Institutional Insights: Pump.Fun's Revenue Briefly Flips Ethereum

Our weekly Institutional Insights explores the latest market developments — market performance, industry news, exchange-traded fund (ETF) flows, trending topics

Our weekly Institutional Insights covers the latest market developments — market performance, industry news, exchange-traded fund (ETF) flows, trending topics, upcoming events and token unlocks — with the aim of helping you supercharge your crypto trading.

Enjoy our weekly take on the market!

Macro Overview — Markets Expect At Least 25bps Cut From Fed

Federal Reserve Chair Jerome Powell signaled that the central bank is on track to cut interest rates in September 2024, citing risks of further labor market weakening. Powell highlighted the Fed's focus on maintaining a strong labor market while bringing down inflation. The central bank is aiming to lower rates without triggering a recession, attempting to strike a delicate balance.

Markets have priced in at least a quarter-point cut in September, but Powell cautioned that the decision isn’t set in stone and will depend on upcoming economic data. Given that the labor market remains strong, the Fed wants to maintain flexibility and avoid being backed into a corner.

Weekly Crypto Highlight — Pump.Fun’s Revenue Briefly Flips Ethereum

Pump.Fun is a Solana-based platform that enables users to create and distribute their own tokens, especially meme coins. This marketplace aims to streamline the token creation process, making it accessible to both experienced crypto enthusiasts and newcomers. With Pump.Fun, users can quickly launch tradeable tokens with minimal effort and cost.

The platform has gained popularity amid growing interest in the meme coin sector, particularly with the emergence of both PolitiFi tokens and celebrity-backed tokens. Pump.Fun provides a user-friendly interface and tools that allow individuals to easily mint and list their own tokens on the Solana blockchain.

24H Protocol Revenue. Source: DefiLlama

In the past week, the decentralized app (DApp) Pump.Fun briefly surpassed Ethereum in terms of daily revenue generation. This surge in activity was driven by the excitement and speculation surrounding recent political events, particularly the 2024 U.S. presidential election. Over the past four years, cryptocurrency adoption has continued to grow, with retail investors increasingly interested in creating meme-inspired tokens connected to high-profile news and cultural moments.

Daily Active & New Addresses on Pump.Fun. Source: Dune @jhackworth

The daily active and new addresses on the Pump.Fun platform have been maintaining strong performance since March 2024. This is impressive as compared to the active user trends seen on many GameFi apps, whose active user numbers haven’t experienced the same abrupt drop-offs.

MICHI Price Chart. Source: CoinGecko

Pump.Fun makes the creation of meme tokens more accessible to retail crypto enthusiasts. The meme token with the highest market capitalization is MICHI. MICHI has held up relatively well against selling pressures, as its price trend hasn’t witnessed the typical pump-and-dump cycle seen with many meme tokens. Additionally, MICHI's 24-hour trading volume is quite close to its fully diluted market cap, likely attributable to the bonding curve mechanism of Pump.Fun.

However, no meme tokens have gained as much traction as PEPE and BONK. Most of those tokens are traded on Raydium and minor centralized exchanges, suggesting that those tokens are not yet owned and traded by most crypto investors.

In summary, Pump.Fun does indeed make crypto more fun and engaging, which has naturally led to higher trading volume on Solana. However, investors should not treat the traded tokens on Pump.Fun as investable in the same way as altcoins such as MKR.

Bitcoin Spot ETF Flows

Total Bitcoin Spot ETF Flows. Source: CoinGlass, as of Aug 2, 2024

Over the past week, the price of Bitcoin has continued to test a recent low as selling pressures have mounted. This comes following last week's launch of Ethereum Spot ETFs and the Nashville (TN) event held over the weekend. The mediocre Bitcoin Spot ETF flows didn’t provide sufficient support for the largest cryptocurrency. Additionally, the broader macroeconomic conditions have turned for the worse, rattling risk-taking investors in both the equity and cryptocurrency markets.

Other Top-Performing Tokens

Token

Catalyst

MakerDAO (MKR)

The transition to LITE-PSM-USDC-A with updated protocol parameters was approved by Maker Governance. Read more here.

Ripple Network (XRP)

XRP has outperformed due to Ripple's partnership with Fenasbac and the market’s anticipation of the potential settlement of a lawsuit against Ripple by the SEC. Read more here.

Aave (AAVE)

Aave v3.1 went live across all networks, with enhanced security and usability. Read more here.

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