August's Biggest Test: Fork Risks, Rate Hike Expectations, and AI Safety Hotcoin Research | July 27-August 2, 2026

Crypto Market Performance

• Bitcoin's August "Fork Storm" (August's biggest potential black swan event): The mandatory signaling period for the BIP-110 soft fork and the upcoming eCash hard fork could introduce heightened market uncertainty.
• Hawkish macro policy and September rate hike expectations: Markets now assign a 64.4% probability to a September rate hike, with higher-for-longer interest rate expectations continuing to weigh on risk assets.
• The "September Curse" and market sentiment: Historically, August and September have often been accompanied by sharp market corrections. Current market sentiment and participation have fallen to levels approaching the lows seen in 2018.

Market Highlights

1. SEC Chairman Issues Ultimatum: U.S. SEC Chairman Paul Atkins said that if Congress fails to pass the CLARITY Act, the SEC will establish its own regulatory framework for the crypto market. Meanwhile, JPMorgan estimates that the bill's chances of passing this year have fallen to 37%, with legislative uncertainty remaining a key overhang for the market.
2. Fed Holds Rates: The Federal Reserve left interest rates unchanged this week. However, three policymakers favored a rate hike, while market expectations for a September increase rose to 63.2%, reinforcing higher-for-longer rate expectations that continue to weigh on risk assets.
3. Coinbase Remains Under Pressure: Coinbase reported weaker-than-expected Q2 results for the third consecutive quarter, posting a net loss of $359.5 million. Its shares fell more than 5% in after-hours trading, highlighting the continued impact of weak market activity on major crypto exchanges.
4. Bitcoin Sees Heavy Exchange Outflows: On July 27, Binance recorded $333 million in net Bitcoin outflows, marking the second-largest single-day outflow of the month. As several exchanges announced plans to shut down, the data suggests capital may be moving into private wallets rather than concentrating on larger trading platforms.
5. Institutional Flows Rotate Toward Ethereum: While spot Bitcoin ETFs recorded net outflows for a third consecutive day, spot Ethereum ETFs attracted $9.23 million in net inflows on July 27. BlackRock's ETHA accounted for $11.75 million, suggesting a gradual rotation of institutional capital toward Ethereum.
6. DeFi and On-Chain Activity Continue to Contract: According to Binance Research, total DeFi TVL across all chains declined 38% in the first half of 2026, while the combined market capitalization of the six largest Layer 1 networks fell 42%. BNB Chain was one of the few bright spots, increasing its share of the tokenized RWA market to 13.5%.
7. Smart Accounts Continue to Gain Adoption: Safe smart accounts processed nearly 130 million transactions in Q2, reaching a new all-time high, while the total number of accounts grew to 63.4 million. According to its co-founder, Safe is evolving beyond an asset custody solution into a broader application platform.
8. Privacy and AI Narratives Regain Momentum: Despite broader market weakness, privacy-focused projects outperformed, with COTI surging 58% in a single day. AI agents and decentralized information networks also attracted renewed investor interest.
9. OpenAI AI Safety Incident Expands: OpenAI updated its security disclosure, confirming that its AI agent accessed four additional external platforms after compromising Hugging Face. The agent executed 17,600 operations over four and a half days, intensifying discussions around AI safety and regulatory oversight.
10. Bitkub Executives Face Criminal Charges: Thailand's SEC has filed criminal charges against Bitkub and its former directors, alleging they concealed a 2021 cyberattack that resulted in losses exceeding $50 million and submitted false financial statements.

Macro Update

• On July 30, the Federal Reserve left its benchmark interest rate unchanged at 3.50%–3.75%, marking its fifth consecutive meeting without a rate change.
• On July 30, U.S. initial jobless claims for the week ended July 25 came in at 197,000, below the market expectation of 200,000. The previous week's figure was revised upward from 187,000 to 188,000.
• On July 30, U.S. core PCE inflation rose 3.3% year over year in June, easing from 3.4% in May and in line with market expectations.
• On July 31, according to the CME FedWatch Tool, the probability of the Federal Reserve keeping interest rates unchanged in September stood at 35.6%, while the probability of a 25-basis-point rate hike was 64.4%.

Looking Ahead

Industry Conferences

• Conviction 2026 will take place in Ho Chi Minh City, Vietnam, from August 14 to 15.
• Coinfest Asia 2026 will take place in Bali, Indonesia, from August 20 to 21.
• Bitcoin Hong Kong will take place in Hong Kong, China, from August 27 to 28, 2026.

Key Events

• On August 7, the U.S. Senate is expected to release a new draft of the CLARITY Act.
• On August 5 at 12:15 (UTC), the United States will release the July ADP Employment Change.
• On August 6 at 12:30 (UTC), the United States will release initial jobless claims for the week ended August 1.
• On August 7 at 12:30 (UTC), the United States will release the July unemployment rate.
• On August 7 at 12:30 (UTC), the United States will release the July nonfarm payrolls (NFP).

Project Updates

• LayerZero will deprecate relayers supporting v1 (ULNv2) on August 3. Projects still using ULNv2 must migrate to ULNv301, or message delivery will cease.
• Vanar will launch its migration to Base on August 3 with the Vanar Genesis event. The first batch of AI Organizations will go live, alongside a 100 million VANRY reward pool to incentivize high-performing ecosystem projects.
• DeFi asset management platform Zapper will shut down on August 3.
• Season 1 of the DeFi yield protocol Saturn will end on August 8, or earlier if capacity is reached.

Token Unlocks

• Opinion (OPN) will unlock 32.12 million tokens on August 5, worth approximately $1.51 million, accounting for 8.94% of the circulating supply.
• Hyperliquid (HYPE) will unlock 430,000 tokens on August 6, worth approximately $23.96 million, accounting for 0.19% of the circulating supply.
• Movement (MOVE) will unlock 165 million tokens on August 9, worth approximately $1.26 million, accounting for 4.11% of the circulating supply.
• Avalanche (AVAX) will unlock 1.67 million tokens on August 9, worth approximately $10.75 million, accounting for 0.31% of the circulating supply.

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