🏋️ Test your strength

Only one milestone left before bitcoin officially enters price discovery mode: gold.

No question that bitcoin is at an all-time high for US dollars. BTC hit $98,000 earlier this morning, awarding it a market cap close to $1.94 trillion (fully-diluted: $2.06 trillion).

Bitcoin’s price has also formally broken 2021 records against all three major US benchmark stock indexes: the Dow Jones, S&P 500 and Nasdaq 100.

Gold, though, had outperformed bitcoin following crypto’s peak in November 2021 — until this past week. As of this morning, bitcoin was up 55% since then compared to gold’s 46%.

Bitcoin still needs to catch up to gold, which converts to lag between BTC’s gold all-time high, as well as its US dollar and stock market ratios.

As of this morning, the bitcoin-to-gold ratio was just under 36.83. When BTC set its November 2021 high, it was as much as 37.05, a tiny difference of less than half a percent.

If gold is steady today, a single move to $98,500 would do it from here, and even less if gold slips slightly. (Current bitcoin price: $97,845.)

At that point, there’s probably some other annoying technicality to pin on bitcoin. Perhaps it’s still below its all-time high against gold after adjusting for inflation, for instance. But whatever.

In any case, we’re all totally locked into the bitcoin price chart for the foreseeable future, including, probably, the Feds.

The US government crypto stash — seized in a variety of criminal cases — has now ballooned to almost $21 billion, over 98% of it bitcoin. The rest is mostly made up of ETH, BNB, TRX and stablecoins. 

That’s up from just under $10 billion at the start of the year, per Arkham Intelligence data. Although it’s difficult to find the exact value of the crypto kept by the US government, as agencies regularly move it between unmarked wallets.

We can however zoom in on the 3,999 BTC sold by the Feds in June and July. Valued at the times of transfer to Coinbase Prime, those coins were worth on average $61,300 and likely generated more than $245 million for government coffers.

If sold today, they would’ve netted closer to $392 million, leaving $147 million on the table.

The German state of Saxony has it much worse. It altogether dumped almost 50,000 BTC on a string of exchanges around the same time as the US, raking in the euro equivalent of $2.78 billion.

Had Saxony held, it would’ve had almost $4.9 billion — converting to over $2.1 billion in lost potential revenue. That’s equal to 1.7% of Saxony’s total GDP in 2018.

All told, identified government treasuries are worth a combined $28.5 billion, belonging to the US, UK, Bhutan and El Salvador. 

And with bitcoin properly in price discovery mode, now comes the true test of strength for their hands.

— David Canellis

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• New all-time high for crypto’s total market cap on CoinGecko: $3.245 trillion.

• ETH is up 7.5% in the past day to BTC’s 3.3%. (Current price: $3,345.)

• DAO treasuries are currently worth $26.9 billion, up $4 billion since this time last month.

• Solana’s real economic value (fees+MEV tips) has set its fourth consecutive daily record, now at $27.6 million per Blockworks Research data.

• Daily CEX liquidations have reached $495 million in the past day, $216 million coming from shorts.

 🪐 Orbital mechanics

We’ve asked ourselves one question over and over again: Wen altcoin szn?

To be fair, David’s done a very good job of setting up what it would take to see the next altcoin season take off. But to get some clarity on how bullish folks should be, I turned to HashKey’s Jupiter Zheng. 

Zheng and David see eye-to-eye when it comes to when we could see the next altcoin season, with HashKey putting together a report on why the team is so bullish on altcoins right now. 

Part of it is the potential for bitcoin’s dominance to peak, which — if you’re a regular Empire reader — you know is one of the necessary ingredients for altcoins to take off. 

Once we get that bitcoin dominance over 60% or even 65%, that’s when Zheng expects a “massive altcoin season” to begin. BTC dominance is currently sitting at 61.64%.

Zheng highlighted three success areas he’s watching: Ethereum, Solana and certain tokens in DeFi, such as UNI and SKY (formerly MKR). 

Let’s start with Ethereum, especially because it feels like more and more people are dropping off the bull train right now. 

There are three factors bringing down Ethereum, HashKey argued: Increased competition (duh), value diversion and lower transaction fees. 

“Currently, the Ethereum community is developing metrics to measure ‘Ethereum alignment,’ and it is anticipated that best practices will emerge from these efforts, further consolidating Ethereum’s ecosystem and ensuring long-term success,” the report stated.

As for Solana, it’s a “major fundamental play,” unlike Ethereum’s role as the “distressed play.”

“Solana has been achieving a lot of things this year, and — compared to Ethereum — Solana is a little bit centralized, but it's very efficient. So, Solana is strong in its operational capabilities. Ethereum is more focused on the tech …  technical layers and decentralized layers and security layers, but Solana is more focused on how to deliver mass adoption,” Zheng explained to me.

And to add to that, Zheng believes it’ll be the next coin to be selected for an ETF following the ETH and BTC funds.

To round it out, “many DeFi projects from the last cycle have gradually become foundational infrastructure and have crossed cycles, forming a ‘must-have’ landscape,” HashKey wrote. 

But it’s not all bulls and daydreams, there are a few things that Zheng’s not feeling so optimistic about. 

Layer-2s for example. There can only be so many that investors can focus on. And, even beyond that, only the “top 5 or top 10 will be valuable,” he explained. 

To solve this, he has a suggestion: “If we try to select the best layer-2s from the 100 [on offer], It's quite hard, so maybe just pick the top ones, just like we picked the Magnificent Seven from the US stock market.”

Who wants to pick the name?

— Katherine Ross

• Michael Saylor no longer has voting control of MicroStrategy, Protos reported.

• Chill Guy meme creator threatens legal action after a memecoin using its likeness rockets to a $330 million market cap. 

• DCG boss Barry Silbert will serve as CEO of decentralized AI startup Yuma, focused on the Bittensor ecosystem.

• Tron founder Justin Sun buys infamous duct-taped banana art installation for $6.24 million at Sotheby’s auction.

• Sui blockchain is back online after a two-hour major outage.

Q: Will memecoins be a retail-only thing when tokens are legal?

Zheng brought up a stock market comparison above, and I’m going to make one here: I think it’s possible that memecoins become the equivalent of the meme stocks (or, as I called them back in the day, momentum stocks). 

On the other hand, tokens — when and if the regulatory environment turns favorable — could become more stock-like with fundamentals at play. 

Either way, I think memecoins lose some strength in the overall crypto market. I can see a shift away from speculation, and that’s healthy given the volatile nature of memes! Not to mention how in the know you have to be to really profit.

— Katherine Ross

Don’t think so. 

From here, the most entertaining outcome seems the most likely. Which means we’re headed for a world where corporate memecoins are back on the menu. 

They say all companies are destined to be “crypto companies.” 

We’re on track to take that one step further: Tokenize their mascots and logos. Turn their quirky ad campaigns into memecoins. Accelerate. 

— David Canellis