Macro Update

Last week, Bitcoin market cap dominance slipped 2.5% from recent highs to 63.8%, signaling a risk-on market sentiment. Furthermore, Total open interest (OI) on centralized exchanges has surged 52% to $68 billion since the tariff pause on April 9, with altcoins driving the growth, currently accounting for 34% of the total OI. For context, altcoin OI share hit 44% during Bitcoin’s prior rally to all-time highs post-U.S. election, reflecting heightened risk appetite.

Last week, Strategy acquired 13,390 Bitcoin at an average price of $99,856, increasing its holdings to 568,840 Bitcoin with an average cost basis of $69,287. Meanwhile, DeFi Development Corp added 172,670 SOL via a $24 million private investment, bringing its total to 595,988 SOL, and acquired a $3.5 million validator business to self-stake. Unlike Bitcoin’s passive accumulation, Solana strategies emphasize staking to bolster network security and generate in-kind yield, earning additional SOL to compound holdings.

Spot Bitcoin ETFs inflows hit  $400 million last week, contributing to a net $2.3 billion in positive flows month-to-date. IBIT recorded $2.5 billion in inflows, with the AUM reaching $64 billion, making it BlackRock’s 11th-largest ETF and the fastest-growing ETF by AUM in history. In contrast, Grayscale’s GBTC continues to bleed capital, recording $200 million in outflows last week. Since its ETF conversion, GBTC has lost 37% of its Bitcoin under management, yet still holds $19 billion in AUM. Despite its significantly higher 1.5% management fee, many long-term holders appear reluctant to sell due to potential tax consequences or institutional friction in rebalancing portfolios.

Following last week’s $2.9 billion Deribit acquisition, Coinbase is set to join the S&P 500 index, replacing Discover Financial Services. The inclusion underscores the growing mainstream adoption and legitimacy of the crypto sector. These shifts have fostered a favorable climate for crypto firms, prompting the S&P 500 committee to consider crypto sector representation for the first time. As a consequence of this inclusion, Bernstein analysts estimate approximately $16 billion in buying pressure, with $9 billion from passive funds tracking the S&P 500 and $7 billion from active allocations, as index-tracking ETFs and mutual funds may adjust their portfolios. The announcement sparked a 24% surge in Coinbase’s stock, with rival exchanges like Bullish, Gemini, and Kraken signaling plans for public listings, further signaling sector growth and investor appetite.

Our take: Coinbase’s S&P 500 inclusion crowns crypto’s evolution from a distrusted outlier to a legitimate sector, amplifying its presence in mainstream portfolios. This step cements crypto’s hard-won legitimacy, potentially hinting at increasing institutional attention, which is already evidenced by spot Bitcoin ETF success.

Memecoin Launchpad Update

Pum.fun has led Solana’s memecoin narrative, amassing $700 million in revenue over the past year with its launchpad model. To solidify its position, Pump.fun has introduced a creator revenue-sharing program for its DEX PumpSwap, where graduated PumpFun tokens are traded, 5bps of each transaction to token creators. While this move encourages developer participation, it may deter community takeovers of abandoned projects, as original creators continue earning fees without rewarding active community members who sustain these initiatives.

So far in May 2025, Pump.fun (including PumpSwap and PumpFun) recorded $10 billion in trading volume and generated $43 million in fees, surpassing Raydium’s $26 million in fees. The revenue gap largely stems from memecoin launchpad performance. PumpFun’s revenue model offers free token creation and a 1% transaction fee during the bonding curve phase. In contrast, Raydium’s LaunchLab provides free token creation but avoids bonding curve fees, offering customizable curve models to attract developers. While the revenue accrual disparity is considerable, a new catalyst in the form of Raydium’s recent integration- LetsBonk.fun, a Bonk-powered launchpad, could potentially help draw higher revenue. By leveraging Raydium’s LaunchLab infrastructure, LetsBonk.fun facilitates token creation and directs graduated tokens to Raydium’s AMM pools, boosting trading volume and revenue from the 1% AMM trading fee.

Until the launch of LetsBonk.fun, PumpFun dominated memecoin launchpads with over 90% of token deployments. In less than a month, however, LetsBonk.fun captured 20% of the market share last week, reducing PumpFun’s dominance to less than 80%, with emerging platforms like Boop, Believe, and others accounting for the rest, signaling an evolving competitive landscape.

Our take: LetsBonk.fun’s ecosystem-driven model, prioritizing Solana’s long-term development through community incentives and network support, may draw Solana communities away from Pump.fun, consequently decreasing the centralization of memecoin trading activity.

Internet Capital Markets

While launchpads like Pump and Raydium focus on memecoins, the relaunched Believe platform aims for a broader target: enabling creators and startups to raise capital through token launches that resemble internet-native crowdfunding. This model, dubbed “internet capital markets,” could primarily appeal to indie developers, many from Web2, by enabling capital formation through low-barrier token launches. By bypassing traditional venture capital, creators can directly engage online communities, transforming internet-native ideas into tradable assets. Relaunched on May 2, Believe allows users to mint tokens simply by replying to an X post. Tokens follow a bonding curve with a capped supply, transitioning to deeper liquidity after reaching a $100,000 market capitalization. To align incentives, 50% of trading fees are allocated to creators and 50% to Believe, with gradual disbursement mechanisms.

However, tokens launched on the BELIEVE app, akin to Kickstarter’s crowdfunding model, are presented as non-securities without formal utility or revenue-sharing rights, providing supporters with tokens in exchange for backing projects rather than equity. BELIEVE operates under a structure where founders could receive payouts at specific stages or milestones in the near future to promote accountability and long-term commitment. While this may address some concerns about future utility, the value of these tokens currently appears to be largely influenced by community sentiment and speculative momentum. This raises potential regulatory concerns, as authorities might view such tokens as blurring the line between patronage tokens and unregistered securities.

Following a modest start in early May, activity surged dramatically last week, peaking at 4,977 new tokens per day before dropping to 2,210 by the weekend. Of 19,000 total launches, 1,070 have advanced to deeper liquidity. The total market cap of ecosystem tokens is $125 million. Meanwhile, Launchcoin, the platform’s native token, rose from a $20 million market cap to a peak of $320 million before settling around $175 million. This speculative fervor persists despite limited disclosed fundamentals, such as utility, revenue-sharing, or token sinks like staking or burns, which are critical for anchoring long-term value.

Our take: Believe’s potential to reshape how creators and communities engage with capital offers an intriguing alternative to traditional venture capital, hinting at a future where ideas and online presence can drive funding. However, the model’s long-term viability hinges on its ability to balance accessibility with accountability, ensuring token launches are grounded in clear value propositions and regulatory compliance.