Welcome back to DV Chain's Weekly Market Commentary! In this edition, we highlight the sell-off in crypto and broader financial markets over the weekend, reaching peak panic by Sunday night. Key factors include the BoJ raising interest rates for the first time in 30 years, U.S. recession fears, disappointing tech earnings, and geopolitical tensions. Despite this, Monday saw a strong rebound in risk assets. Dive in for a detailed analysis, as we discuss some key trade ideas and upcoming catalysts:

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Market Recap

• Crypto, along with the broader financial markets sold off into the weekend, and reached peak panic sunday night
  • BTC went to 49k
  • ETH hit 2.1k
  • SOL went to 109
  • NQ futures were just shy of going limit down on Sunday night and the Vix tagged 60, the highest since covid
    
    
• The macro panic seemed to stem from the BoJ raising interest rates for the first time in 30 years, U.S Recession fears after a weak job number, Tech Earnings disappointing, and geopolitical turmoil between Iran and Israel
  
  
• The election odds have also tightened up, as Trump’s odds have fallen from 70% to 53%
  
  
• The fed is now expected to cut 50 bps in September
  
  
• On Monday, risk assets across the board bounced and vols came down
  
  
• The U.S trading session on Monday was notably strong for equities and crypto, there was notable appetite to buy the dip
  • We saw net inflows of $49mm in ETH etfs and net outflows of $168mm in BTC ETFs
    • That net inflow number for ETH is the largest net inflow day since day 1, potentially marking an inflection point for flows
      
      

• Microstrategy announced that they look to sell $2B more of their shares to buy more Bitcoin
  
  
• Morgan Stanley tells wealth advisors that they can pitch Bitcoin ETFS to clients

Upcoming Catalysts / Trade Ideas

• $ETH
  • ETH has been crushed in the recent selloff, and seems to be the most dislocated token due to the path of events post ETF launch
  • If the ETF flows are at a turning point, which the data seems to suggest, then the daily inflows will be a good tailwind for price each U.S session and the market may price in the future flows
    
    
• $LDO
  • LDO took an outsized selloff from the SEC lawsuit against Consensys alleging Lido and Rocketpool staking pools are securities, potentially a favorable entry point ahead of the ETH ETF launch
    • Hester Pierce made comments that indicate the potential to walk back this lawsuit
  • Recent developments on the regulatory side are looking very bright, with Trump adding crypto support officially to his campaign coupled with his odds of winning surging
  • SEC allegations also seem to lose effect and mean revert over time, $SOL being the best example of this
  • DeFi as a sector is likely to benefit from the ETH ETF as well as the new political climate
  • LDO fundamentally is a very strong project, clipping almost $150m in fees on an annualized basis to its treasury
  • It has maintained majority of market share in the LST/LRT space, despite higher temporary yields in new competitor’s liquidity bootstrapping farms
  • From an institutional standpoint, it is much stronger than competitors in terms of safety and network effects. The Lido Dao’s roadmap prioritizes institutional adoption, which we think is an astute plan, given the recent interest in crypto and tokenization from Wall Street
  • See AAVE and MKR price action for forgotten DeFi tokens that generate earnings, once the value is tapped into by implementing a fee switch
    
    

• Polymarket is rumored to TGE sometime soon, so it’s probably worth using the platform for an airdrop

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