Macro Update

Last week we saw another surge with Bitcoin pushing beyond $120K for the first time, notching a record high near $123K during Monday's Asian session after testing ~116K levels , it hovered between that level and $120K. The rally was mainly propelled by optimism of U.S. breakthroughs and continued institutional inflows, reinforcing Bitcoin’s status as a maturing macro asset.

U.S.-listed ETH ETFs saw record inflows (~$747M on 16/07), reflecting renewed demand even as ETH hovered near $3,000. The rally wasn’t limited to BTC and ETH. The Total crypto market cap surpassed $4T for the first time, driven by accelerating mainstream adoption and supportive policy signals out of Washington. Notably, Bitcoin dominance has climbed back to ~60.5%, retracing back to level last seen six months ago.

Looking on an index level, we saw broad-based strength over the past week, with high-beta sectors leading gains. GMCI Meme (+20.2%) and USA Select (+17.6%) outperformed, followed closely by DeFi (+17.0%) and Mid Cap (+15.7%), suggesting renewed retail and U.S.-focused interest. Layer 1s (+15.0%) and Gaming (+12.8%) also posted solid returns, while infrastructure plays like Utilities (+11.3%), DePIN (+9.7%), and AI (+8.7%) lagged slightly. The NFT markets also revived, with top collections like CryptoPunks and Pudgy Penguin surging as ETH and SOL hit multi-month highs. In general, the rally continues to favor smaller caps and thematic narratives, pointing to a clear pickup in risk appetite.At the same time, futures activity across centralized exchanges  surged, with total open interest breaching the $200B mark, up ~16% week-over-week from $178B, reflecting continued positive sentiment. The bulk of this growth came from ETH, where open interest jumped 37%, rising from $41B to $56B, while BTC’s OI remained relatively flat. The divergence underscores a shifting narrative, with ETH increasingly becoming the focal point of speculative positioning. Supporting this trend, the ETH/BTC ratio climbed to 0.032, marking a 27.2% increase on the week, highlighting the relative strength behind ETH’s move as focus is shifting from BTC to other assets.

Our take:

“Crypto’s recent outperformance signals a maturing market driven by idiosyncratic catalysts, catching up after lagging equities earlier in the year”

This week’s price action underscores two key takeaways. First, the continued rally in digital assets, despite SPY trading near all-time highs but drifting sideways, reflects the growing influence of idiosyncratic drivers in crypto, a hallmark of a maturing asset class. Second, we appear to be witnessing a reversal of the early 2025 dynamic, where equities surged and crypto lagged. Now, that script has flipped: digital assets are playing catch-up while equities stall, as sector-specific catalysts, especially regulatory breakthroughs, are driving momentum. 

US Crypto Week And 401K

Last week marked a historic turning point for cryptocurrency regulation in the United States, as Congress pushed forward a trio of landmark bills aimed at bringing long-awaited clarity and oversight to the digital asset industry. After years of uncertainty, regulatory opacity, and mounting industry pressure, US lawmakers made sweeping progress on legislation covering stablecoins, digital asset classification, and government-issued digital currencies.

The most significant breakthrough came with the GENIUS Act, which was officially signed into law by President Trump. It establishes the first comprehensive federal framework for stablecoins, requiring they be fully backed by cash or equivalents, subject to monthly public reserve disclosures, and issued only by licensed entities. The act represents a bipartisan effort to legitimize and mainstream dollar-backed digital assets.

Meanwhile, the House passed the CLARITY Act, a long-demanded bill that finally draws legal lines between securities and commodities in the crypto space. It aims to shift oversight away from the SEC for most tokens and hand primary responsibility to the CFTC, dramatically reshaping how digital assets are treated under US law. The bill now awaits Senate review.

Also passing the House was the Anti-CBDC Surveillance State Act, designed to block the Federal Reserve from launching a surveillance-prone central bank digital currency (CBDC) without direct congressional approval, echoing concerns about privacy, control, and financial autonomy.Below a quick overview of their description, status and key outcomes.

Outside of the proposed agenda for Crypto Week, we’ve also seen headlines around the drafting of an executive order allowing 401(k) plans to invest in alternative assets, including private equity, real estate, gold, and digital assets. The order would direct the Department of Labor and the SEC to issue guidance enabling plan sponsors to offer these options, expanding beyond traditional public market assets.

Our take:

“Crypto Week delivered real progress with the GENIUS Act and 401(k) access talks, laying groundwork for long-term institutional adoption.”

The outcomes of “Crypto Week” mark a significant regulatory shift for digital assets after several years of limited progress. While only the GENIUS Act has been signed into law, its impact is already notable. Combined with the House passage of the CLARITY Act and the Anti-CBDC Surveillance State Act, the week delivered a more comprehensive framework addressing key industry pain points, particularly around stablecoin regulation and clarifying oversight between the SEC and CFTC.

These developments provide the foundation for clearer, more structured engagement between industry players and regulators, enabling more effective compliance and strategic planning. While the changes won’t have an immediate watershed impact, they set the stage for broader institutional alignment and long-term growth across the digital asset ecosystem.

While the broader market stands to gain, certain sectors are particularly well-positioned to benefit from the approval. Below is a quick breakdown, in short, we see four distinct categories emerging as key beneficiaries.

The proposed expansion of 401(k) investment options to include digital assets and private equity is a constructive step toward diversification, not only for digital assets but also, for example, through private equity, as companies generally stay private for longer, allowing 401(k)s to access these opportunities.

While the inclusion of digital assets is promising, it comes at a time of increasing regulatory openness to more exotic crypto products, such as yield-bearing or structured ETFs. Given how relatively passively 401(k) accounts are managed, we think broad access to the full digital asset universe is unlikely.

As more tokens get added beyond the majors and blue chips, we move into earlier, less mature projects that carry inherently greater risk. Many so-called “blue chips” have failed to remain relevant across past cycles. To protect long-term savers, approval will likely focus on majors and a limited set of vetted ETFs, rather than wholesale adoption of all crypto exposures.

Coinbase App And The Social Renaissance?

Coinbase announced the rebranding of its Coinbase Wallet as the “Base App,” positioning it as an all-in-one mobile platform for onchain activity. Built on the Ethereum Layer 2 Base network, the app integrates trading, USDC payments, mini-apps, AI tools, and a Farcaster-powered social feed into a single user-friendly interface. Each user is onboarded with a smart wallet, called a “Base Account,” that works seamlessly across apps and chains.

Now in beta as of July 16, the Base App represents Coinbase’s broader push to make onchain experiences as intuitive and accessible as using a typical mobile app, while positioning itself as a Web3 super app at the center of the emerging onchain consumer ecosystem.

Our take:

“The "Base App" reflects the deepening convergence of finance and social, potentially marking the next major growth leg for SocialFi adoption.”

One of the most compelling aspects of the Base App launch is the integration of social features into the user experience. It feeds into a wider, structural trend happening within finance we call “finance as a culture”, where technology and education are driving more open, participatory financial systems.

In practice this trend is noticeable in:

• The increasing participation of retail within financial markets
• New financial assets being qualified, monetized and optimized for financial gains.

Blending social and financial layers is a natural progression. Allowing tokenization of posts, generating tips, enabling sales, and turning engagement into income is a prime example. The deeper integration of predication markets into social platforms is another example of this trend playing out within Web3. 

Farcaster

Throughout 2022 and 2023, we already saw experimentation with SocialFi, with the launch of platforms like Lens, Farcaster and Friend.Tech. Each captured early attention by introducing new concepts like decentralized identity, on-chain social graphs or token-gated chats.When the initial excitement died down, it became clear that pure ideology or technological innovation wasn’t enough, these platforms needed lasting engagement to grow their network effects.

That said, as shown below by the platform activity, Farcaster managed to stay somewhat relevant by leaning into cultural trends, for example, through the launch of the Degen token, which rewarded active users and unlocked profile badges as social signals. This blend of memecoin culture, gamified identity, and steady product evolution showcased how Farcaster used DLT to create a distinct and innovative user experience.

While overall activity on the platform has been compressing, a somewhat different picture is shown when looking at user growth on Farcaster. Despite a recent uptick in churn, the data suggests that the user base has remained relatively stable, what’s declined is engagement per user. The chart below breaks down the change in users since launch, segmented by new, returning, and churning cohorts.

Through the Farcaster integration into the Base App, users will be able to interact with social posts, mint NFTs, tip creators, and access mini apps like games or prediction markets. This could meaningfully revive activity on Farcaster, and we’ve already seen the impact deeper Base integration can have. While the microdynamics differ, the Uniswap integration into Base and Coinbase Wallet is a clear example of how the Coinbase ecosystem can be value-accretive, something evidenced in the chart below.

Today, Base accounts for roughly 24% of Uniswap fees, second only to Ethereum at around 49%. Despite launching only in 2023, Base has quickly become a major driver of Uniswap activity, now generating more than half as much in fees as Ethereum. In the past week alone, it contributed over $4.6 million in fees, highlighting the growing impact of deep integration within the Coinbase ecosystem.