A look back at August: Crypto trails other asset classes

Bitcoin and other cryptocurrencies lost ground against traditional assets in August over recession fears, decreasing liquidity, worries about upcoming selling by governments, etc. 

Equities fared well in August, with both US and Japanese equities generating double-digit returns and European and Emerging Market equities returns above 8 percent. Meanwhile the price of Bitcoin and Ether fell 8.3 percent and 21 percent respectively. 

Crypto players, including Coinbase and Ripple, nevertheless continue to pour millions of dollars into the US election campaign. Currently, on the betting site Polymarket, pro-crypto Republican candidate Donald Trump holds a four-point lead over Kamala Harris, the Democratic candidate, whose stance on cryptocurrency remains unclear. 

In August, the monthly cryptocurrency exchange volumes edged higher to $1.21 trillion – the highest level since May. Binance remains the largest centralized crypto exchange with a 37 percent market share.

Bitcoin underperforms, though rebounds from a low at $50,000

Mid-August, Bitcoin reached a new milestone when 94 percent of its total 21 million coins had been mined, according to Glassnode data. Bitcoin, with a 54 percent dominance at the end of the month, ended August just below $59,000, after having plunged down toward the $50,000 level on Aug 5. This downturn was caused by a surprise rate hike in Japan, which triggered the unwinding of carry trades and led to a mini global crash. 

Corporations continue to raise funds for additional Bitcoin acquisitions

MicroStrategy, the listed company holding most Bitcoin, raised another $2 billion to buy additional Bitcoin in August. It now holds 226,500 Bitcoin or 1.08 percent of the total supply of Bitcoin. The unrealized capital gain on this stake was $4.9 billion on Sept 2. As for Michael Saylor, the CEO and co-founder of the company last month disclosed that he personally owns more than $1 billion worth of Bitcoin.

Bitcoin miners experience losses at Bitcoin’s current price level

The $60,000 level is the threshold where Bitcoin mining becomes unprofitable for the industry, leading to significant price declines due to miners' high beta, the crypto intelligence firm 10xResearch noted. 

As a result, Marathon Digital (MARA), the world’s largest Bitcoin miner, saw its stock price fall by 3 percent in August. MARA, which follows a similar Bitcoin treasury reserve strategy as MicroStrategy, raised an additional $300 million in August. The world’s largest Bitcoin miner now holds roughly 25,000 Bitcoins.

Ethereum plummets, leading to low interest in new spot ETFs

The nine Ether exchange traded funds (ETFs) that started trading in the US on July 23 have experienced a cumulative net outflow of half a million US dollars since their debut, largely due to outflows from Grayscale’s incumbent Ether Trust that was converted into an ETF ($ETHE), data from Sosovalue shows. With its fee being ten times higher than that of competitors at 2.5 percent, $ETHE has experienced outflows of $2.6 billion over the past six weeks. Meanwhile, BlackRock’s $ETHA ETF has attracted $1 billion in assets and Fidelity’s $FETH almost $400 million. The venture capital firm DRW is among the institutional investors which holds $150 million in these spot Ether ETFs. 

During the month, the Securities and Exchange Commission (SEC) obtained applications for options on the spot ETH ETFs. The US regulator has until April 2025 to rule on the matter. The price of Ethereum fell 21 percent during the month. 

Trial of Binance executive moved in Nigeria & CZ soon a free man in the US

August marked the six-month detention of Tigran Gambaryan, Binance’s head of financial crime compliance, in a Nigerian prison where his health steadily deteriorated. He is accused of money laundering by the Nigerian authorities. Gambaryan’s trial was brought by more than a month to Sept 2, yet he continues to be denied access to his legal counsel.

The news from overseas is more encouraging. The co-founder of Binance, Changpeng Zhao (known as CZ) will be released from a US jail on Sept 28, where he is currently serving a sentence after pleading guilty to money laundering. He was recently transferred from a minimum-security prison in California to a residential re-entry program designed to help inmates to transition back into society. CZ ranks 65th on Bloomberg’s Billionaire Index, with an estimated fortune of $27.6 billion. The price of Binance Coin fell 5.6 percent during the month. 

Solana spot ETFs approved in Brazil & Ethena stablecoin deployed on its blockchain

Brazil’s Securities and Exchange Commission (CVM) approved the listing of two separate spot Solana exchange traded funds (ETFs) in August. Today, there are two similar Solana ETFs trading in Europe, one on the SIX Swiss exchange and the other on the German Deutsche Börse, but none in the US.   

Separately, the stablecoin of Ethena Labs, USDe, was deployed on the Solana blockchain during the month. Solana has been added as a backing asset for this stablecoin. The price of Solana fell 19 percent in August. 

Ripple settles with SEC for a fraction of the initial fine sought & tests own stablecoin

Ripple Labs, the issuer of the cryptocurrency XRP, has reached a $125 million settlement with the SEC. The US regulator had initially sought a $2 billion fine in March 2024 accusing the company for selling XRPs to institutional clients  without registering them properly. 

Separately, Ripple Labs announced the start of beta testing of its stablecoin Ripple USD (RLUSD) on the Ethereum mainnet and the XRP Ledger. These plans could be expanded to additional blockchains and decentralized finance (DeFi) protocols in due time. RLUSD is pegged 1:1 value with the US dollar, fully backed by US dollar deposits, short-term US government treasuries, and other cash equivalents. XRP shed 6.3 percent during the month of August. 

Toncoin under pressure from indictment of Telegram’s founder

Toncoin, the seventh-largest cryptocurrency, plunged 21 percent in August following the indictment of Pavel Durov in France for failing to stop illegal content such as drug trafficking, fraud, promotion of terrorism and more on the messaging service Telegram. 

Durov is the founder and CEO of Telegram, whose team developed Toncoin. Telegram has since cut its ties to the crypto project. Durov was released from jail but is not allowed to leave France and must report to the French police twice a week while the trial continues. 

Tron rallies following launch of thousands of new memecoins

Tron, the eighth-largest cryptocurrency, profits from strong tailwinds since the deployment of its SunPump memecoin generators mid-August. Several thousand memecoins have since been created. Tron was one of the few cryptocurrencies that posted positive returns in August. Last month, its price rose 22 percent. 

Cardano hard fork upgrade delayed to Sept 1

The Chang hard fork update, originally announced by Cardano for the end of July, was delayed to Sept 1. Cardano then now transition to a decentralized governance model over the coming three months. The update not only makes the Cardano blockchain platform more efficient, enabling it to support larger decentralized applications (dApps), but it also improves the deployment of smart contracts and its security protocols. The price of Cardano fell 10 percent in August. 

Avalanche unlocked almost $10 million tokens in August

Avalanche, the 11th-largest cryptocurrency, unlocked $9.5 million tokens worth roughly $200 million in August. Half of these tokens went to the Avalanche team, and a fifth each to strategic partners and the Avalanche foundation. The price of Avalanche fell 9 percent in August. 

Stablecoin market cap hits all-time high 

The global stablecoin market reached a record in terms of market cap at $171 billion in August. Tether’s USDT remains the dominant stablecoin with a market cap of $118 billion, way ahead of Circle’s USDC that trails far behind at $35 billion. As for PayPal’s PYUSD, launched just a year ago, its market cap approaches the $1 billion threshold. 

97% of all memecoins have already failed

More than 97 percent of all the memecoins that have ever existed have already failed, the study “State of Memecoin 2024” released by Chainplay shows. Their average lifespan is a mere year and approximately 2,000 memecoins are delisted every month.  

US regulator continues to crack down on the US crypto universe

OpenSea, among the largest marketplaces for non fungible tokens (NFTs), obtained a warning in the form of a Wells notice from the SEC. The US regulator claims that NFTs trading on OpenSea are securities. “We're shocked that the SEC would make a move that threatens creators and artists, and we're ready to stand up and fight for our industry,” Open Sea said. 

The US regulator also charged Abra, a crypto lender, for offering and selling unregistered its retail crypto asset Abra Earn and operating as an unregistered investment company. 

Meanwhile, the winds are blowing in the opposite direction in Dubai, where a court issued a landmark ruling allowing wages to be paid out in crypto assets.