Welcome back to DV Chain's Weekly Market Commentary! In this edition,  we recap a choppy week in the crypto markets that ended with a move higher following Jerome Powell’s speech at Jackson Hole. We also dive into key developments such as the arrest of Telegram founder Pavel Durov, State Street’s entry into crypto custody, and new projects from major players like Sony and Donald Trump Jr. Dive in for insights on the latest market trends and potential trade ideas:

Market Recap

• Crypto had a choppy week of trading and made a move higher on Friday after Powell’s speech at Jackson Hole
  • Powell stated “the time has come for policy to adjust”, confirming what rates futures had priced in
  • Odds of a 50 BP cut climbed slightly, now at about ⅓ chance
    
    
• Alts were noticeably strong on Friday through the weekend, until the arrest of Telegram founder, Pavel Durov, which seemed to spark some fear into markets as $TON traded down 20%
  
  
• State Street Selects Taurus for Crypto Custody, Tokenization
  • The bank will start with tokenization and plans to offer digital asset custody once the U.S. regulatory environment improves.
  • Plans to offer tokenized versions of traditional assets
    
    
• Wyoming aims to launch state issued stablecoin in 2025
  • Just as markets started to trade up on Friday, the Ethereum Foundation sent 35K ETH to Kraken worth about $100m, sparking some controversy
    
    
• Vitalik also made some tweets responding to criticism of the EF not caring about DeFi
  • He discussed his vision of crypto which led to some debates on the vision of the space
    
    
• Trump odds ticked back up on Polymarket after Kamala took the lead last week, now about even
  • RFK, a former democrat endorses Trump
    
    
• Mercadolibre, South American Fintech giant worth 100B, issues dollar pegged stablecoin
  • The stablecoin, called Meli Dollar, can be traded by all Mercado Pago clients in Brazil through the fintech's app, essentially exporting the US Dollar
    
    
• Sony announces they are building an Ethereum L2 called Soneium
  • Soneium aims to integrate blockchain into Sony's consumer products within the next two years.
    
    
• Donald Trump Jr makes announcement regarding his DeFi Project, ‘World Liberty Financial’
  • “Folks, we all know how crooked banks and financial institutions rig the system against everyday Americans. They shut people out, deny them loans, drown them in paperwork and kill them with legal and processing fees. Our entire family, has experienced this firsthand… we’ve been de-banked, de-platformed and had every political game imaginable played on us. These banks and the elites who run them want absolute control but that ends now. We’re making finance great again by putting the power back in YOUR hands. This new DeFi platform will cut out the corrupt, expensive and inefficient middlemen. No more bureaucrats deciding your fate. It’s time to modernize an unfair and antiquated system and give everyone the same opportunities the elites have been hoarding. Join us, and let’s make finance work for the people again.”
    
    
• Total stablecoin market cap keeps climbing

• Base activity remains strong amidst the downturn

Upcoming Catalysts / Trade Ideas

• Nvidia reports earnings on Wednesday

• • AI coins led as top sector performance last week as traders position for NVDA
    
    
• PCE on Friday, which could move next months rate cut expectations
  • Rates have an implication on DeFi, since DeFi becomes much more attractive as central bank rates approach 0
    
    
• FTX creditor distributions in Q4
  
  
• $ETH
  • ETH dominance keeps falling as ETF flows disappoint, but we believe price and sentiment have overshot to the downside as ETHBTC makes new lows not seen since  2021 while fundamentals remain strong
  • There continue to be many developments made globally of institutional adoption, tokenization, and payments
  • The regulatory environment is expected to loosen up, but the issue is that it’s now tied to the election and becomes a ‘Trump Trade’
  • The launch of the ETF allows easy access and establishes ETH as an investable asset class along with Bitcoin
  • Crypto tends to be a reflexive market, and sentiment will improve as price goes up, it’s possible that institutional flows pick up as price goes up
    
    
• $LDO
  • LDO took an outsized selloff from the SEC lawsuit against Consensys alleging Lido and Rocketpool staking pools are securities
    • 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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