invested, you shouldn’t let short term price action throw you off. The true bullievers know where we are heading long term.

Meme of the Day

McDonald’s just opened some jobs lads and ladies, get in while you can…