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What a week. Bitcoin’s price went down another 4% and freaked everybody out.

For us, nothing new. Bitcoin continues to follow a familiar path with no signs of taking the key step we’ve wanted to see since July.

In my most recent market update, I looked at a crucial insight we’ll get from watching stablecoin behaviors in the coming weeks and months, as well as some metrics that nobody seems to talk about and a trading pattern that isn’t what you think it is.

Look for another market update this week, an altcoin report this month, and more goodies later this year. Scroll down for some content you may enjoy.

You can reply to this email to contact me directly. Or, use this button to leave a comment at the bottom of any post.

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Chart of the Week

Institutional DeFi Needs a BUIDL Moment 

Bottom line: Decentralized finance will never get institutional adoption until developers create financial primitives for institutions, such as easy-to-use wallets, out-of-the-box lending apps, natively-digital insurance products, and protocols that can harness liquidity across blockchains.

My take: You can’t post these things when the market’s up because people call you FUD, make fun of you, and say mean things about you. When the market’s down, those same people nod and agree.

Big entities compete for liquidity and efficiency to get the best price for the least cost on every transaction. They also can’t risk a protocol failure, given the size of the activities they’re involved in. For individual users, this is probably not a problem. We're not moving massive amounts of money at high frequencies for people who will sue us if we screw up. Institutions are. Yet most crypto investment capital goes to meme coins, NFTs, and new tokens. So I get the allure of a big entity or group of entities that fill the gap, as Blackrock’s doing with BUIDL for RWAs (and Coinbase is doing with Base for dApps).

Why you should care: You want to know what needs to happen before you get hyped about “institutions.”

VanEck on Ethereum’s and Solana’s struggles 

As premium subscribers know, I sold all but a trivial amount of my smart contract tokens at the beginning of April for the reasons detailed in my buy/sell/HODL alert from April 1, 2024.

That doesn't mean these projects are bad or I don’t like them. Quite the opposite!

They simply got too big for their britches, as we say in some parts of the US.

In its August report, VanEck looked at two of the biggest platforms, Ethereum and Solana. It's a must-read for anybody wondering why somebody would ever think these projects might fail or die.

The full post is a little dense. I will oversimplify VanEck’s far more nuanced, informative, interesting discussion in two bullets:

• Solana’s blockchain is too big for small entities to maintain. As such, any protocol failure is hard to fix because only the most powerful entities can sift through the blockchain (and may miss or collude to hide the problem). It has a history of outages, and its consensus mechanism is very centralized.

• Ethereum is big, slow, expensive compared to other blockchains. It relies too much on L2s that drain liquidity and revenue from the Ethereum chain. Protocol upgrades made things worse. New projects on other blockchains sucked users away.

To be fair, all crypto projects have their downsides and risks. Doesn’t everything? Even the wheel has its flaws and limitations. Lots of technologies succeed despite their drawbacks.

But Ethereum and Solana enthusiasts tend to gloss over the negatives. I would hate for you to get so wrapped up in the hype that you overlook some substantial problems that are very hard to fix.