THE PHENOM CRYPTO LETTER

GM,

Welcome to the Phenom Weekly Update, where we cover everything you need to know about crypto this week. The markets are red but a lot of exciting stuff is happening in the industry and we are excited to ride out the Summer Slump. As they say, “Buy the Dip”. If you’ve been around crypto for awhile these deep corrections are nothing new. All a part of the ride in this volatile asset class.

Here’s what we’ve got this week:

• Market Rundown

• A word on the BTC Dump

• Reading Corner

• BlockBuzz News

• Crypto Twitter

MARKET RUNDOWN

The cryptocurrency market experienced significant volatility this week, marked by sharp price movements and notable developments in regulatory actions. Sentiment has taken a start downturn from previous weeks with Fear and Greed being solidly in the neutral at 46 as of writing this.

Bitcoin (BTC) fluctuated around the $66,000 mark earlier in the week but faced downward pressure, dropping to a support zone near $58,000 before rebounding slightly. This decline was attributed to outflows from digital-asset investment products, liquidiations of leveraged longs and increased selling pressure from miners post halving. Overall, Bitcoin saw a weekly loss of approximately 6.17%, and Ethereum (ETH) fell by 5.21%.

Altcoins also suffered substantial losses, with the total market cap shrinking by $70 billion. Traders bullish on altcoins like Dogecoin (DOGE) and Shiba Inu (SHIB) experienced significant liquidations, reflecting a broader trend of declining confidence in the altcoin market. Notably, DeFi tokens such as DYDX and Curve Finance (CRV) hit new lows.

Regulatory developments included the closure of the U.S. SEC’s investigation into Ethereum 2.0, which was seen as a major win for the blockchain industry. This move aligns with the CFTC's view of Ethereum as a commodity rather than a security, which should result in a boost to investor sentiment around ETH. Additionally, the Australian Securities Exchange approved its first spot Bitcoin ETF, indicating growing institutional acceptance and regulatory clarity in the region.

Despite these challenges, some analysts remain optimistic about the long-term prospects of major cryptocurrencies, particularly Ethereum, which is seen as having significant potential to reach new highs and outperform BTC over the course of the year.

Top Movers:

• (-) Bittensor ($TAO) -6% TAO continues its slump. We see this as a good entry opportunity if you are bullish on AI. TAO is the leading AI token

• (-)Ethena ($ENA) -12% Continues to correct after the hype of its launch. We are bullish ENA and see this as a buy opportunity

• (+) Kaspa ($KAS) +23% Kaspa (one of our long term holds) is up 23% this week rebounding on news that its being mined by large institutional miners

• (+) Fetch.ai ($FET) +17% FET (another of our long term holds) is up on news of a partnership w/ Coinbase and anticipation of its merger w/ AGIX

ENTERING THE SUMMER SLUMP

The Summer Slump is a recurring pattern in the crypto market, evident even in the most bullish years:

• - In 2017, altcoins were heavily impacted compared to Bitcoin.

• - In 2019, Bitcoin peaked at $13k before experiencing a correction.

• - The summer of 2020 saw the rise of DeFi, as risk aversion towards major coins made yield farming appealing.

• - During 2021, the market remained bearish until a pivotal tweet in July.

• - In 2022, the market faced significant downturns.

• - In 2023, the market hovered around $28k.

Summer is often a period to strategically move into BTC, ETH, or stablecoins, reducing exposure to altcoins.

This seasonal trend does not appear to alter the broader four-year cycle:

• - 2018 = 2022 = severe downturns.

• - 2019 = 2023 = recovery and echo bubbles.

• - 2020 = 2024 = constructive and bullish.

• - 2021 = 2025 = irrational exuberance, to the moon, presenting an opportune time to sell.

While this mental model is simplistic, it has proven effective thus far.

Willy Woo’s Take On The BTC Price Dump

In a rare dive into short-term price action, renowned bitcoin analyst Willy Woo breaks down the current fear gripping the Bitcoin market. Woo attributes the recent volatility to a deliberate effort to flush out leverage, initially targeting $62.5k. However, speculative investors continued to add long positions, triggering a cascading long squeeze that drove prices down to the $58k mark.

This liquidation squeeze coincides with a post-halving miners' capitulation, where miners, compelled to upgrade their hardware due to diminishing profitability, are selling off their Bitcoin holdings. This selling spree is pushing the weakest miners to liquidate their assets, exacerbating the market downturn.

Woo identifies a potential reversal on the horizon, with short-term technical indicators like the TD9 reversal on daily candles suggesting a hidden bullish divergence that could correct the market’s overselling. However, he cautions that Bitcoin is not yet out of danger. The market needs to clear out speculative futures open interest before it can stabilize and move upward.

A critical threshold looms at $54k, where the next layer of liquidations could tip Bitcoin into a bearish phase. This price point is significant, acting as the line between bullish and bearish regimes, especially for short-term holders.

Interestingly, Woo highlights that a miners' capitulation often precedes a market rally. Historically, this event signals the end of bearish trends or sideways movement, paving the way for upward momentum. The market is now in a waiting period, anticipating an increase in the hash rate and a reduction in speculative futures activity to signal a more stable phase.

In essence, Woo’s analysis suggests that while short-term indicators point to a possible market correction, the overall stability and future direction of Bitcoin depend on the broader purge of speculative interest and a recovery in mining activities. The next few weeks will be critical in determining whether Bitcoin can regain its bullish momentum or if it will dip further into bearish territory.

Check out Woo’s thread below

READING CORNER

A collection of longer form content we are consuming this week

BLOCKBUZZ

Quick Hitters from the week

• Stablecoin Transfer Volume Soars: Over the past four years, stablecoin usage has increased 16x, indicating growing adoption and maturity in the crypto industry.

• LayerZero Prepares for Airdrop: Opens eligibility checker for its highly anticipated upcoming token airdrop.

• German Government's Bitcoin Sell-Off Stirs Market: Initiates a large-scale sell-off of Bitcoin holdings, causing market jitters.

• Solana's ZK Compression Sparks Debate: Ethereans critique the scaling solution, arguing it's essentially a Layer 2.

• Polymarket Predicts Trump Victory: Betting platform shows a 57% chance of Trump defeating Biden.

• Bitwise CIO Predicts Ethereum ETF Inflows: Anticipates spot Ethereum ETFs will attract $15 billion in net inflows within 18 months.

• CFTC Investigates Jump Crypto: Launches a probe into one of the sector’s previously prominent players.

• CertiK Identifies and Corrects Kraken Bug: Finds the issue and begins transferring funds back to Kraken.

• Arbitrum Market Cap Grows Despite Token Price Drop: ARB’s market cap increases 75% to $2.23 billion due to significant token unlocks, despite nearing its all-time low price.

THE TWITTERVERSE

A collection of the most interesting stuff on Crypto Twitter this week

Steady Lads, price corrections are normal. Zoom out and stay calm.

If you are bullish on the AIxCrypto sector (we are) Shawred has a list of some interesting tokens to check out.

Exciting news on Kaspa, one of our long term positions

WAGMI

For the (crypto) Culture

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