Markets
The State of the Crypto Market
We’ve had a rough 2025 so far. Tariffs, war in the Middle East, and somehow eggs are 12 bucks again.
So when crypto pumped yesterday, many people were still bearish. They think it’s a fluke. A fakeout. But here’s the thing: behind all the noise, the fundamentals are getting stronger.
Let’s review where we are. And why the tide might be turning.
The Macro Picture
First up, some macro good news. Trump just announced a US–Vietnam trade deal.
More importantly for markets? According to the CME FedWatch, the Federal Reserve is now expected to cut interest rates twice this year—once in September and again in October. That’s great for risk assets. Like crypto.
The Senate passed Trump’s massive “Big Beautiful Bill,” and once it clears the House, it’s expected to add $3 trillion to the federal deficit over the next decade. That’s a lot of dollars getting printed, which again is very good for crypto prices.
Speaking of prices, the U.S. Dollar Index fell 10.8% in just the first half of the year. That’s its biggest drop since 1973. With a weaker dollar, investors will be looking for higher-yield assets. And crypto? It starts to look a lot more attractive.
The Regulatory Landscape
Regulation has been one of crypto’s biggest headaches over the years. But that might be changing fast.
The Trump administration has been aggressively pro-crypto. Sure, it’s drifted into grifter territory with $TRUMP, but big policy shifts have also been happening.
- The OCC has greenlit banks to offer crypto-related services.
- The Federal Reserve lifted key restrictions on crypto custody and settlements.
- The Genius ACT, which creates a regulatory framework for stablecoins, has already passed the Senate.
- SEC Chair Paul Atkins is pushing to make DeFi work in the U.S. He’s taken many steps like clear guidance that clarifies what is and isn’t a security. That’s a huge deal.
- And just recently, the FHFA said crypto holdings on U.S.-regulated exchanges can be used as mortgage collateral. That’s no small change. It means crypto just got closer to mainstream financial legitimacy.
Yes, there’s still more work to do. But we’ve laid a very real foundation for growth.
Public Sentiment
Most people still think of crypto as a casino. Or a scam. Or both.
But that’s starting to shift. Here are some recent announcements driving that change.
- Circle and Ripple are applying for bank licenses. That’s real-world legitimacy.
- Robinhood’s recent announcements (which we covered last week) will change how millions of people view crypto.
- Tom Lee, a well-known analyst in TradFi circles, is turning BitMine into an ETH-focused treasury strategy company.
- Ric Edelman, the founder of a $300B investment advisory firm, just told investors to allocate up to 40% of their portfolios to crypto. Just three years ago, he was recommending 1%.
And let’s be clear: retail investors haven’t come back yet. But if sentiment continues to improve, they just might.
Institutional Flows
Retail might still be cautious, but TradFi is diving in headfirst.
We had good ETF inflows to both BTC & ETH. BTC had $4.6 billion in net inflows for June. A very healthy number. ETH had its third-best month for ETF inflows—$1.16B in June.
ETH is also becoming a Treasury Strategy asset. Sharplink and BitMine are the most well-known, but there are some more companies.
For Bitcoin, it feels like there’s a new BTC treasury company every week.
Corporate BTC buying recently outpaced ETF inflows. In June alone, public companies like SolarBank, Blockchain Group, Sequans, and ProCap bought in. That’s on top of Strategy’s ongoing accumulation. That’s wild.
Even Solana has entered TradFi. A Solana staking ETF launched and got $33 million in day-one trading volume.
What’s the Verdict?
In the very short term, it’s difficult to predict.
The sentiment still isn’t good for altcoins. Case in point: Robinhood x Arbitrum was a huge announcement. In better market conditions, that news might’ve sent $ARB soaring. This time? Barely a blip.
But that doesn’t mean things are bearish. As I explained, the fundamentals are bullish than they’ve been in years. So good time for accumulation.
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xStocks: Trade Stocks Onchain
Onchain stocks are the holy grail of crypto.
It means there’s serious trading on crypto, not just memecoins and rug pulls. xStocks is offering that holy grail.
What are xStocks? They’re tokenized stocks on Solana.
You can now trade 61 stocks onchain. You’ll also get the full benefits of DeFi. You can use Kamino to take a loan against xStock collateral. Wanna provide liquidity to your xStock? Hop over to Raydium.
The same stocks are available on centralized exchanges like Kraken, ByBit, and Gate. So that’s additional distribution venues for these stocks.
If you’re skeptical and think there’d be some catch, you’d be right.
Firstly, US citizens can’t legally use it. (Alongside many other jurisdictions.)
Secondly, xStocks aren’t real stocks. You don’t have any legal right whatsoever on the stock.
They’re similar to stablecoins like USDC. You are not holding the asset directly. You are holding a wrapper that’s backed by the offchain asset.
Similar to USDC, qualified, KYC’d, non-US Kraken investors will be able to mint and redeem the underlying tokenized xStocks.
You can read the legal documentation here.
Backed.fi is behind onchain tokenization of stocks. They’re already tokenized $COIN on the Base chain. You can read more about Backed.fi here.
But you shouldn’t write xStocks off. It still has many benefits over traditional stocks.
Accessibility. Many people don’t have access to the US capital markets. Now anyone around the world can get exposure to big US companies like Tesla and Google without going through KYC or any other frustrating bureaucracy.
DeFi benefits. You can potentially earn yield by LPing. You can use them as collateral and borrow money against them. Trade 24×7. And so on. Previously, these options weren’t available for retail.
Even here, there are nuances. Since TradFi doesn’t trade on weekends, prices could diverge in both markets. This could create problems for market makers and liquidity providers. Low liquidity will lead to bad execution for traders as well.
Officially, xStocks only launched on June 30th. We’ll have to wait and watch how xStocks will perform.
We can look at some metrics to get an idea.
- Since launch, it did ~$20.5M in trading volume on Solana. This <0.2% of the volume during the same period on Solana.
- Total trading accounts is ~12.5k. But Daily Trading Accounts is in a downtrend. It peaked on July 1st at 6.5k. Yesterday, it only had 2.8k.
- The chart below tracks the daily trading volume. After the initial hype created by the launch, it shows the volume trending downwards.
So xStocks doesn’t have a strong product market fit. At least not yet.
DeFi degens are still chasing the 10x returns, not 5% pumps from stocks. For such returns on stocks, we’ll need leverage products. Platforms like gTrade and Ostium do provide leverage trading on select stocks. But even they haven’t taken off like other crypto native sectors like LSTs or even memecoins.
Ultimately, current wrappers and synthetic products will have limitations. Native issuance of stocks onchain is the endgame.
So despite the hype on crypto twitter, the current cohort of crypto users have a limited appetite for stocks. For them to really take off, we’ll need TradFi investors to enter crypto rails.
DeFi Catalysts
Jupiter Exchange launched Jupiter Studio. It’s the token launchpad from the Jupiter Team.
Stacks announced their Business Development roadmap. It includes bridges, tier-1 stablecoin integrations, expanded wallet support, and more.
Spectra, a yield-trading protocol, has gone live on Avalanche. The live pools include UTY of XSY and avUSD of Avant Protocol.
Celo, an ETH L2, has launched the Eclair testnet. It combines Succinct’s SP1 zkVM with EigenDA for the first time ever.
Dolomite is a money market that has already gone live on Arbitrum and Berachain. It has expanded to Ethereum.
Velora, an intent-based trading protocol formerly known as ParaSwap, has launched on Sonic.
Airdrop Alpha
Axiom is a trading bot that generates a ton of revenue. Their points program is a good airdrop opportunity.
Eclipse, an Ethereum rollup that runs SVM execution environment, has released the airdrop checker for the $ES airdrop.
Industry News
Solana got its first staking ETF in the US. Interestingly, Solana got the staking ETF even before Ethereum.
SEC approved the conversion of the Grayscale multi-asset fund to the Spot Crypto ETF. It’ll hold Bitcoin, Ether, XRP, Solana, and Cardano
OpenAI said they don’t “endorse” Robinhood’s claims of trading OpenAI equities. Robinhood clarified that the tokens are just wrappers for exposure.
X Hits
- The Katana thesis.
- Understand volume profiles easily.
- $$$ strategies for prediction markets.
- Required stack for a stablecoin bank.
- How can HyperLiquid flip Binance?
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.
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