Crypto Market Performance

• Signs of an Internal Liquidity Trap: One warning sign is that crypto prices have remained largely unresponsive despite global equities repeatedly hitting new highs on the AI boom and a series of positive macro developments, including the Strait of Hormuz agreement. This suggests that persistent selling pressure or weak buy-side demand has become a structural issue within the market. If positive catalysts continue to fail to drive prices higher, any new negative development could trigger a sharp market sell-off.
• The Double-Edged Sword of Leveraged Liquidations: Last week, the market experienced a wave of large-scale leveraged liquidations. Short liquidations accounted for 86% of all Bitcoin liquidations. While the resulting short squeeze provided a short-term boost to prices, it also exhausted a significant amount of buying demand, reducing the market's capacity to sustain further gains.

Market Highlights

1. CLARITY Act Enters Key Legislative Window Ahead of Senate Vote The CLARITY Act, widely regarded as the most significant crypto legislation currently under consideration in the United States, entered a critical phase this week ahead of a key Senate vote, with August 7 viewed as the last major legislative window before the August recess. However, growing controversy over provisions on stablecoin interest payments and restrictions on government officials' involvement in crypto-related businesses has significantly weakened the bill's prospects. Bernstein warned that failure to pass the legislation could trigger a short-term sell-off in the crypto market. As of August 3, Polymarket data showed the probability of the bill being enacted by the end of 2026 had fallen to 31%, down 7 percentage points from a week earlier.
2. Japan's FSA Establishes Dedicated Division for Crypto Assets and Stablecoins Japan's Financial Services Agency (FSA) officially established a dedicated division for crypto assets and stablecoins on August 7. The move elevates crypto oversight from lower-level offices to a dedicated division, reflecting Japan's growing emphasis on digital asset regulation. It also lays the organizational foundation for future regulatory reforms, including the potential reclassification of crypto assets, lower tax rates, and the possible approval of spot crypto ETFs.
3. G20 Calls for Closer Monitoring of Crypto Asset Risks In a joint statement released this week, G20 finance ministers and central bank governors called on international bodies, including the Financial Stability Board (FSB), to monitor risks associated with crypto assets and consider coordinated multilateral responses when necessary. While the statement acknowledged the benefits of technological innovation, it also emphasized the need to strengthen investor protection and anti-money laundering measures while remaining vigilant to emerging risks.
4. Bitcoin Remains Range-Bound as Market Sentiment Stays in Fear Territory Bitcoin remained under pressure throughout the week, trading in a $62,000–$65,000 range and failing to build on July's rebound. Macroeconomic uncertainty, an unclear U.S. regulatory outlook, and continued ETF outflows kept the Crypto Fear & Greed Index in Fear territory. However, signs of easing geopolitical tensions helped improve risk appetite, lifting Bitcoin back above $64,000 on August 6.
5. Institutional Strategies Diverge: Bitmine Accumulates ETH, Strategy Pauses Bitcoin Purchases Strategy (formerly MicroStrategy) announced this week that it has paused Bitcoin purchases while raising additional capital through share sales to strengthen its U.S. dollar reserves, leaving its holdings unchanged at 843,775 BTC. In contrast, Bitcoin miner Bitmine Immersion Technologies continued to aggressively accumulate Ether (ETH), with its holdings reaching 5.79 million ETH, or approximately 4.8% of the total supply. About 85% of its ETH holdings have been staked, generating an estimated $299 million in annual staking rewards.
6. Bitcoin and Ether Spot ETFs Show Diverging Capital Flows Data showed that U.S. spot Bitcoin ETFs recorded $211 million in net inflows on August 4 (ET), led by BlackRock's IBIT, which attracted $170 million. Over a longer period, however, U.S. spot Bitcoin ETFs still recorded net outflows for July, while their European counterparts continued to post modest inflows, underscoring the divergence in regional investor demand.
7. Coldcard Wallet Exploit Linked to Nearly $89 Million in Losses A major security incident came to light this week after addresses associated with Coinkite's Coldcard hardware wallet were compromised. The number of affected addresses quickly grew to around 4,500, with estimated losses approaching $89 million. The incident highlights that even cold storage is not immune to security threats and underscores the operational risks inherent in self-custody.
8. Wall Street Accelerates Asset Tokenization as DTCC Begins Production Pilot The adoption of blockchain technology by traditional financial institutions continues to accelerate. Nearly 40 financial institutions, including JPMorgan Chase, BlackRock, Goldman Sachs, Vanguard, and the New York Stock Exchange, are participating in a tokenization pilot led by the Depository Trust & Clearing Corporation (DTCC). The pilot covers the tokenization of equities, including Microsoft shares, ETFs, and U.S. Treasuries, and has entered limited production.
9. Signs of Capital Rotation Emerge in South Korea as Funds Shift Toward Crypto Amid the recent decline in South Korea's KOSPI index, signs emerged that some capital was flowing from equities into crypto assets. Data showed that KRW/USDT trading volume on Upbit, South Korea's largest crypto exchange, surged by 600% over a short period, suggesting that some investors are turning to crypto in search of new opportunities amid stock market volatility.
10. Germany Proposes Changes to Crypto Tax Rules Germany's Federal Minister of Finance has proposed changes to the tax treatment of crypto gains. Under current rules, gains on cryptocurrencies held for more than one year are tax-exempt. The proposed reform would instead subject crypto gains to a flat 25% withholding tax, similar to the tax treatment of gains on stocks. The proposal has drawn widespread attention from Germany's crypto community.

Macro Update

• On August 5, U.S. ADP employment increased by 44,000 in July, below the consensus forecast of 70,000. The previous reading was revised down from 98,000 to 97,000.
• On August 6, U.S. initial jobless claims for the week ended August 1 came in at 199,000, below the consensus forecast of 202,000. The previous week's reading was revised up from 197,000 to 198,000.
• On August 7, the CME FedWatch Tool showed a 44.6% probability that the Federal Reserve would leave interest rates unchanged in September, while the probability of a 25-basis-point rate hike stood at 55.4%.

Looking Ahead

Industry Conferences

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

Key Events

• August 12, 12:30 (UTC): The United States will release its July CPI (year-over-year).
• August 13, 12:30 (UTC): The United States will release initial jobless claims for the week ended August 8.

Project Updates

• Loopring announced that NFTs held in affected Smart Wallet addresses will be returned through a manual recovery process. Users can submit a verification request via the project's official email before August 15, 2026. After the deadline, the project can no longer guarantee NFT recovery.
• Superseed, a Layer 2 CDP lending protocol, will officially shut down its L2 network on August 15 and migrate its ecosystem to the Ethereum mainnet. Users holding assets such as USDC, USDT, cbBTC, and ETH are advised to complete the migration before the deadline, as the project cannot guarantee asset recovery afterward.

Token Unlocks

• Babylon (BABY): 139 million tokens will be unlocked on August 10, worth approximately $1.53 million and representing 5.49% of the circulating supply.
• Linea (LINEA): 1.08 billion tokens will be unlocked on August 10, worth approximately $2.42 million and representing 3.50% of the circulating supply.
• io.net (IO): 13.25 million tokens will be unlocked on August 11, worth approximately $1.63 million and representing 3.46% of the circulating supply.
• Aptos (APT): 11.3 million tokens will be unlocked on August 12, worth approximately $6.65 million and representing 0.66% of the circulating supply.
• Starknet (STRK): 125 million tokens will be unlocked on August 15, worth approximately $3.25 million and representing 3.61% of the circulating supply.
• Sei (SEI): 89.26 million tokens will be unlocked on August 15, worth approximately $3.66 million and representing 1.42% of the circulating supply.

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