When I wrote this article, the biggest short-term uncertainty in cryptocurrencies was the direction of interest rates. The key points are: 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 dovish signals are released → 2-year treasury yields and the dollar index fall → Bitcoin / Ethereum rises.
If there is a hawkish rate cut or high rates are maintained for longer → risk assets will be sold off, and altcoins will drop first.
This is the conclusion from the ChatGPT 5 thinking model and Deepseek's Deepthink model. Many people on platform X share the same view, which also explains the recent decline in altcoins.
To be honest, the crypto market's dependence 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: interest rate cuts will eventually come. The uncertainty lies in 'when to cut, how many times, and by how much.'
In this sense, it is now exactly the opposite of the end of the last cycle: interest rate cuts are coming, so is the peak of the bull market still far away?
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 the market (as can be seen from the crypto app data in the iOS App Store). Currently, the biggest buyers are:
Spot ETF
Crypto Asset Treasuries (DAT)
What I'm worried about is: can the purchasing power of institutions, crypto asset treasuries, and other large holders offset the sell-offs from retail investors again and again? Or will their purchasing power be exhausted?
Ideally, this is a process that lasts for several years, where steady price increases gradually eliminate those who are not steadfast investors.
The most interesting outcome might be: even if most crypto 'natives' sell off, cryptocurrencies still continue to rise, leading to 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.
It's all about crypto asset treasuries now.
Just look at the speed at which crypto asset treasuries are acquiring Ethereum.
In less than three months, the Ethereum crypto asset treasury acquired 2.4% of the total supply of Ethereum.
From another perspective: currently, the largest Ethereum crypto asset treasury (Bitmine) has a holding volume comparable to that of 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 proportion of Ethereum held by crypto asset treasuries will surpass Bitcoin within a few months. In the short term, this is favorable for Ethereum, but once crypto asset treasuries need to liquidate their Ethereum holdings, the risk will emerge.
But even Wassie admits that it is still unclear what will happen to crypto asset treasuries when the adjusted net asset value (mNAV) turns negative.
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.
When I wrote this article, the trading prices of SBET and BMNR were slightly above an 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 distribution of $0.05 in ETH dividends per share, as well as $0.35 in cash dividends.
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, this operation by BTCS resembles the 'staking mechanism' in traditional finance, aiming to prevent shareholders from selling their stocks. Their motivation for issuing 'dual dividends' stems from the adjusted net asset value being below 1, as well as to 'prevent market manipulation'—to avoid stocks being lent out for short selling.
Additionally, where do these dividends come from? They are actually paid with the Ethereum they acquire.
It doesn't look great, does it?
At least they haven't publicly sold off Ethereum yet. I suspect that the first treasury to collapse and sell off crypto assets will be those small companies that can't attract stock buyers. So we need to track the dashboards below to identify crypto asset treasuries and study how they manage their crypto holdings.
Crypto Twitter may overlook smaller crypto asset treasuries, but their trends can help us predict what larger, systemically important crypto asset treasuries might do.
Here are a few dashboards worth paying attention to:
Blockworks
The Block
Delphi
Crypto Treasuries 1
Crypto Treasuries 2
Crypto Stock Tracker
It should be noted that the data reported by different dashboards varies slightly, which increases the difficulty of analysis. We need to closely monitor the trends of other crypto asset treasuries.
However, considering the current low premium of adjusted net asset value and the record number of Ethereum in the unstaking queue, 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 record levels. 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 machines (like Litecoin, Dogecoin), or building staking infrastructure (like EOS, SOL, ETH). Even in the last cycle, issuing tokens required some technical knowledge.
Before this cycle, the number of tokens worth paying attention to was 'controllable', including several lending protocol tokens, decentralized exchange tokens, and a few public chain tokens and infrastructure tokens.
And now, with the cost of token issuance reduced to zero, more projects are launching tokens, especially with the rise of Pump.fun, making it increasingly difficult for altcoins to attract enough 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 continuously buying, only Bitcoin can rise.
And altcoin crypto asset treasuries have changed this landscape.
First, very few altcoin projects can plan for the acquisition of crypto asset treasuries. This requires specific knowledge and skills that most projects do not possess.
Secondly, only a limited number of altcoins are 'worth' having crypto asset treasuries. For example, Aave, Ethena, Chainlink, Hype, or DeFi token indices.
Thirdly, perhaps the most important point: crypto asset treasuries give ICO projects their 'IPO moment', attracting institutional funds that were previously inaccessible. Just as I wrote on platform X:
I used to think altcoin crypto asset treasuries were just a crazy Ponzi scheme. But upon reflection, crypto asset treasuries allow altcoins to 'go public'—transitioning from ICO to IPO. The BNB crypto asset treasury is like Binance's IPO, which might not have been able to IPO properly otherwise. For instance, the $AAVE crypto asset treasury allows traditional financial capital to invest in the future of lending. More such crypto asset treasuries, please.
Lastly, unlike Bitcoin and Ethereum, altcoins do not have ETFs to attract institutional investors.
Therefore, altcoin crypto asset treasuries are a key area I will focus on. They present various 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 a high circulating altcoin has a crypto asset treasury.
Should I 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 remarkably healthy. CryptoQuant's 'All-in-One Momentum Indicator' tracks bull and bear cycles through the profit and loss index.
The core conclusion (which hasn't changed much compared to a few months ago):
Bitcoin is in the mid-cycle of a bull market.
Holders are taking profits, but extreme euphoria has not yet emerged.
There is still potential for price increases before it becomes overvalued.
Nevertheless, Delphi's Bitcoin top signal dashboard shows that the market is close to overheating but still within controllable limits: the strength score is 56.7, while tops are usually 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 market tops by peaks in funding rates, but now I suspect this indicator has been distorted by Ethena.
Previously, high funding rates meant too many speculators were going long, and usually, a crash would follow. But Ethena's USDe has broken this signal.
USDe mints stablecoins by going long on the spot market and shorting perpetual contracts, earning funding rates as returns. When funding rates rise, more USDe will be minted, increasing short positions and thus lowering funding rates. This creates a cycle.
So now a high funding rate no longer means the market is overheated; it could just be Ethena issuing more USDe.
Why not switch to tracking the supply of USDe? In that case, the market indeed looks quite hot, with the supply of USDe doubling within a month.
Overall, I think the market situation is quite good. However, many speculative retail investors in the third and fourth cycle hold 'life-changing' unrealized gains, and every significant rise is met with selling.
I hope crypto asset treasuries and Ethereum can absorb this sell pressure.
Additionally, a bear market may unexpectedly arrive again due to macro turbulence, which could reveal hidden leverage in the crypto space that we have yet to discover.
Previously in the first article of the 'Market Status' series, I mentioned several areas where leverage may exist:
Ethena: The collateral for USDe has shifted from mostly Ethereum to Bitcoin, and now is moving towards liquidity stablecoins.
Re-staking: Although the related narrative has quieted down, liquidity re-staking protocols (LRTs) are integrating into mainstream DeFi infrastructure.
Circular arbitrage: Speculators leverage mining through circular operations to chase high yields.
Ethena used to be my biggest concern, but now crypto asset treasuries have become my main focus. What if there are hidden leverages that we are completely unaware of? This keeps me awake at night.
What to do after selling?
After relocating my tax base to Portugal, my investment strategy for cryptocurrencies has changed.
In Portugal, if assets are held for more than 365 days, the capital gains tax is 0%; moreover, transactions between cryptocurrencies are not taxed.
This means I can convert to stablecoins, hold for a year, and receive tax-free gains.
The question is: where should stablecoins be stored to maximize returns while sleeping peacefully?
Surprisingly, there are not many reliable protocols. Chasing high yields requires switching back and forth between different protocols, and one must be wary of 'treasury migrations' (like during contract upgrades), and of course, the risk of hackers.
Aave, Sky (Maker), Fluid, Tokemak, and Etherfi's treasuries are mentioned most frequently, but there are many other options, such as Harvest Finance, Resolv, Morpho, Maple, etc.
The question arises: which protocol can allow you to safely hold stablecoins for a year? I personally may only trust two.
The first is Aave. However, the growth of USDe and the circular arbitrage of LST ETH/ETH make me a bit concerned about the risk of large-scale liquidations (although Aave's new 'umbrella' mechanism helps).
The second is Sky. However, S&P Global Ratings gave it a 'first stablecoin system credit rating', which raised concerns—rated B-, it falls under the category of 'risky but not on the brink of collapse'.
Weaknesses include:
Concentration of Depositors
Governance is still deeply tied to Rune (the founder of MakerDAO).
Weak capital buffer
Regulatory ambiguity
This means that Sky's stablecoins (USDS, DAI) are considered credible but very fragile. They are fine in normal times, but during major redemption or loan default pressure events, they could be severely impacted.
As PaperImperium said: 'This is a disastrous rating for mainstream stablecoins.'
However, the risk tolerance of traditional finance is much lower than that of crypto natives, but putting all stablecoins into one protocol definitely won't work.
This also indicates that cryptocurrencies are still in the early stages, and there is not yet a true 'passive investment', apart from Bitcoin and Ethereum.
