Macro Update

Crypto markets stayed under pressure last week as Bitcoin failed multiple times at the 112–113k resistance band before retreating below 110k. More than $500m in long liquidations dragged sentiment lower, with the fear index sliding back into the high 30s, a move amplified by a large (>30kBTC) btceth twap.

As BTC continues to post lower highs on shorter time frames, the ~$109k level stands out as a critical support. ETH, after setting its all-time high the prior week, spent much of last week consolidating lower and is now trading around ~$4.4k. 

On the ETF side, flows showed a clear divergence: ETH saw steady and strong buying throughout the week, while BTC inflows were more uneven. This highlights the widening sentiment gap between the two majors and reinforces ETH’s position as the preferred asset, supported by ongoing headlines of corporate and institutional adoption of the EVM ecosystem. Notably, there also appears to be a split in buyer profiles, with institutions continuing to accumulate ETH even as retail investors rotate out.

Rotation across majors and narratives remained the defining theme. Solana outperformed on down days with its ecosystem tokens Raydium and Jupiter also leading. Chainlink gained on its U.S. Commerce Department collaboration, while Hyperliquid posted early on in the week on the back of some more aggressive longs, now having given back that performance on the back of broader market weakness. When it comes to volumes, we say a pickup vs earlier weeks in August despite Monday’s Labour day in the US still happening.

The standout was Cronos, doubling in value after Trump Media disclosed a $6.4B treasury plan including a $1B CRO purchase and a $5B credit facility, catapulting it into the top-20 by market cap.

Macro drivers added to the chop: U.S. equities (SPX) edged higher to fresh records, China rallied ~11% on housing support, and oil and metals caught a bid as the U.S. 10-year yield eased to 4.2%. The dollar held firm, while trade frictions deepened, Trump moved to dismiss Fed Governor Lisa Cook and raised tariffs on India, ended de-minimis exemptions. The mix of risk-on equity tone and trade uncertainty kept crypto as the release valve, amplifying moves around crowded positioning.

On an index performance, every category closed the week lower, with the GMCI-30 down 3.5%. Large caps held up better, while mid (-4.7%) and small caps (-5.1%) lagged. Layer 2s (-1.1%) and Layer 1s (-2.8%) were relative outperformers, while higher-beta sectors sold off more sharply, led by AI (-7.3%), Gaming (-5.5%), and DePIN (-5.2%).

Finally, we look at weekly changes in perps as a read on sentiment and positioning. HYPE stood out, with funding costs jumping sharply higher over the week to an annualised +26%, showing traders increasingly willing to pay for long exposure after price faded back from >$50 to ~$44. 

ETH and BTC saw the opposite move, with funding shifting notably lower over the week, pointing to fading demand for leverage despite still-elevated activity. Across the board, funding generally moved down, while AVAX led the decline in open interest, alongside pullbacks in SOL, BNB and DOT.

Our take:

“Macro jitters weigh on BTC and the broader market despite strong adoption headlines”

As has been the theme for the past few weeks, macro remains the dominant driver, with trade tensions and policy noize keeping markets choppy and BTC struggling to hold key levels. Leverage has been washed out, and positioning remains relatively fragile as we head into September. Against that backdrop, ETH continues to see strong ETF inflows, driven by the sentiment rotation between majors. 

While macro keeps the market busy we continue to see very supportive headlines around adoption from both a policy, corporate and institutional perspective, which are barely being reflected in prices, almost instantly being discounted with the exception of a few. All this results in a market where macro sets the tone, but selective narratives and institutional adoption continue to pull capital into specific sectors and names.

Notable Headlines

• Solana Treasury Fund: Galaxy Digital, Multicoin Capital and Jump Crypto raise $1B to build the largest Solana-dedicated treasury.

• Hyperliquid Volumes: Hyperliquid set a new 24h record in spot activity, led by BTC and ETH flows, making it the second-largest BTC spot venue.

• VanEck has filed for the JitoSOL ETF, the first 100% Liquid Staking Token ETF, marking the intro of a distinct new product suite for Solana and DeFi.

• Avalanche ETF Filing: Grayscale filed an S-1 for an Avalanche ETF, underscoring rising institutional demand for the L1 ecosystem.

• Google Cloud Blockchain: Google Cloud announced plans for its own Layer 1 blockchain, marking a significant step in its digital asset strategy.

• Crypto Positioning: Morgan Stanley published the results of their institutional survey, showing that 82% of respondents have no crypto exposure, showing clear underallocation in digital assets (incl BTC and ETH) vs every year since 2022, indicating both the sentiment and potential upside if we ever see similar allocation levels vs last cycle again. 

2025 summer recap

As we step into September, it’s worth taking stock of how the digital asset market evolved over the summer. Rather than focusing solely on the majors, we use the GMCI taxonomy of more than 1,000 tokens to cut the market into sectors, allowing us to see not just headline performance but also the underlying currents across different narratives. This sector-level view provides a more complete picture of where conviction has been building, where fatigue has set in, and how the broader ecosystem has responded to shifting macro and regulatory backdrops.

On an equal-weighted basis (with BTC and ETH included as benchmarks), Ethereum’s resurgence set the pace and left no sector able to match its outperformance. Within sectors, DeFi led the pack (+49%), closely followed by Layer 2 (+47%) and Layer 1s (+43%), highlighting that scaling solutions and base layer infrastructure remained the most structural themes. Smaller verticals were more mixed: Gaming (+21%) and Utilities & Tools (+10%) stayed in positive territory, while AI (-1.7%), DePIN (-2.6%), and Memes (-4.5%) all finished the summer in the red, underscoring how speculative narratives struggled to sustain momentum.

Our take:

“Outside of majors, DeFi, L2s and L1s led, while smaller narratives stayed fragmented and altseason momentum never materialized”

Breadth

To move beyond simple performance and understand whether sector rallies were broad-based or concentrated in a few names, we look at breadth, measured as the share of tokens in each sector with positive returns over the summer. 

What stands out is that sectors anchored by larger, more established tokens displayed far stronger breadth, with Layer 2s (82%), DeFi (73%), and Layer 1s (71%) all showing broad participation. In contrast, more speculative narratives such as Gaming, Utilities, DePIN, Memes, and especially AI (24%) saw narrower or uneven breadth, highlighting that smaller-cap themes struggled to sustain momentum at a time when majors still dominate headlines and OTC flow. 

Even as Bitcoin dominance drifts lower, we did not see a decisive rotation into lower-cap tokens over the summer as the bulk of activity remains centered in majors and midcaps. We’ll be keeping a close eye on sector breadth beyond BTC and ETH dominance, as a meaningful shift here would be a stronger signal that a true altseason is underway.

Next up we take the breadth analysis one level deeper by splitting each sector into quartiles based on average market cap over the summer period, allowing us to see not just which verticals outperformed, but whether leadership came from small caps, mid-caps, or the largest names. 

Over the summer, leadership was clear: DeFi and Layer 2s stood out with strong and broad-based performance across all quartiles, pointing to structural momentum and deeper adoption rather than isolated pumps. Layer 1s also delivered uniformly solid gains, with higher-quality mid- and large-caps leading the way. 

In contrast, AI and DePIN sectors struggled, with larger names dragging even as a handful of small caps held up, suggesting narrative fatigue outside of speculative plays. Gaming and Utilities were more selective stories, gaming saw gains concentrated in mid-caps, while Utilities leaned on small-cap outperformance. Memes, as expected, were highly dispersed, with only a few tokens carrying the sector. Taken together, the picture is one of strong conviction in DeFi and scaling solutions, while other narratives remain fragmented and uneven.

Momentum

Finally we look at momentum because it helps contextualize sentiment across the broader market and shows how individual sectors are contributing to or diverging from the cycle. 

Momentum across crypto spiked in mid-July as U.S. regulatory breakthroughs (GENIUS, CLARITY, 401(k) access) provided a strong policy tailwind, but quickly cooled into August after BTC’s failed breakout above $120k coincided with a broader risk-asset reversal. The move lower was amplified by macro uncertainty around geopolitics and rate expectations, and while a softer CPI followed by a hotter PPI briefly revived dovish hopes, momentum never fully recovered. Into late August, the entire complex sits with negative momentum scores, confirming that the summer’s rally has lost steam and that majors continue to dictate the cycle, with sectors still moving in tight correlation to BTC and ETH.

Sector-by-sector, Layer 2s and DeFi, the leaders earlier in the summer, saw the sharpest cooling, giving back much of their relative strength as profit-taking set in. Layer 1s and Gaming followed a similar path, peaking in late July before rolling over. By contrast, AI, DePIN, Memes, and Utilities showed small relative improvements over the past month, with positive 30-day momentum deltas, though all remain below zero, more of a repair phase than genuine leadership. Overall, breadth in momentum has narrowed, with the market leaning on majors while sectors wait for a fresh catalyst to re-establish upside.

Within digital assets, size and structural depth drove the market over the summer, with DeFi, Layer 2s, and Layer 1s showing broad, multi-cap leadership while smaller narratives remained fragmented. As we head into autumn, majors continue to set the cycle, and a true altseason will require a decisive shift in breadth and momentum beyond BTC and ETH.