One Chart Determines if We're in a Bull or Bear Market

This episode reveals the one chart that suggests the crypto bull market is far from over, while dissecting the fierce stablecoin wars and the strategic rise of Digital Asset Trusts (DATs).

Market Sentiment: Is the Bull Market Over?

The episode opens with Ryan and David discussing the market's flat performance in September, a month often dubbed "Downtember." This has led to widespread questions about whether the bull market has ended. David expresses skepticism about anyone claiming to know the answer, but Ryan confidently asserts that a single chart in their discussion holds the key to determining the market's true direction.

Macroeconomic Indicators: A Mixed Bag for Crypto

• The Bad News: US unemployment rose to 4.3% in August, a nearly four-year high. However, David notes that this increase from 3.5% over three years appears relatively flat and historically low, suggesting it may not be a major cause for alarm.
• The Good News: The Producer Price Index (PPI), which measures inflation from the producer's perspective, unexpectedly fell by 0.1% in August. This indicates that inflationary pressures are cooling, a positive sign for the market.
• The Fed's Next Move: The market is pricing in an 86% probability of a 25 basis point interest rate cut by the Federal Reserve. David emphasizes the significance of this potential shift, stating, "The direction is more important than the magnitude of cuts... the fact that we are just going down I think is a bigger deal than the size of how we are going down." Both hosts commend Fed Chair Jerome Powell for navigating a difficult economic environment without triggering a recession.

The One Chart to Rule Them All: Global Liquidity as a Bull Market Indicator

• Ryan unveils his key thesis: the weekly global liquidity chart is the single most important indicator for the crypto market's health.
• He presents a chart showing global liquidity reaching an all-time high of approximately $185 trillion and continuing to climb. This metric aggregates the total amount of money and credit available in the global financial system.
• Ryan demonstrates a historical correlation where Bitcoin's price lags behind changes in global liquidity. When liquidity rises, crypto markets tend to follow after a short delay.
• Strategic Implication: Ryan argues that as long as global liquidity is increasing, the fundamental fuel for a crypto bull market remains. Investors should monitor this metric as a leading indicator for future market momentum, suggesting that after "Downtember," the bull market is likely to resume.

Weekly Market Snapshot & A New ETF

• Market Prices: Bitcoin is up 4.5% on the week to $114,500, while ETH is up 3% to $4,430. The total crypto market cap has reclaimed the $4 trillion level.
• Dogecoin ETF: A Dogecoin (DOGE) ETF is launching under the ticker $DOJE. Crypto commentator Eric Balchunas humorously noted, "Pretty sure this is the first ever US ETF to hold something that has no utility on purpose," to which Ryan quipped that Bitcoin was arguably the first.

The Digital Asset Trust (DAT) Saga: Buybacks, Ponzis, and New Players

The conversation shifts to Digital Asset Trusts (DATs), which are financial vehicles similar to ETFs that hold a single crypto asset, allowing traditional investors to gain exposure.

• Bitwise's Buyback: Bitwise initiated a $1.5 billion share buyback for its Ethereum DAT (ESETH) in response to its shares trading below their mNAV (Market-based Net Asset Value). An mNAV below 1 means the trust's shares are cheaper than the underlying ETH they represent, making a buyback a logical move to concentrate value for existing shareholders.
• The "Ponzi" Debate: The hosts address community concerns that DATs are "ponzies" unraveling as their mNAVs compress. Ryan clarifies that this term is technically incorrect, as the trusts are backed by underlying assets (ETH). David offers a cyclical perspective, suggesting market sentiment will shift back to euphoria. He states, "Not feeling great and feeling nervous is a fantastic thing to feel in a healthy financial market."
• Tom Lee's Worldcoin Purchase: Tom Lee, known for his massive ETH purchases via Bitwise, acquired a $20 million position in a Worldcoin DAT, which subsequently grew to $600 million. This move signals a potential expansion of DATs beyond just Bitcoin and Ethereum.
• Solana's DAT: Kyle Samani of Multicoin Capital is chairing a new, unnamed Solana DAT. The trust has reportedly raised $1.65 billion in cash and stablecoin commitments, which could create significant net-new buying pressure for SOL. David questions if Samani can be Solana's "Michael Saylor," arguing that unlike Saylor or Tom Lee, Samani is already a known entity within the crypto space and may not bring a net-new audience.

Ethereum's Quiet Dominance in Real-World Assets (RWAs)

• Stablecoins: Ethereum L1 holds 57% of all stablecoins, but this figure jumps to 95% when including all EVM-compatible chains.
• Treasuries: Ethereum L1 accounts for 70% of tokenized treasuries (86% including EVM chains).
• Gold: Ethereum L1 dominates with 78% of all tokenized gold (99% including EVM chains).
• Strategic Implication: Despite narratives suggesting Ethereum is losing its edge, the data shows it is the clear leader for RWA tokenization. This deep integration with traditional finance represents a powerful, long-term value accrual thesis for the Ethereum ecosystem. This trend was further solidified by Fidelity stealth-launching a money market fund on Ethereum, which has already attracted over $200 million.

Justin Sun vs. World Liberty Financial: A Lesson in On-Chain Property Rights

• Justin Sun faced a major setback when the World Liberty Financial (WLFI) project froze over $100 million of his unlocked WLFI tokens.
• After Sun transferred $9 million of his tokens to the HTX exchange, the WLFI team blacklisted his wallets, citing the need to "protect users" and investigate suspicious activity.
• The core issue is that the WLFI token contract includes a `blacklistAddress` function, giving the developers a "debanking button" to revoke property rights at will. This is a stark contrast to standard, permissionless ERC-20 tokens on Ethereum.
• Actionable Insight: This incident serves as a critical reminder for investors to scrutinize smart contract code. Tokens with centralized control functions, such as blacklisting capabilities, carry significant counterparty risk and undermine the core principles of decentralized finance.

The Hyperliquid Bachelor: A Stablecoin Bidding War

• Hyperliquid, a leading perpetuals exchange, created a public competition to select a native stablecoin provider for its platform, a move driven by the desire to capture the estimated $200 million in annual yield generated by the USDC held on its platform.
• Major stablecoin issuers, including Ethena, Frax, Paxos, and Agora, submitted public proposals, creating a "bachelor-style" competition on Crypto Twitter.
• The proposals offered various revenue-sharing models and incentives. For example, Paxos offered 95% revenue sharing, while Ethena pledged up to $150 million in ecosystem incentives.
• Despite the high-profile contenders, a lesser-known project, Native Markets, emerged as the overwhelming favorite, with prediction markets giving it a 94% chance of winning. The final vote is scheduled for September 14th.

The Evolving Business Models of Blockchains

The hosts discuss MegaETH's plan to integrate a native stablecoin (USDM) with Ethena as a service provider. This strategy allows the chain to generate revenue from the stablecoin's yield, which is crucial for a "hyperscaled" chain that aims to have near-zero transaction fees.

This highlights the three primary business models for blockchains:

• Selling Blockspace: Charging transaction fees (e.g., Ethereum L1 and L2s).
• Asset-Based Revenue: Earning a percentage of the yield from assets held on the chain, like native stablecoins.
• Monetary Premium: Achieving "store of value" status through network effects and social consensus (e.g., Bitcoin).

OP Stack Expansion: Ronin and Upbit Join the Ethereum Ecosystem

• Ronin: The gaming-focused blockchain, originally created for Axie Infinity, is migrating from an independent L1 to become an Ethereum L2 using the OP Stack. This move provides enhanced security, faster block times, and access to Ethereum's vast developer ecosystem.
• Upbit: South Korea's largest crypto exchange is launching its own L2, named Giwa, also built on the OP Stack. This is seen as the South Korean equivalent of Coinbase's Base chain.
• Strategic Implication: These adoptions signal strong momentum for the OP Stack and the broader Ethereum L2 ecosystem. The increasing consumption of Blob Space—dedicated data storage for L2s on Ethereum—further validates this trend of chains choosing to build within Ethereum's security umbrella.

TradFi and Crypto Convergence: Robinhood, NASDAQ, and Gensler's Missing Texts

• Robinhood Joins S&P 500: Robinhood was added to the S&P 500 index, which will create a persistent passive bid for its stock from index funds.
• NASDAQ's "Tokenization": NASDAQ announced plans to offer tokenized equities. However, Ryan clarifies this is less revolutionary than it sounds, as settlement will still occur on the DTCC's private, permissioned blockchain (R3 Corda), offering no on-chain composability or public access.
• Gensler's Missing Texts: A report revealed that nearly a year of SEC Chair Gary Gensler's text messages (from October 2022 to September 2023) were permanently lost due to "avoidable errors." This period coincides with the height of "Operation Chokepoint 2.0," raising suspicions of intentional deletion. David points to Gensler's April Fool's Day profile picture change to the "deal with it" sunglasses as a tacit admission of his aggressive, and now conveniently undocumented, actions against the crypto industry.

Conclusion

This episode highlights that while macro liquidity remains the primary driver of the crypto bull market, foundational infrastructure is being built through DATs, RWA tokenization, and intense stablecoin competition. Investors should monitor global liquidity as a key market signal, while researchers must analyze the strategic implications of institutional adoption on Ethereum.