Author: Ignas
Compiled by: Luffy, Foresight News
As I write this, the biggest uncertainty in cryptocurrency in the short term is the trend of interest rates. It depends on two key points: first, Powell's statement at the Jackson Hole meeting (Thursday, August 22), and second, how the Federal Reserve determines interest rates at the FOMC meeting on September 16-17.
If a dovish signal is released → 2-year U.S. Treasury yield and dollar index fall → Bitcoin/Ethereum rise
If a hawkish interest rate cut or maintaining high rates for longer occurs → risk assets are sold off, altcoins fall first
This is the conclusion of the ChatGPT 5 thinking model and Deepseek's Deepthink model. Many on platform X share the same view, which also explains the recent decline in altcoins.
To be honest, the dependence of cryptocurrencies on macro factors is quite frustrating, but the fact that the last cycle peaked due to global interest rate hikes shows that we cannot ignore these factors.
However, as Wintermute trader Jack said, my AI model also depicts a bullish outlook: interest rate cuts will eventually come. The uncertainty lies in ‘when to cut, how many times to cut, and how much to cut’.
That said, it's just the opposite of when the last cycle ended: interest rate cuts are imminent, so is the bull market peak still far off?
I hope so, but everyone I talk to around me is planning to sell. So who is buying to offset the selling pressure?
The retail speculators we relied on in the last cycle have not yet entered the market (as can be seen from the data of crypto apps in the iOS App Store). Currently, the largest buyers are:
Spot ETF
Crypto Asset Treasury (DAT)
What I'm concerned about is whether the buying power of institutions, crypto asset treasuries, and other large players can offset one round of retail selling after another? Or will their buying power run out?
Ideally, this is a process that lasts for several years, where steady price increases gradually eliminate those who are not firm investors.
The most interesting result might be: even if most crypto ‘natives’ sell off, cryptocurrencies continue to rise, leading to further bullish trends.
In any case, the crypto asset treasury is both a significant risk point and a key bullish factor, and I would like to briefly discuss this point.
Now it all depends on the crypto asset treasuries
You can see the speed at which the crypto asset treasury is acquiring Ethereum.
The Ethereum crypto asset treasury acquired 2.4% of the total supply of Ethereum in less than 3 months.
From another perspective: the largest Ethereum crypto asset treasury (Bitmine) currently holds the same amount as the crypto exchange Kraken, surpassing exchanges like OKX, Bitfinex, Gemini, Bybit, Crypto.com, and even exceeding the holdings in the Base chain cross-chain bridge.
At this rate, the proportion of Ethereum held by the crypto asset treasury will surpass Bitcoin in a few months. In the short term, this is good for Ethereum, but once the crypto asset treasury needs to liquidate Ethereum holdings, the risk will arise.
But even Wassie admits that what happens to the crypto asset treasury when the adjusted net asset value (mNAV) turns negative is still unclear.
There are many related speculations on platform X, but my advice is: continuously track the data of crypto asset treasuries, especially focusing on whether the adjusted net asset value remains below 1.
As I write this, the trading prices of SBET and BMNR are slightly above the adjusted net asset value of 1, while BTCS is below 1.
So what is BTCS doing?
To attract more stock buyers, BTCS announced its first ‘dual dividend’: a one-time distribution of $0.05 in ETH dividends per share, along with a $0.35 cash dividend.
Most importantly, they provide... please read carefully... ‘We will provide a one-time $0.35 Ethereum loyalty reward per share to shareholders who transfer their shares to our transfer agent for registration and hold until January 26, 2026.’
For crypto natives, BTCS's operation is like a traditional finance ‘staking mechanism’, aimed at preventing shareholders from selling shares. Their motivation for issuing ‘dual dividends’ stems from the adjusted net asset value being below 1, and to ‘prevent market manipulation’ — preventing shares from being lent to short sellers.
Also, where do these dividends come from? They are actually paid using the Ethereum they acquired.
It looks not so good, right?
At least they haven’t publicly sold off Ethereum yet. I suspect that the first crypto asset treasury to collapse and sell off crypto assets will be the small companies that can't attract stock buyers. So we need to track the following dashboards to identify crypto asset treasuries and study how they manage their crypto holdings.
Crypto Twitter might ignore small crypto asset treasuries, but their movements can help us predict what larger, systemically important crypto asset treasuries will do.
Here are a few dashboards worth paying attention to:
Blockworks
The Block
Delphi
Crypto Treasuries 1
Crypto Treasuries 2
Crypto Stock Tracker
It is important to note that the data reported by different dashboards may vary slightly, which adds to the difficulty of analysis. We must closely monitor the movements of other crypto asset treasuries.
However, given that the current adjusted net asset value premium is low, and the number of Ethereum releasing from staking queues has reached a record, it is not surprising that Ethereum's upward momentum may slow down for a few days or even weeks.
Before moving on to other topics, I want to add: I am becoming increasingly optimistic about altcoin crypto asset treasuries.
The bullish logic of altcoin crypto asset treasuries
In this cycle, the issuance of new tokens has reached a record. Although most are worthless meme coins, the cost of token issuance has effectively dropped to zero.
Comparing to previous cycles: proof-of-work forks require mining rigs (like Litecoin, Dogecoin), or building staking infrastructure (like EOS, SOL, ETH). Even in the last cycle, issuing tokens required a certain level of technical knowledge.
Before this cycle, the number of tokens worth paying attention to was ‘controllable’, including several lending protocol tokens, decentralized exchange tokens, several public chain tokens, infrastructure tokens, etc.
And now, with the cost of token issuance at zero, more projects are launching tokens, especially with the rise of Pump.fun, making it increasingly difficult for altcoins to attract sufficient attention and capital inflows.
For example: I listed 11 numbers below, but what if there are thousands? It would be impossible to find the ‘Schelling point’ (the default consensus point among people without communication).
Previously, there was only a distinction between Bitcoin and ‘other coins’. With MicroStrategy's continued purchases, only Bitcoin was able to rise.
And altcoin crypto asset treasuries have changed this pattern.
First of all, very few altcoin projects can plan a crypto asset treasury acquisition scheme. This requires specific knowledge and skills that most projects do not possess.
Secondly, only a limited number of altcoins are ‘worth’ having a crypto asset treasury. For example, Aave, Ethena, Chainlink, Hype, or DeFi token indices.
Thirdly, and perhaps most importantly: crypto asset treasuries give ICO projects a ‘moment of IPO’, attracting previously unreachable institutional funds. As I wrote on platform X:
I used to think that altcoin crypto asset treasuries were just a crazy Ponzi scheme. But upon closer thought, crypto asset treasuries allow altcoins to go ‘public’ — transitioning from ICO to IPO. The crypto asset treasury of BNB is like Binance’s IPO, which Binance might not have been able to do legitimately otherwise. For example, the crypto asset treasury of $AAVE allows traditional financial capital to invest in the future of the lending sector. More such crypto asset treasuries, please.
Finally, unlike Bitcoin and Ethereum, altcoins do not have ETFs to attract institutional investors.
Thus, altcoin crypto asset treasuries are an area I will focus on. They bring different advantages, such as absorbing venture capital's off-market selling or acquiring tokens at a discount.
Ethena is already an early case, but I would like to see what happens when a highly circulated altcoin has a crypto asset treasury.
Should I sell?
As I mentioned earlier, many people around me are planning to sell. But they don't want to sell at the current price.
Why? Because all indicators still look surprisingly healthy. CryptoQuant's ‘Omni Momentum Indicator’ tracks bull and bear cycles through profit and loss indices.
The core conclusion (not much changed compared to a few months ago):
Bitcoin is in the mid-bull market.
Holders are taking profits, but extreme enthusiasm has not yet appeared.
There is still potential for price increases before valuations become excessive.
Nevertheless, Delphi's Bitcoin top signal dashboard shows that the market is close to overheating but still within a controllable range: the strength score is 56.7, while tops are usually around 80.
The fear and greed index has returned to neutral.
Moreover, of the 30 indicators tracked by Glassnode, none indicate that the market has peaked.
I used to judge the market peak by the funding rate peak, but now I wonder if this indicator has been distorted by Ethena.
In the past, high funding rates meant too many speculators were going long, and typically there would be a subsequent crash. But Ethena's USDe broke this signal.
USDe mints stablecoins by going long on spot and shorting perpetual contracts, earning funding rates as profit. When funding rates rise, more USDe will be minted, increasing short positions, thus lowering funding rates. This creates a cycle.
So now, a high funding rate no longer means the market is overheating; it may just be Ethena issuing more USDe.
Wouldn't it be better to switch to tracking the supply of USDe? Looking at it this way, the market is indeed quite hot, as the supply of USDe doubled in a month.
Overall, I think the market condition is still decent. However, due to many speculative retail investors in the third and fourth cycles holding ‘life-changing’ unrealized gains, each significant rise will encounter selling pressure.
I hope the crypto asset treasury and Ethereum can absorb this selling pressure.
Additionally, a bear market may also unexpectedly return due to macro turbulence, which could expose hidden leverages in the crypto space that we have yet to discover.
In the first article of the ‘Current Market Situation’ series, I mentioned several areas where leverage might exist:
Ethena: the collateral for USDe has shifted from primarily Ethereum to Bitcoin, and is now turning towards liquidity stablecoins.
Re-staking: although the related narrative has quieted, liquidity re-staking protocols (LRTs) are being integrated into mainstream DeFi infrastructure.
Circular arbitrage: speculators leverage mining through circular operations to chase high yields.
Ethena used to be my biggest worry, but now the crypto asset treasury has become the main focus. What if there are hidden leverages we are completely unaware of? This keeps me up at night.
What to do after selling?
After moving my tax base to Portugal, my investment strategy in cryptocurrencies has changed.
In Portugal, if you hold an asset for more than 365 days, the capital gains tax is 0%; moreover, there is no tax on trading between cryptocurrencies.
This means I can convert to stablecoins, hold for a year, and obtain tax-free gains.
The question is: where to store stablecoins so that I can sleep soundly while maximizing returns?
Surprisingly, there are very few sufficiently reliable protocols. Chasing high yields requires switching back and forth between different protocols, and one must be wary of ‘treasury migration’ (for example, during contract upgrades), not to mention hacker risks.
Aave, Sky (Maker), Fluid, Tokemak, and Etherfi's treasuries are the most mentioned, but there are many other options, such as Harvest Finance, Resolv, Morpho, Maple, etc.
The question arises: which protocol can allow you to comfortably hold stablecoins for a year? Personally, I can only trust two.
The first is Aave. However, the growth of USDe and the circular arbitrage of LST ETH/ETH make me a bit worried about large-scale liquidations (although Aave's new ‘umbrella’ mechanism is helpful).
The second is Sky. But S&P Global Ratings gave it a ‘first stablecoin system credit rating’, which is concerning — rated at B-, which falls under ‘risky but not on the verge of collapse’.
Weaknesses include:
Depositor concentration
Governance is still deeply tied to Rune (MakerDAO founder)
Weak capital buffers
Unclear regulation
This means that Sky's stablecoins (USDS, DAI) may be considered credible, but they are very fragile. They may be fine in normal times, but during stress events like large-scale redemptions or loan defaults, they could be severely impacted.
As PaperImperium said: ‘This is a catastrophic rating for mainstream stablecoins.’
However, the risk tolerance of traditional finance is much lower than that of crypto natives, but it certainly doesn't work to put all stablecoins in one protocol.
This also indicates that cryptocurrencies are still in the early stages, and there is currently no real ‘passive investment’ except for Bitcoin and Ethereum.
