Macro Update

At the time of writing, Bitcoin is trading at $120.6K, up ~5.4% on the week, fueled by a series of pro-crypto executive orders and supportive comments from U.S. regulatory bodies, including the SEC and CFTC. This continuation of favorable policy came alongside a soft July jobs report and the early departure of Fed Governor Adriana Kugler, who is set to be replaced by Trump appointee Stephen Miran. In line with market expectations, the probability of a September rate cut is now priced at 86%, a meaningful increase from last month. On the equity side, we’re coming off a strong earnings season, with more than 80% of the S&P 500 companies beating Q2 2025 estimates despite tariff headwinds.

As noted last week, despite numerous project-specific headlines in crypto, macro remains the dominant market driver. This week’s U.S. CPI and PPI prints will be closely watched, with markets eyeing a higher likelihood of a fresh rate cut next week. Meanwhile, geopolitical developments in Ukraine and the Middle East continue to simmer in the background.

Among tokens, Ethereum has been the clear focus. Up nearly 25% and trading around $4.3K, it has outperformed BTC and every other major narrative (see below). Options positioning remains bullish, with increased activity in calls and call  spreads into December, relatively more than BTC, signaling market interest in an ETH/BTC catch-up trade. The pair is currently at ~0.035, its highest level this year and up 110% since April this year.

Looking closer at Index performance confirms the breadth of the rally. The GMCI-30 gained 10.4%, with all verticals advancing. Layer 2 (+21.4%) and DeFi (+20.3%) led, supported by renewed risk appetite and capital rotation down the curve and a clear indication of market's lazer focus on ETH plays. Gaming (+11.6%), Mid Caps (+11.2%), and USA Select (+10.7%) also outperformed, while Layer 1 (+9.7%), Small Caps (+9.9%), and Meme (+9.3%) saw decent gains. AI (+8.8%), Utilities (+8.6%), and DePIN (+7.5%) lagged slightly but still posted solid weekly returns.

On the derivatives side, unlike last week, BTC and ETH 3-month basis have bounced back sharply,  to ~9.5% and 8.5% respectively, as leverage returns following the prior week’s unwind. In options, there’s strong demand for ETH >$4K naked calls and call spreads, with $5K emerging as the next target into year-end. Notably, large $5K/$7K call spreads were rolled from September to December on Friday, highlighting positioning for extended upside. 

Positioning now shows a clear divergence between BTC and ETH: BTC remains more balanced, with continued activity in covered calls and calendar spreads, while ETH positioning skews more aggressively to the upside.

Our take:

“Dovish stance lifts markets as inflation data takes focus.”

Policy tailwinds, a dovish Fed tilt, and institutional accumulation have reignited momentum across majors, particularly ETH. With 2Q earnings season now behind us, macro remains focused but supportive for now while geopolitical risk continues to linger in the background. This week’s inflation data will be critical in confirming whether the September cut narrative holds.

Notable Other Headlines

• Trump signs two executive orders: (i) Opening 401(k)s to alternative assets incl. crypto and (ii) Orders regulators to stop banks from closing or denying accounts over crypto, political or religious views. Crypto czar David Sacks says this could extend crypto access to ~90 million Americans.

• U.S. regulatory clarity: The SEC confirms that liquid staking is not a security transaction while the CFTC launches an initiative to let federally registered exchanges enable spot crypto listing. At the same time, the SEC and XRP officially ended their legal battle with $125m in fines outstanding.

• Pendle launched Boros: a  platform to trade and hedge perp funding onchain, starting with Binance BTC/ETH funding. In the first 24h it hit ~$15m OI and ~36m notional. Read Jake’s opinion on it here.

• Chainlink Reserve: Chainlink launched an on-chain LINK reserve that converts both off-chain and on-chain revenue into LINK to support network growth (via Payment Abstraction).

• Solana Seeker staking: Solana Mobile’s Seeker phone ships with built-in SOL staking routed to SOL Strategies’ validator, advertising 0% commission on staking rewards.

As Ethereum broke 4K for the third time since the start of 2024, we spend some time looking at derivative positioning and on-chain adoption to see if it’s really different this time…

Ethereum, Third Time’s The Charm

Since early 2024, Ethereum has made three credible runs at its ATH. The first two, March 2024 and December 2024, tagged the $4k handle and failed. This past week, the bid returned on a stronger mix of drivers: accelerating institutional adoption, record futures activity, post-Dencun scalability gains, US spot ETH ETF approvals, supportive macro, improving holder profitability, a rebound in DeFi/NFT activity, and clearer regulation. 

This time the $4k break seems to stick (for now) as ETH has been holding >$4K levels for more than two days so far, potentially flipping prior resistance into support. As of writing, price sits ~12% below the ATH, setting up either a clean retest or a tight range just beneath it.

To understand if the third time’s the charm and this time is really different we have a quick look at derivatives positioning and on-chain metrics and adoption to contextualize the most recent $4K break.

Ethereum Derivatives

To set the scene for last week’s $4k break, start with derivatives. This attempt is happening in a much bigger, and more perp-led, market than the March and December 2024 tries. Futures are several-fold larger than in March, with turnover rising in tandem. Price discovery is also more concentrated in perps, with a ~10× perp/spot mix versus ~5× in early 2024.

Positioning looks cleaner too. Hyperliquid’s long/short skew has roughly halved since December 2024, helped by the maturation of on-chain perps. Funding rates also look fairly normal so far, especially compared with the spikes in the 2021 cycle. Taken together, that means less immediate squeeze risk if momentum pauses, fewer crowded longs, and less forced action either way.

Near term, we’re focused on two scenarios as ETH momentum develops:

1. If momentum cools, you want a handoff to spot: less action in perps, more in spot while ETH holds >$4k; funding/premia stay reasonable and options interest building without everyone crowding one side. That would make the break sturdier than the 2024 tries.

2. If momentum doesn’t slow and we push toward the ATH with perps still leading, it can still be healthy as long as leverage grows orderly (funding up but not spiking, OI rising without blow-outs), spot volumes rise with it, and options interest broadens. If instead spot lags, funding rips, OI balloons, and calls get one-sided, the setup could potentially shift toward a blow-off and snapback.

Ethereum AdoptionEthereum is materially larger than in 2024. TVL and the on-chain stablecoin float are up meaningfully from March 2024. Token holders, validators and active addresses have also increased. DEX volume is still above March levels but below the December spike, which points to steadier usage rather than peak churn. On the flow side, DATs have been the largest net buyers through this move, adding steady spot demand and reinforcing the adoption backdrop.

Two things to watch out for:

• Ethereum’s share of the stablecoin pie has slipped, naturally, as the stablecoin theme has reaccelerated with greater regulatory clarity (e.g., GENIUS-Act-style proposals), drawing in new issuers and chains and temporarily intensifying competition for issuance.
• Fee capture is weaker: L1 fees are far lower than in March ’24, pushing the price-to-fee multiple to elevated levels as Dencun and L2 adoption compress costs and shift activity off L1. That’s good for users but loosens the link between usage and L1 revenue/burn.

ConclusionBased on derivatives positioning and adoption, ETH’s break above $4k looks materially different from the two attempts in 2024. It happened in a much larger, more futures-driven market, with cleaner positioning. That is supportive but still reliant on leverage. On-chain adoption is bigger in absolute terms (TVL, stablecoin float, holders, validators, active addresses). However, Ethereum’s share of stablecoins has slipped and L1 fee capture is much lower as activity moves to L2, which pushes valuation multiples higher. The durability of this move now depends on how well spot follows perps in the coming days and weeks as momentum slows.