Crypto market undergoes massive sell-off as Bitcoin trades below $50k
Weekly Market Update #40
Major developments for the week:
Last week, Bitcoin ETFs saw net outflows of approximately $80 million
Japan's Nikkei index experienced a significant crash
The SEC amended its complaint against Binance, in which they now state tokens like SOL are not securities
Aave reduced stablecoin borrowing rates
Ripple allocated $10 million to tokenized U.S. Treasury Bills on the XRP Ledger
Lido Finance introduced Lido Institutional
The strategic BTC reserve bill was officially introduced
Aave profited from liquidation management
Bitcoin experienced a significant price crash over the weekend, falling below $50,000 for the first time since February 2024, driven by several factors. The decline coincided with substantial losses in stock markets across Europe and Asia, reflecting a broader economic turmoil and a general risk-off sentiment among investors. Disappointing US employment figures released last week raised concerns about a slowdown in the world's largest economy, triggering a sell-off in risk associated assets. Global market volatility further exacerbated the situation, with Japan's Nikkei 225 index suffering a record 12.5% drop and European markets also declining.
The sudden price drop in digital assets led to over 307,078 traders being liquidated, with total liquidations amounting to $1.22 billion. The largest single liquidation order occurred on Huobi, valued at $27 million for the BTC-USD pair.
This crash wiped out approximately $367 billion from the overall crypto market capitalization, with Bitcoin falling by about 15% and Ethereum by 22% in 24 hours.
Ethereum ETF flows are beginning to show signs of strength
Despite broader macroeconomic concerns, the Ethereum ETFs are beginning to show potential signs of strength just 10 days post-launch. As illustrated in image one, Grayscale’s ETHE outflows are starting to subside. Since the launch date of the Ethereum ETFs, ETHE has seen a total of $2.16 billion in outflows. Notably, on August 5th, ETHE's outflows significantly reduced to just $56 million, compared to $484.1 million on the first day.
Approximately 25.2% of ETHE has flowed out 10 days after the Ethereum ETFs went live. In comparison, BTC hit its lowest point 12 days post-ETF launch, with roughly an 18.8% outflow from GBTC.
Overall, Ethereum ETFs have experienced net outflows of $462.4 million to date, with 4 net inflow days out of the 10 trading days.
Lido introduces Lido Institutional:
In other news last week, Lido Finance has introduced Lido Institutional, a liquidity staking solution targeted at large clients such as custodians, asset managers, and exchanges. Lido Institutional combines the reliability and security needed for enterprise-grade staking with the liquidity and utility required for various institutional strategies, according to a post on X by Lido. Lido, the largest liquid staking protocol, controls over 28.5% of all staked ETH. Prior to the launch of the new service, Lido partnered with infrastructure provider Taurus in February and announced an integration with Fireblocks at the EthCC event in July, designating these firms as custody solutions on its website.
Aave generated $6 million in Revenue within the last 24 hours
Over the last 24 hours Aave generated over $6 million. This revenue was primarily generated via liquidation fees as a result of the broader market liquidation event.
It is also noteworthy that in July Aave posted a governance proposal titled AAVEnomics update. The update proposal aims to create a clear path for redistributing Aave's excess protocol revenue and enhancing its security model. Key points include:
New "Umbrella" Security System: Replacing the current Safety Module, this system will offer more efficient coverage and potential monetization beyond just the Aave protocol.
"Buy & Distribute" Program: Using excess protocol revenue to purchase and distribute AAVE tokens to key ecosystem participants, such as stakers and GHO users.
Staking Module Upgrade: Allowing staking of multiple assets beyond just AAVE tokens.
Phased Implementation Approach: Launching the first phase immediately, with subsequent phases dependent on reaching specific growth and revenue milestones.
Linking Protocol Development to AAVE Token Value: Introducing buybacks and cash flow income for holders to tie protocol development more closely to the AAVE token value.
The proposal aims to mature Aave's economic model while ensuring long-term sustainability. It is currently in the "temperature check" stage for community feedback before moving to formal governance votes.
Ripple to allocate $10 million to tokenized U.S. Treasury Bills
For the final update of this week, Ripple announced that it is investing $10 million in tokenized U.S. Treasury bills on the XRP Ledger. This initiative, representing the first issuance of such tokens on the platform, is part of Ripple's broader strategy to enter the Real-World Assets (RWA) market. The T-bills, issued by OpenEden, are backed by short-term U.S. government debt and collateralized reserve repurchases. Users will be able to mint these TBILL tokens using stablecoins, including Ripple USD, which is scheduled to launch later this year.
This research report is exactly that — a research report. It is not intended to serve as financial advice, nor should you blindly assume that any of the information is accurate without confirming through your own research. Bitcoin, cryptocurrencies, and other digital assets are incredibly risky and nothing in this report should be considered an endorsement to buy or sell any asset. Never invest more than you are willing to lose and understand the risk that you are taking. Do your own research. All information in this report is for educational purposes only and should not be the basis for any investment decisions that you make.