Markets
Have We Topped?
Is it all over? Should we pack it up? Or is there still room to run?
BTC & ETH posted some red candles. The timeline is calling for the cycle top. Before we jump to conclusions, let’s rewind and set the stage.
What’s a crypto cycle? Historically, crypto prices have moved in four-year cycles where periods of explosive growth are followed by painful drawdowns.
People calling for a cycle top are expecting a very painful drop. In previous cycles, these were 70-80% drawdowns.
To know if we’re in for a crash like that, we need to know what drives these cycles. There are two main schools of thought:
- The Halving Theory. Every four years, the block reward for miners gets cut in half. According to this theory, Less new BTC = reduced supply = higher prices.
- The Global Liquidity Theory. It says crypto cycles are largely a reflection of global liquidity.
Think of Global Liquidity as how much money is sloshing around in the financial system. Central banks expand or shrink liquidity through interest rates, money printing, and credit conditions. This also happens in cycles like crypto.
When liquidity is abundant—rates are low, money is cheap—risk assets pump. Stocks go up. Real estate goes up. And crypto, being the riskiest of them all, pumps the hardest.
When liquidity dries up—rates rise, credit tightens—risk assets crash. Crypto gets hit the hardest.
Imo, Global liquidity theory is more fundamental than halving theory. BTC halving just happened to coincide with Global liquidity cycles and became the catalyst to attract the risk-on capital.
M2 growth is a good indicator of global liquidity. It tracks the money supply growth of the top 21 central banks. The chart below tracks BTC price & M2 growth.
The above chart supports the global liquidity theory. When global liquidity expands, BTC grows. And when it contracts, BTC crashes.
Now, we can answer if we’ve reached the cycle top. If we zoom the chart to the recent period, we can see that global liquidity is still growing in August. As long as more money enters the system, money will flow towards risk-on assets like crypto. So we still have room to run.
However, we’re nowhere near the bottom either. BTC is already up 636% from 2022 lows. And the recent pumps in ETH & BTC are driven by financial engineering via treasury companies. (See last week’s newsletter.)
A good strategy is to monitor “bull market peak indicators” from Coinglass. It lists 30 indicators of the cycle top.
Interestingly, none of the 30 indicators listed is showing that we’ve hit the top. So that data also says we have more room to run.
Here are some of the important technical indicators for the cycle top.
- MVRV Z-Score. MVRV compares the market value (price today × supply) with the realized value (the average price people paid for their coins). The Z-score then adjusts this difference by accounting for volatility (standard deviation).
If the score is high (>5), BTC is considered overvalued. And vice versa.
- Bitcoin Net Unrealized Profit/Loss (NUPL). It measures the aggregate profit state of holders. At the top, NUPL will enter deep “Euphoria” (>70) as nearly everyone is in profit.
- Pi Cycle Top Indicator uses two moving averages (111-day MA vs 350-day MA×2). For the past three market cycles, when the 111DMA moves up and crosses the 350DMA x 2, we see that it coincides with the price of Bitcoin peaking.
You can directly monitor all 30 metrics on Coinglass here. The explanations of the indicators are also available on dedicated pages.
For our purposes, all those metrics are saying we haven’t reached the cycle peak.
But we don’t have to limit our analysis to those 30 metrics. Crypto now has an onchain economy.
Artemis is a great platform to monitor different ecosystems. It has many metrics, ranging from DEX volume to daily active addresses.
- Peak onchain activity was in January 2025.
- But since March 2025, onchain activity has been grinding up.
So onchain activity is also looking up.
In this cycle, TradFi was the key player. The only crypto-native narratives that resembled previous cycles were memecoins and AI Agents. A large reason for BTC dominance this cycle was ETFs and Saylor’s treasury strategy.
Here are my preferred venues for tracking TradFi activity.
With an active onchain economy and TradFi participation, crypto is maturing. If you’re still using a simplistic four-year cycle model, that’s a mistake.
You cannot make money by simply rotating from BTC to ETH to alts. There’s no altseason anymore. That era is gone.
But at the macro-level, global liquidity is expanding. TradFi is buying BTC & ETH with ETFs and Treasury companies. The onchain economy is looking fine. Coinglass indicators are bullish. All of that means there are still opportunities in crypto for those who are looking.
That doesn’t mean we’ll keep going up. There’ll be a top. And when that happens, you’ll know because your grandma will be talking about her Lambo pre-order.
Don’t get caught up in the euphoria when that day comes.
Sponsored by Mantle
Why $MNT Demand About to Explode?
$MNT is on a tear lately. It’s the 3rd best gainer among top 100 assets, up >55% in the last 30 days.
I’ve already discussed its bullish tailwinds: the largest treasury in the space, UR & TradFi integration, and, of course, the wave of Bybit partnerships.
Well, another big one just dropped. Bybit will be using $MNT for discounted trading fees. This is huge.
Why? Bybit is the #2 CEX by spot volume and #3 by derivatives volume.
Over the past year, Bybit has averaged:
- $3.5B–$5.0B in daily spot volume
- $25B–$43B in daily derivatives volume
Now imagine this: if Bybit routes even 10%–60% of its trading fees through $MNT for these discounts, the recurring demand for $MNT will be off the charts. Just look at the table below from @Moomsxxx:
The numbers look insane:
- Conservative case (10%) → $570K in daily demand. That’s $208M annually.
- Bullish case (60%) → $7.2M in daily demand. That’s $2.6B annually.
In my opinion, $MNT is becoming more like $BNB with these new integrations.
PS. Mantle sponsored this post. But we wrote the ad, and it reflects our opinion.
Protocols
Flying Tulip: All-in-one DeFi SuperApp?
The Sonic ecosystem is hyped about a new app.
Andre Cronje is the founder of Sonic. He’s also an innovator who built top-tier DeFi protocols like Yearn and mechanisms like ve(3,3). (He was also involved in some controversies, but that’s beyond our scope here.)
Flying Tulip is his latest project. It’s an all-in-one defi application that combines
- Exchange
- Money Market
- Leverage
- Perpetuals
- Options
The app isn’t live yet. So I don’t know how everything fits together yet.
But Andre has released a lot of research materials for you to dig into. It’s promising many innovations.
Let’s dig into a few of the above.
#1. Adaptive Curve AMM
In DeFi, “Automated Market Makers” (AMM) are the liquidity pools.
These pools work according to the encoded formula. The two most popular AMM formulas have different tradeoffs.
Constant Product AMM (x*y=k)
- Uniswap v3 is the best example.
- Pro: It can handle unlimited price ranges.
- Con: Less profitable for LPs and more slippage for traders.
Constant Sum AMM (x+y=k)
- Curve Finance is the best example.
- Pro: Low slippage for traders and more profitable for LPs
- Con: It cannot support the entire price range. LPs will have impermanent loss.
Alright. Both equations seem to be suited for different situations.
Enter Flying Tulip. It combines both of them. In volatile environments, it’ll use x*y=k. And in a calm market, it’ll use x+y=k
Now, doing is not as easy as saying. You can read about the technical details of this mechanism here.
#2. Better Liquidity Provision
When traders use liquidity pools, they pay a small fee. Liquidity providers are incentivized to add liquidity by this fee. So high yield = deep liquidity.
Since liquidity is allocated across the full price range in Constant Product AMM, it’s less profitable. Uniswap addressed the issue by the concentrated liquidity. It allowed users to confine liquidity to a chosen price range and earn more yield.
But this created another problem: active management to keep liquidity in range. Otherwise, you’ll lose money. But most people don’t have the time or expertise to actively manage liquidity.
Flying Tulip has done research on systems that automatically manage liquidity for users as well. You can read about it here.
#3. New LTV Model
Flying Tulip will have a lending market as well.
Loan-to-value (LTV) ratio is the percentage of the collateral value that can be borrowed. Most lending protocols use a fixed LTV ratio.
According to Flying Tulip, this fixed approach is flawed. It doesn’t adapt to the market conditions. Flying Tulip shows the other way.
For overcollateralized lending, there are three major factors to consider.
- Volatility risk. Collateral price can suddenly crash to cause bad debt.
- Slippage risk. Big liquidations move the price and create bad debt.
- Utilization levels. If the pool is not being utilized, lender capital is idle.
The LTV ratio should be adapting to the factors like the above. And that’s exactly what Flying Tulip is promising: a dynamic LTV ratio that adapts to market conditions.
You can read more about their model here.
There are still some unknowns about the project. Like with any project that operates based on theoretical models, we’ll have to see if those complex models are successful in the real world.
But Andre is a DeFi wizard who created innovations like ve(3,3). If anyone can pull this off, it’s Andre.
A warning: While Andre is raising money, it’s not from the community. So there’s no token or live app. Beware of scam links.
You can follow updates on the official account. It could be the breakout app that puts Sonic on top of crypto mindshare again
🚀 DeFi Catalysts
Kinetiq, the liquid staking protocol of HYPE, partnered with Anchorage Digital to deliver regulatory safeguards for kHYPE depositors.
Morpho has integrated with the new wallet application from Gemini that’ll enable wallet users to earn from Morpho.
Sky Ecosystem has added the bundled transaction feature to the Sky Money App. It combines multiple transactions into a single one.
Shadow Exchange has added Limit Orders and TWAP (Time-Weighted Average Price) orders to its protocol.
Euler Finance added support for tokenized gold from Tether, XAUT. You can use it as collateral to borrow stables, with in-app looping supported.
Limit Break launched Limit Break AMM (LBAMM). It’ll enable tokens and developers to define exactly how trading works: fees, access, pricing, and liquidity.
Liminal introduced xTokens: tokenized delta-neutral strategies. Users will be able to mint $xHYPE, $xBTC, $xETH, $xSOL, and other.
Puffer UniFi V2 testnet went live. It promises sub-100 ms preconfirmations, one‑click exits to ETH L1, and more to users of integrated chains.
Taiko, a based rollup, has released pre-confirmations. It solves a big weakness of the based rollups: L1’s block time.
Facet became the first general-purpose to reach Stage 2 by L2beat standards. It’s the current gold standard of rollup security.
Boundless introduced its native token, ZKC. Boundless will enable provers to mine ZKC in exchange for their proving work.
📰 Industry News
Rise Chain has launched its public community sale on Kaito Launchpad at $200M FDV. It’s a high-performance chain with based sequencing.
BTCS, an ETH Treasury Strategy company, will pay shareholders a one-time dividend of $0.05 per share in $ETH to stockholders.
Coinbase is funding a second Stablecoin Bootstrap Fund to ensure deeper liquidity for stablecoins across the onchain ecosystem..
Spire Labs focuses on building based rollups. They’ve launched DA Builder to help based rollup reduce DA costs.
Sky Protocol (previously MakerDAO) got an issuer credit rating of B‑ with a stable outlook from S&P Global Ratings. Crypto natives are questioning the rating.
🐦⬛ X Hits
- How do Treasury Company bids affect the ETH price?
- An evaluation of Trump’s 6 months of crypto policy.
- Does the bull market have more legs?
- Will memecoin trenches come back?
😂 Meme
Until next time,
Edgy
Today’s email was written by Edgy and Yayya.
DISCLAIMER: I’m NOT a financial advisor. This content is for education and information purposes only. Crypto and DeFi are risky and speculative. Please do your research before investing.
Whenever you’re ready, here’s how we can help you:
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