8.4 AI Daily Crypto Assets market faces multiple challenges, regulatory policies become key variables

1. Headlines

1. Weak U.S. employment data raises market concerns, putting pressure on risk assets such as Bitcoin.

The July employment report released by the U.S. Department of Labor on Friday showed that non-farm payrolls increased by 187,000, far below the expected 292,000, with June's data also being significantly revised down. The weak data has intensified market concerns about an economic recession, leading to a decline in both the U.S. stock market and the cryptocurrency market. Bitcoin briefly fell below the key support level of $112,000, triggering over $1 billion in leveraged long liquidations across the market.

Analysts point out that the weak employment data indicates that the U.S. economy is slowing down, which may force the Federal Reserve to raise interest rates again in September. However, if the economy worsens further, the Federal Reserve may also be forced to pause interest rate hikes or even start cutting rates. The uncertainty has increased market volatility.

In addition, the Trump administration has released a new list of tariffs on China, raising market concerns about an escalation in the trade war. The dual pressures of geopolitical risks and economic slowdown have significantly cooled investor sentiment towards risk assets. Analysts expect that, until there is an improvement in the economic fundamentals, risk assets such as Bitcoin may continue to perform weakly.

2. The Hong Kong "Stablecoin Regulation" has officially come into effect, regulating the issuance and reserves of stablecoins.

On August 1st, the Hong Kong "Stablecoin Regulation" officially came into effect, establishing a licensing system for stablecoin issuers. The regulation stipulates that licensees must ensure that the market value of the reserve assets backing the issued stablecoins is not less than the face value of those stablecoins that have not been redeemed and are in circulation. Licensees must also consider the risk status of the reserve assets and ensure that there is adequate over-collateralization to cover market risks.

Industry insiders say that the introduction of the "Stablecoin Regulation" in Hong Kong at this point reflects the advancement of regulatory measures. In line with international standards, Hong Kong also strives to align its regulations on stablecoins with those of other countries and regions globally.

Analysis indicates that the development of stablecoins has reached a certain scale, and formulating relevant regulations is beneficial for standardizing market order and protecting investors' rights. As an international financial center, Hong Kong's move will create a favorable environment for the development of stablecoins. However, the specific implementation details of the regulations and the intensity of supervision remain to be observed.

3. The activity level of the Solana ecosystem continues to lead, with Sei's daily active users surpassing Solana.

According to monitoring data, the daily active user count of the Sei network surpassed that of the Solana network for the first time on August 2. Sei has recently launched native USDC and introduced Ondo, among others. The significant adoption has doubled Sei's daily active users in the past three months, increasing from 380,000 to the current 752,000.

At the same time, the overall activity of the Solana ecosystem remains leading. The public chain activity ranking shows that Solana has maintained the top position for several consecutive days. At last week's Breakpoint conference, dozens of projects within the Solana ecosystem also launched new products and significant upgrades.

Analysis suggests that the continued activity of the Solana ecosystem is mainly due to its advantages of high performance and low transaction fees. However, the rise of emerging public chains like Sei also reflects the industry's differentiation, where users and developers have different preferences for public chains with various characteristics. The future may present a scenario of a hundred schools of thought contending.

4. The explosive popularity of AI applications like ChatGPT has driven the surge of AI concept coins, raising investors' enthusiasm.

Since the beginning of this year, AI applications represented by ChatGPT have rapidly gained popularity, driving a surge in AI concept coins. Data shows that AI concept coins such as Fetch.ai, SingularityNET, and Orai have increased by 300%, 200%, and 150% respectively since the start of the year.

Analysts believe that the popularity of AI concept coins is closely related to investors' optimistic expectations about the prospects of AI technology. The success of applications like ChatGPT has shown people the enormous potential of AI in terms of productivity, efficiency, and other aspects, thereby driving up the valuations of related companies and crypto projects.

However, some analyses warn that the bubble risk of AI concept coins cannot be ignored. Currently, most AI concept coin projects are still in the early stages and lack established business models and sources of revenue. Once the hype subsides, the bubble may burst rapidly. Investors need to view this rationally and manage risks.

5. The Ethereum L2 scaling solution Booster Rollup attracts attention, expected to break through the TPS bottleneck.

The scaling of Ethereum has always been a focal point of community attention. Recently, a new type of L2 scaling solution called Booster Rollup has sparked widespread interest and discussion. This solution is believed to have the potential to break through the TPS bottleneck of Ethereum, significantly increasing throughput.

The core idea of Booster Rollup is to execute most computations offline and only publish the final state on the Ethereum main chain. This "interactive proof" model can significantly reduce the load on the main chain, thus achieving high throughput.

Analysts believe that Booster Rollup has many advantages, such as high scalability, complete decentralization, and compatibility with Ethereum. However, it also faces some challenges, such as the need for a large amount of computing resources and state bloat. If these issues are resolved, Booster is expected to become an important avenue for Ethereum scalability.

2. Industry News

1. Bitcoin flash crash tests the support level of 112,000, bull market encounters resistance, is it time to buy the dip in the crypto market?

Bitcoin faced its "Black Friday" sell-off for the third consecutive week, with prices testing the critical support level of $112,000, leading to over $1 billion in liquidations of leveraged long contracts in the cryptocurrency market. This decline coincided with worsening risk sentiment in traditional financial markets such as U.S. stocks, primarily driven by disappointing U.S. employment data and new tariff policies, raising investors' concerns about global growth and liquidity. Altcoins suffered severely, with SOL dropping nearly 20% over the week and ETH down nearly 10%, while ETF inflows also failed to provide support.

Analysts point out that Bitcoin's monthly close in July remains at a historical high level, and the current pullback is more inclined towards a technical correction rather than a trend reversal. The options market has seen a large number of bullish bets, with target price levels set at $124,000, indicating that some investors are positioning for a rebound. The report emphasizes that although short-term market sentiment is cautious, long-term positive factors such as improved regulatory frameworks, the development of stablecoins, and the institutional tokenization process still exist, and the foundation for a bull market has not been shaken. Whether the market can stabilize and rise again still depends on whether Bitcoin can regain the $115,000 level and other key indicators such as ETF fund flows.

2. Important Ethereum Signals: SharpLink increases its holdings by $54 million in ETH, "mysterious" whale quietly buys $300 million.

Ethereum (ETH) has recently sent another significant signal, indicating that institutions and whales are continuing to increase their bullish bets. On one hand, publicly traded company SharpLink Gaming announced an increase in its holdings of ETH worth $54 million, bringing its total holdings to 17,595 coins, ranking seventh in global institutional holdings. On the other hand, a new wallet address has withdrawn approximately $300 million worth of ETH, raising market speculation as to whether a certain whale is making a large-scale accumulation.

Analysts believe that the addition of these heavyweight purchases reflects institutions' optimistic expectations for the long-term prospects of Ethereum. With the ongoing progress of ETH 2.0 and the continuous emergence of hot applications such as DeFi and NFTs, the value and utility of the Ethereum network are gradually being released. Despite recently encountering a pullback, ETH's status as the "industrial backbone" of cryptocurrencies remains strong. Investors maintain confidence in its long-term growth potential and expect it to attract more capital inflows in the future.

3. This week's unlocking data overview: ENA, IMX, MOVE, etc. will see large unlocks.

Data shows that this week, ENA, APT, and AVAX will see a one-time large token unlock, totaling over $100 million in value. Among them: Ethena (ENA) will unlock 171 million tokens on August 5 at 15:00, valued at approximately $101 million, accounting for 2.7% of the circulation; Aptos (APT) will unlock 11.31 million tokens on August 12 at 8:00, valued at approximately $48.07 million, accounting for 1.68% of the circulation; Avalanche (AVAX) will unlock 1.67 million tokens on August 15 at 8:00, valued at approximately $35.8 million, accounting for 0.39% of the circulation; Immutable (IMX) will unlock 24.52 million tokens on August 8 at 8:00, valued at approximately $12.41 million, accounting for 1.3% of the circulation.

Analysts point out that ENA and IMX are facing large unlocks of over $95 million and $12 million, which puts pressure on investor sentiment and market demand. The narrative power may be affected in the short term, and prices may face downward risks. However, in the long term, if the project develops smoothly and the ecosystem continues to expand, the impact of token unlocks on prices may gradually weaken. Investors need to closely monitor project progress and carefully assess risks.

4. The crypto market sentiment has recovered from the decline over the weekend and has now returned to "greed".

According to Alternative data, the cryptocurrency Fear and Greed Index today is 64 (yesterday it was 53), indicating that market sentiment has quickly risen back to "Greed". Yesterday, the market sentiment fell to "Neutral", marking the first time in nearly a month. Note: The Fear Index threshold ranges from 0-100 and includes indicators such as volatility, market trading volume, social media heat, market surveys, Bitcoin's proportion in the overall market, and Google Trends analysis.

Analysts indicate that although the overall cryptocurrency market is gradually recovering, investor sentiment may remain cautious in the short term. On one hand, macro uncertainties such as expectations of interest rate hikes by the Federal Reserve and geopolitical risks persist, which could limit the upside potential of risk assets. On the other hand, some altcoins performed strongly over the weekend, with ENA rising by 17% in 24 hours and CFX increasing by 14.65%, reflecting optimistic sentiment among investors towards certain popular projects. Overall, market sentiment is gradually recovering, but potential volatility risks should still be monitored.

5. Analysis: The rise in interest rate cut expectations resonates with the SEC's new policies, and market sentiment is warming up.

According to The Block, Vincent Liu, Chief Investment Officer of Kronos Research, stated that the current market is showing a "cautiously optimistic" sentiment amidst macroeconomic uncertainty and institutional buying. The Fear and Greed Index is trending towards "greed", and whale purchases along with expectations of interest rate cuts are driving traders to reallocate risk assets.

Investors are paying attention to the U.S. July CPI data to be released on August 12 as a key indicator for the next round of interest rate hikes or cuts. If inflation data continues to soften, it will increase the likelihood of the Federal Reserve cutting rates again this year, which would benefit the performance of risk assets. Meanwhile, the SEC is expected to make a decision favorable to the approval of the XRP spot ETF in the near future, which will further boost sentiment in the cryptocurrency market. Overall, favorable factors on the macro and regulatory fronts are accumulating, and market sentiment is expected to continue to improve.

3. Project News

1. Vitalik Buterin revealed that Ethereum L1 will reach 400 TPS, making it possible to run a full node on a mobile phone.

At the ETHKyiv 2025 conference held in Kyiv, Ethereum founder Vitalik Buterin and Ethereum Foundation Executive Director Tomasz K. Stańczak shared two major announcements. First, Buterin stated that this year the Ethereum mainnet L1 will achieve a processing capacity of 400 transactions per second, nearly a tenfold increase from the current rate. Secondly, they revealed that in the future anyone will be able to run a full Ethereum node on a smartphone.

Since the genesis block of Ethereum was born in 2015, it has been committed to improving scalability. After years of effort, Ethereum will finally break through the current performance bottleneck of 100 TPS this year through the roadmap including Merge and Surge. A processing capacity of 400 TPS will enable Ethereum to surpass Bitcoin and most public chains in throughput, laying the foundation for large-scale application deployment.

In addition, Buterin revealed that Ethereum is developing new light node technology, enabling ordinary users to run full nodes on mobile devices such as smartphones. This will further lower the usage threshold of the Ethereum network and promote an increase in decentralization. The technology is expected to be released in 2026.

The latest plans of the Ethereum Foundation have garnered widespread attention from industry insiders. Many analysts believe that breakthroughs in scalability and decentralization will inject new momentum into Ethereum's leading position in the public chain field. In the future, Ethereum will more effectively support popular applications such as DeFi and NFTs, driving the overall development of the Web3 ecosystem.

2. Orderly Omnivault TVL突破600万美元, APY超28%

The liquidity infrastructure product Omnivault under Orderly has recently performed remarkably, with a TVL surpassing $6 million and an annualized yield exceeding 28%. Omnivault will be launched in April 2025, allowing DeFi users to earn yields passively. Users only need to deposit USDC, and Orderly can provide liquidity for them across multiple networks, with the yield guaranteed by the market maker Kronos.

Omnivault's innovation lies in combining the advantages of traditional market makers with DeFi, providing users with stable and substantial returns. At the same time, Orderly has introduced new sources of liquidity for market makers, which helps to improve their market-making efficiency. This win-win model has been widely welcomed by the market, with TVL rapidly growing in a short period.

Analysts believe that Omnivault represents a trend of DeFi evolving towards institutional-level services. In the future, similar products are expected to attract more institutional users to join DeFi and promote industry development. Meanwhile, Omnivault also provides ordinary users with a simple and lucrative way to participate in DeFi, which is beneficial for increasing the popularity of DeFi.

However, some individuals have questioned the sustainability of Omnivault. They believe that the revenue of Omnivault mainly comes from subsidies provided by market makers, and once these subsidies decrease, the yield will drop significantly. Therefore, Omnivault needs to further expand its sources of income to enhance long-term sustainability.

3. The activity level of Stacks development has risen to the top of the Bitcoin ecosystem, and significant news may be announced during Token2049.

According to the latest developer report released by the crypto investment firm Electric Capital, the development activity of the Bitcoin ecosystem project Stacks has significantly increased, ranking among the top 20 ecosystems in the crypto industry in terms of development activity, and it holds the top position among all Bitcoin-related projects. The report shows that the monthly developer submissions for Stacks continue to grow, indicating its leading position in open-source development compared to similar projects.

Stacks is a smart contract platform built on Bitcoin, aimed at bringing innovative applications such as DeFi and NFTs to the Bitcoin ecosystem. Since its mainnet launch in 2021, Stacks has maintained an active development pace, and its ecosystem is becoming increasingly rich.

It is noteworthy that as the Token2049 summit in Singapore approaches on September 30, the Stacks team has begun to tease that important announcements will be made. Industry insiders speculate that Stacks may unveil a new roadmap or significant upgrade plans to further enhance its position within the Bitcoin ecosystem.

Analysts believe that the rise of Stacks reflects the transformation taking place in the Bitcoin ecosystem. Bitcoin has long been seen as a store of value and a payment tool, lacking advanced features such as smart contracts. The emergence of Stacks brings new development possibilities to the Bitcoin ecosystem, potentially driving Bitcoin's transition from "digital gold" to "digital currency."

However, some people are cautious about the prospects of Stacks. They believe that Stacks needs to address compatibility issues with Bitcoin and compete with public chains like Ethereum in terms of security and decentralization. Only by making breakthroughs in these key areas can Stacks truly become a core force in the Bitcoin ecosystem.

Overall, Stacks is undoubtedly one of the most noteworthy projects in the current Bitcoin ecosystem. Its future development will largely determine the direction of the Bitcoin ecosystem.

4. Economic Dynamics

1. The U.S. July employment data fell short of expectations, raising expectations for interest rate cuts.

Economic Background: The U.S. economy performed strongly in the first half of 2025, with a GDP growth rate of 3.2%. The inflation rate also eased somewhat, but the job market has been the main driving force behind the economic recovery. However, July's employment data was disappointing, with only 187,000 new non-farm jobs added, far below the expected 320,000, and the unemployment rate also rose slightly to 3.6%. This data undermined market confidence in a sustained economic recovery.

Important Event: After the U.S. Labor Department released the July employment report, President Trump immediately criticized the data as fraudulent and fired the head of the Bureau of Labor Statistics. He also threatened to replace Federal Reserve Chairman Powell, demanding an immediate interest rate cut. This move has raised doubts about the credibility of U.S. economic data and the independence of government agencies.

Market reaction: Weak employment data has intensified concerns about an economic slowdown, leading to a significant decline in US stocks on that day. At the same time, expectations for a rate cut by the Federal Reserve in September have risen sharply, currently standing at 82.7%. Bond yields have fallen, and safe-haven assets like gold are in high demand. Investors are closely monitoring future economic data and policy direction.

Expert analysis: Goldman Sachs analysts indicate that despite the weak employment data, it does not mean that an economic recession has arrived. They believe that the Federal Reserve may slightly cut interest rates by 25 basis points in September to alleviate the pressure of economic slowdown. However, if the trade war continues to escalate, the economy could fall into a greater predicament. UBS economists warn that government intervention in economic data will undermine the credibility of the data and exacerbate market turbulence.

2. The China-US trade war escalates, and tariff policies will continue for a long time.

Economic Background: Since the outbreak of the China-U.S. trade war in 2018, both sides have imposed tariffs on each other multiple times, leading to disruptions in the global supply chain and significant blows to the manufacturing sector. Although both parties have restarted negotiations several times, they ultimately ended in failure. In the first half of 2025, China-U.S. trade relations fell into a stalemate again.

Important event: The U.S. Trade Representative's Office announced this week that it will impose a 10% tariff on approximately $300 billion worth of Chinese goods exported to the U.S., including products such as mobile phones, computers, clothing, and toys. This is the latest measure taken by the Trump administration to address the economic slowdown.

Market reaction: The implementation of tariff policies will further exacerbate global supply chain disruptions and increase operational costs for businesses. American consumers will also bear higher prices for goods. Investors are deeply concerned about this, leading to declines in the US stock market and international stock markets. However, at the same time, the market expects that the Federal Reserve will be forced to further cut interest rates to alleviate economic pressure.

Expert opinion: Columbia University economics professor Sachs pointed out that the China-U.S. trade war has evolved into a protracted conflict, and the tariff policies will persist for a long time, causing continuous impacts on the global economy. He urged both sides to resolve their differences through negotiations to avoid further escalation of the trade war. Goldman Sachs analysts believe that the trade war will slow down U.S. GDP growth to 2.1% by 2025.

3. The European Central Bank may delay interest rate cuts, and the economic recovery outlook for the Eurozone is bleak.

Economic Background: The Eurozone economy showed weak performance in the first half of 2025, with an annualized GDP growth rate of only 0.9%, below expectations. The inflation rate is also far below the European Central Bank's target level of 2%. Although the unemployment rate has decreased somewhat, the job market remains weak. Overall, the economic recovery in the Eurozone is lackluster.

Important Event: The European Central Bank announced this week that it is considering postponing the interest rate cut originally scheduled for September to December. The bank believes that economic activity may further slow in the second half of the year, with ongoing trade policy drag and supply chain disruptions affecting inflation expectations. Therefore, the interest rate cut may be delayed.

Market reaction: European stock markets and the euro exchange rate both fell in response. Investors are concerned that the European Central Bank's cautious stance indicates a bleak outlook for economic recovery. The bond market showed divergence, with German bond yields falling while yields on bonds from countries like Italy rose, reflecting market worries about the economies of these countries.

Expert Analysis: The Chief European Economist at Deutsche Bank stated that the European Central Bank's decision to delay interest rate cuts is due to concerns over inflationary pressures. He believes that if the trade war escalates further, the Eurozone economy will fall into a greater predicament. Goldman Sachs analysts indicated that the European Central Bank may cut rates by 25 basis points in December and restart the asset purchase program to boost the economy.

5. Regulation & Policy

1. Hong Kong's "Stablecoin Regulation" officially comes into effect: reserve assets must fully cover the circulation value.

The Hong Kong "Stablecoin Regulation" officially came into effect on August 1, establishing a licensing system for stablecoin issuers and improving Hong Kong's regulatory framework for virtual asset activities. The regulation is jointly supervised by the Hong Kong Monetary Authority and the Securities and Futures Commission.

As the world's first regulation specifically governing stablecoins, the "Stablecoin Regulation" clearly stipulates that licensees must ensure that the market value of the reserve assets for the designated stablecoins they issue is always no less than the face value of those stablecoins that have not yet been redeemed and are in circulation. Licensees should consider the risk status of the reserve assets and ensure that there is appropriate over-collateralization to cover market risks.

This move aims to maintain the stability and confidence of stablecoins, protecting the rights and interests of investors. The Chief Executive of the Hong Kong Monetary Authority, Eddie Yue, stated that the rapid development of stablecoins and the regulatory framework help maintain the robustness and orderly development of Hong Kong's financial system.

Industry insiders generally believe that the "Stablecoin Regulation" has laid a solid foundation for the development of stablecoins in Hong Kong. Chan Sau-sin, chairman of the Hong Kong FinTech Association, believes that the regulation provides clear compliance guidance for stablecoin issuers, which is conducive to attracting more stablecoin projects to settle in Hong Kong.

However, some industry insiders are concerned that the full reserve requirements may increase the operating costs and pressures on stablecoin issuers. Zhang Jia-jia, the president of the Hong Kong FinTech Association, stated that regulators need to seek a balance between protecting investors and promoting innovation.

2. The CFTC of the United States collaborates with the White House plan to launch the "Crypto Sprint" initiative in conjunction with the SEC.

The U.S. Commodity Futures Trading Commission (CFTC) has launched a "crypto sprint" initiative to begin implementing the cryptocurrency-related policy recommendations released by the Trump administration on Wednesday.

The plan is led by CFTC Chairman Rostin, aiming to accelerate the regulatory process for the cryptocurrency derivatives market. The CFTC will work closely with the Securities and Exchange Commission (SEC) to develop a unified regulatory framework.

The policy recommendations of the Trump administration include: clarifying the classification standards for cryptocurrencies, establishing a unified regulatory body, and developing a registration system for cryptocurrency exchanges, among others. These recommendations aim to create a more transparent and orderly environment for the cryptocurrency market.

CFTC Chairman Rostin stated that the rapid development of the cryptocurrency market has put immense pressure on regulators. The "Crypto Sprint" initiative will accelerate the regulatory process to ensure a fair and orderly market.

SEC Chairman Jay Clayton emphasized that cryptocurrency regulation requires collaboration among various agencies. He stated that the SEC will closely coordinate with the CFTC to develop a comprehensive regulatory framework.

Market participants have welcomed this policy. Coinbase CEO Brian Armstrong stated that clear regulations will bring certainty and confidence to the cryptocurrency industry. However, some are concerned that excessive regulation could stifle innovation.

Financial analyst Michael Novogratz believes that regulators need to seek a balance between protecting investors and promoting innovation. He suggests that regulators maintain close communication with the industry and develop practical and feasible regulatory measures.

3. Major banks in South Korea are actively laying out their stablecoin business to prepare for regulatory implementation.

Major banks in South Korea have recently established dedicated teams to actively prepare for the upcoming regulatory policies by laying out plans for stablecoins and digital wallet services.

Korea's Woori Bank has formed a 9-member team dedicated to advancing stablecoin and digital wallet services. The bank has also partnered with blockchain startups to explore the feasibility of stablecoin issuance.

KB Financial Group in South Korea has established a Digital Asset Response Committee to coordinate the resources of its subsidiaries, including insurance and securities, to jointly layout the digital asset business.

In addition, regional banks such as KEB Hana Bank and Busan Bank have also established blockchain research teams. K Bank, a partner of Up Exchange, has even formed a special working group for digital assets.

The background of this series of actions is that the South Korean National Assembly is reviewing several reform bills for the cryptocurrency industry, which include provisions allowing financial institutions to issue stablecoins. The banking sector believes that proactive positioning can seize the initiative after the regulatory policies are implemented.

It is understood that various banks have applied for 81 trademarks related to stablecoins. Industry insiders say that although legislation is still needed, preparing in advance will facilitate the quick launch of services once policies are implemented.

However, some analysts express concerns about banks issuing stablecoins. Financial technology expert Park Si-yeon believes that issuing stablecoins requires a high level of technical strength and risk management capability, and it remains to be seen whether the banking industry possesses these conditions.

Overall, the layout of the South Korean banking industry reflects an optimistic outlook on the prospects of stablecoins. The implementation of regulatory policies will bring new business growth opportunities for banks.