Written by: Ignas
Translated by: Luffy, Foresight News
When I wrote this article, the biggest uncertainty for cryptocurrencies in the short term was interest rate trends. Key points to watch are: first, Powell’s statements at the Jackson Hole meeting (Thursday, August 22), and second, how the Federal Reserve will determine rates at the FOMC meeting on September 16-17.
If dovish signals are released → 2-year US Treasury yield and US dollar index fall → Bitcoin/Ethereum rise
If hawkish interest rate cuts or prolonged high rates occur → risk assets are sold off, altcoins fall first
This is the conclusion of the ChatGPT 5 thought model and the Deepthink model of Deepseek. Many people on platform X share the same view, which explains the recent decline of 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 indicates that we cannot ignore these factors.
However, as Wintermute trader Jack said, my AI model also depicts a bullish outlook: rate cuts will eventually come. The uncertainty lies in 'when to cut, how many times to cut, and by how much'.
That said, it is now exactly the opposite of when the last cycle ended: rate cuts are approaching, so is the bull market peak still far from reach?
I hope so, but everyone I talk to around me plans 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 (as evidenced by data from crypto apps in the iOS App Store). Currently, the largest buyers are:
Spot ETF
Crypto Asset Treasury (DAT)
What I worry about is whether the purchasing power of institutions, crypto asset treasuries, and other large holders can offset one round of retail selling after another? Or will their purchasing power be exhausted?
Ideally, this is a process lasting several years, where steady price increases gradually eliminate those uncertain investors.
The most interesting outcome may be: even if most crypto 'natives' sell off, cryptocurrencies continue to rise, triggering further upward trends.
In any case, crypto asset treasuries are both a significant risk point and a key bullish factor, and I want to briefly discuss this.
Now it's all about crypto asset treasuries
Just look at the speed at which crypto asset treasuries are acquiring Ethereum.
The Ethereum crypto asset treasury acquired 2.4% of the total supply of Ethereum in less than three months.
Looking at it from another perspective: the largest Ethereum crypto asset treasury (Bitmine) now holds as much as the crypto exchange Kraken, surpassing exchanges like OKX, Bitfinex, Gemini, Bybit, Crypto.com, and even the holdings in the cross-chain bridge of Base.
At this rate, the holding ratio of Ethereum crypto asset treasuries will surpass Bitcoin's within a few months. In the short term, this is positive for Ethereum, but once crypto asset treasuries need to liquidate their Ethereum holdings, risks will arise.
But even Wassie admits that what happens when the adjusted net asset value (mNAV) turns negative is still unclear for crypto asset treasuries.
There are many related speculations on platform X, but my advice is: continuously track the data of crypto asset treasuries, especially pay attention to whether the adjusted net asset value remains below 1.
When I wrote this article, the trading prices of SBET and BMNR were slightly above the adjusted net asset value of 1, while BTCS was below 1.
So what is BTCS doing?
To attract more stock buyers, BTCS announced its first 'dual dividend': a one-time ETH dividend of $0.05 per share and a cash dividend of $0.35.
Most importantly, they offer... please read carefully... 'We will provide a one-time Ethereum loyalty reward of $0.35 per share to shareholders who transfer their shares to our transfer agent and hold them until January 26, 2026.'
For crypto natives, the operation of BTCS resembles the 'staking mechanism' of traditional finance, aimed at preventing shareholders from selling stocks. Their motivation for issuing 'dual dividends' stems from the adjusted net asset value being below 1 and to 'prevent market manipulation' — stopping stocks from being lent to short-sellers.
Moreover, where do these dividends come from? They are actually paid using the Ethereum they acquired.
It doesn't look good, does it?
At least they haven't publicly sold Ethereum yet. I suspect that the first crypto asset treasury to buckle and sell off will be the smaller firms that can't attract stock buyers. Therefore, we need to track the following dashboards to identify crypto asset treasuries and study how they handle their crypto holdings.
Crypto Twitter may overlook 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 different dashboards report slightly different data, which increases the difficulty of analysis. We need to closely monitor the movements of other crypto asset treasuries.
However, considering that the current adjusted net asset value premium is low, and the number of Ethereum unstaking queues has hit a record, it is not surprising that Ethereum's upward momentum may slow 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 for 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 fallen to zero.
Compared to previous cycles: Proof of work forks require mining machines (like Litecoin, Dogecoin), or the establishment of 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 'manageable', including several lending protocol tokens, decentralized exchange tokens, a few public chain tokens, infrastructure tokens, etc.
However, now that the cost of token issuance has hit 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 inflow.
For example: I listed 11 numbers below, but what if there are thousands? It's 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 continuing to buy, only Bitcoin can rise.
And the altcoin crypto asset treasury has 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' holding crypto asset treasuries. For example, Aave, Ethena, Chainlink, Hype, or DeFi token indices.
Thirdly, perhaps the most important point: crypto asset treasuries provide ICO projects with an 'IPO moment', attracting institutional funds that were previously unattainable. Just like I wrote on platform X:
I used to think that altcoin crypto asset treasuries were just a crazy Ponzi scheme. But on 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 may not have been able to go public legitimately. Similarly, the crypto asset treasury of $AAVE can attract traditional financial capital to invest in the future of the lending sector. More such crypto asset treasuries would be great.
Lastly, unlike Bitcoin and Ethereum, altcoins do not have ETFs to attract institutional investors.
Therefore, altcoin crypto asset treasuries are an area I will focus on. They bring different opportunities, such as absorbing venture capital's off-market sell-offs or acquiring tokens at discounted prices.
Ethena is already an early case, but I want to see what happens when an altcoin with high circulating supply has a crypto asset treasury.
Is it time to sell?
As I mentioned earlier, many people around me plan to sell. But they don't want to sell at the current price.
Why? Because all indicators still look surprisingly healthy. CryptoQuant's 'Universal Momentum Indicator' tracks bull and bear cycles through profit and loss indices.
Core conclusion (not much change compared to a few months ago):
Bitcoin is in the mid-cycle of a bull market.
Holders are taking profits, but extreme enthusiasm has not yet appeared.
There is still potential for price increases before valuation becomes excessive.
Nevertheless, Delphi's Bitcoin top signal dashboard shows that the market is approaching overheating but still within manageable range: the strength score is 56.7, while tops typically hover around 80.
The fear and greed index has returned to neutral.
Moreover, none of the 30 indicators tracked by Glassnode show that the market has peaked.
I used to judge the market peak by funding rate peaks, but now I question whether this indicator has been distorted by Ethena.
Previously, high funding rates meant too many speculators going long, usually followed by a crash. But Ethena's USDe has broken 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 is minted, increasing short positions, which in turn lowers funding rates, creating a cycle.
So now, a high funding rate no longer means the market is overheated; it may just mean Ethena is issuing more USDe.
Why not switch to tracking the supply of USDe? From this perspective, the market indeed looks quite hot, as the supply of USDe has doubled in a month.
Overall, I think the market situation is pretty good. But due to many speculative retail holders in the third and fourth cycles holding 'life-changing' unrealized profit positions, each significant rise will encounter selling pressure.
I hope the crypto asset treasuries and Ethereum can absorb this selling pressure.
Additionally, a bear market may unexpectedly return due to macro turmoil, which could expose hidden leverage in the crypto space that we have not yet discovered.
In the first article of the 'Market Status' series, I mentioned several areas that may have leverage:
Ethena: The collateral for USDe has shifted from mostly Ethereum to Bitcoin, and now it is turning towards liquidity stablecoins.
Re-staking: Although the related narrative has quieted down, 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 was once my biggest concern, but now the crypto asset treasury has become the primary focus. What if there is hidden leverage that we are completely unaware of? This keeps me awake at night.
What to do after selling?
After moving the tax base to Portugal, my investment strategy for cryptocurrencies has changed.
In Portugal, if an asset is held for more than 365 days, the capital gains tax is 0%; furthermore, trading between cryptocurrencies is not taxed.
This means I can convert to stablecoins, hold them for a year, and earn tax-free gains.
The question is: where to store stablecoins to maximize returns while being able to sleep soundly?
Surprisingly, there are not many sufficiently reliable protocols. Chasing high yields requires switching back and forth between different protocols while also being wary of 'vault migration' (such as during contract upgrades), and of course, the risk of hackers.
Aave, Sky (Maker), Fluid, Tokemak, and Etherfi's vaults are mentioned the most, but there are many other options, such as Harvest Finance, Resolv, Morpho, Maple, etc.
The question arises: which protocol can let you safely hold stablecoins for a year? Personally, I might only trust two.
The first is Aave. However, the growth of USDe and the circular arbitrage of LST ETH/ETH makes me a bit worried about large-scale liquidations (although Aave's new 'umbrella' mechanism helps).
The second one is Sky. However, S&P Global Ratings gave it a 'first-time stablecoin system credit rating', which raised concerns — rated B-, it falls into the 'risky but not on the brink of collapse' category.
Weaknesses include:
Concentration of depositors
Governance is still deeply tied to Rune (founder of MakerDAO)
Weak capital buffer
Regulatory ambiguity
This means that Sky's stablecoins (USDS, DAI), while considered credible, are quite fragile. They are fine in normal times, but under pressure events like large-scale redemptions or loan defaults could severely impact them.
As PaperImperium said: 'This is a disastrous rating for mainstream stablecoins.'
However, traditional finance has a much lower risk tolerance than crypto natives, but putting all stablecoins in one protocol is definitely not a good idea.
This also indicates that cryptocurrencies are still in the early stages, and there is currently no real 'passive investment', except for Bitcoin and Ethereum.