Macro Update

Bitcoin remained flat last week despite an uptick in geopolitical tensions between Iran and Israel. Altcoins faced steeper declines, with the GMCIMID index dropping 5%in-line with a more subtle derisking. Meanwhile, gold rallied by 4% to its highest weekly close at $3,430 in response.

In stablecoins, Plasma secured $1 billion in deposits for its XPL token sale through Echo’s Sonar platform. Over 1,100 addresses participated, with the top 100 accounting for 70% of the total, securing options to purchase $50 million in XPL tokens at a $500 million fully diluted valuation. As an EVM-compatible Bitcoin sidechain, Plasma aims to enable near-zero-fee, cross-chain stablecoin transfers. Backed by Tether, Bitfinex, and Founders Fund, Plasma raised $3.5 million in a Bitfinex-led round in October 2024, followed by $20 million in Series A funding in February 2025.

Meanwhile, spot Bitcoin ETFs recorded over $1 billion in inflows last week, driven primarily by BlackRock’s IBIT, which added $840 million. IBIT reached $70 billion AuM in 341 trading days, the fastest ETF to hit this mark, outpacing SPDR Gold Shares (GLD), which took 1,691 days. Spot Ethereum ETFs also maintained momentum, extending an 18-day inflow streak with $520 million last week.

The ETF landscape is set to expand beyond Bitcoin and Ethereum, with the SEC requesting updated S-1 filings from issuers like Franklin Templeton, Galaxy Digital, VanEck, and Fidelity for proposed spot Solana ETFs, a step that historically preceded Bitcoin and Ethereum ETF approvals. Previously flagged as an unregistered security in SEC lawsuits, Solana’s regulatory outlook has shifted, with filings now incorporating staking, offering 6-8% annual yields through its proof-of-stake system. As a result, Jito’s token (JTO), Solana’s main liquid staking protocol, recorded its best week this year with a 20% rally while the rest of the market remained choppy.

Our take: Bitcoin has demonstrated resilience over the past two weeks, with market sentiment holding steady despite last week's geopolitical tensions.

Polymarket Update

On June 6, 2025, Polymarket announced a high-profile integration with X to bring real-time forecasting into the platform’s social media ecosystem. This collaboration integrates Polymarket’s live odds and market data alongside relevant X posts, exposing X’s estimated 500 million+ monthly active users to prediction markets. Supported by AI-generated summaries from Grok and contextual insights from related X posts, the integration aims to enhance user engagement with data-driven forecasting. Despite ongoing regulatory challenges, including a 2022 $1.4 million CFTC fine for unregistered derivatives trading, U.S. user restrictions, and scrutiny in jurisdictions like Switzerland, Singapore, etc., X’s partnership with Polymarket indicates noteworthy mainstream penetration for Polymarket despite the presence of other regulated TradFi alternatives like Kalshi.

Unlike the previous U.S. election cycle, where prediction markets often saw activity fall by over 80%, Polymarket has maintained strong engagement following the 2024 U.S. election. Trading volume peaked at $2.6 billion in November 2024, dipped to $740 million in March, but rebounded to $1.1 billion in May. However, open interest declined from $500 million to $100 million, mainly due to the lack of long-running, high-interest markets like the U.S. presidential race that attract sustained speculation for months, which builds open interest.

Our take: Polymarket’s integration with X’s vast audience represents arguably the largest total addressable market a crypto-native protocol has ever reached. This enhances the legitimacy of the crypto industry while also boosting the utility of stablecoins, with USDC being the most widely used trading pair on the platform.

Virtuals Update

Virtuals Protocol, a decentralized platform for AI agents built on Base and now extended to Ethereum’s mainnet, launched its first Ethereum-based agent, I.R.I.S., on June 9. Developed with Nethermind, led by Ethereum Foundation co-executive director Tomasz Stańczak, IRIS detects crypto threats via smart contract analysis and social media monitoring. Its token sale on the Genesis Launchpad, capped at 42,000 VIRTUAL tokens, attracted 640,000 VIRTUAL in commitments, reflecting a 1,500% oversubscription. The Genesis Launchpad encourages participation through a staking system where users lock VIRTUAL tokens to earn veVIRTUAL, a non-transferable, vote-escrowed stake yielding Virgen Points with lock periods ranging from one week to four years. During launch, 37.5% of the agent’s token supply is distributed to community members based on their Virgen Points, with the rest supporting liquidity pools, ecosystem growth, and future incentives. Unallocated tokens are refunded for restaking or pledging in subsequent launches.

Despite I.R.I.S.’s token sale being 15x oversubscribed, its FDV plummeted from $100 million to $16 million. This drop likely stems from secondary market pressure, as the Genesis Launchpad’s design allows veVIRTUAL holders to sell presale tokens immediately post-claim due to the absence of a lock-up structure, albeit with a 10-day point-earning penalty

The Genesis Launchpad has significantly boosted Virtuals’ ecosystem activity- daily active wallets have surged from 2,500 in April to 12,000, with 43,650 users committing 2% of total VIRTUAL tokens to the launchpad. This increased engagement has driven revenue growth, primarily from fees on AI agent interactions and a 1% trading fee on agent token trades, with 70% distributed to agent creator wallets and 30% allocated to the Agent Commerce Protocol. Daily revenue has risen 300% from a low of $30,000 in March, though it remains well below the December high of $1.5 million. User and revenue growth percolated into price appreciation: since the local lows of April 9 amid tariff pause, VIRTUAL has increased by 385% to a $1.2 billion market capitalization. The broader AI subsector also mirrors the growth, as the GMCIAI index rose by 87%, surpassing other indices.

Our take: The Genesis Launchpad’s meritocratic model promotes decentralized ecosystems driven by active participation. To ensure lasting success, it must improve accessibility and demonstrate the tangible value of AI agents to maintain engagement beyond the initial speculative fervor.