GM and happy Friday! As crypto equities with real earnings continue to outperform a lagging Bitcoin, a YTD factor analysis delivers proof for the same conclusion. Across the board, capital has moved up the quality curve with the highest-earning, larger-cap assets delivering outperformance over smaller, expensive, and non-earning assets.

BTC is the laggard again at -1.3% on the week against 2.9% for gold, 2.2% for the NASDAQ 100, and 1.2% for the S&P 500; over a month it is -2.3% while gold has run 8.6%.

The market can only absorb bitcoin's biggest bull becoming its biggest seller for so long. Strategy has now sold 6,948 BTC across four disclosures since late May, including 1,690 BTC for $108.6M in the latest sale. Every tranche was sold below its $75,385 average cost, with the proceeds recycled into buybacks of its own preferred shares rather than BTC. 

That selling creates a persistent supply overhang, and BTC’s price action reflects it. BTC traded at $62,829 Friday morning, below every major daily moving average and just above the early August low of $62,662, with the June low near $57,000 marking the next key support level.

Thursday's session belonged to the 2025 crypto equity cohort at 3.0%, ahead of Perps 2.5%, Modular 2.3%, and DeFi 2.2%. Crypto miners were the outlier in the other direction at -7.4%, Hut 8 down 10.3% and Cipher, Core Scientific, and TeraWulf all off 5% or more.

The divergence is starker the further out you go. The 2025 cohort is 10.1% on the week and 12.1% on the month, one of only four indices green over the month, against Modular -23.6%, DePIN -16.1%, DeFi -12.6%, and Perps -12.1%. DEXs were the worst of the week at -11.9% as UNI gave back 13.3%, a full unwind of the fee-switch trade two weeks after Proposal 100 activated it.

Inside the cohort, Bullish led at 15.3% on the week and Circle, at 54.4% of the index, added 10.8%; Figure was up 7.3% while Galaxy lagged at 1.7%.

Earnings are the whole story. Bullish reported Thursday with adjusted revenue of $92.6M, up 62% year over year, adjusted EBITDA of $29.5M against $8.1M a year ago, and record subscription and services revenue of $62.7M, enough to send the stock up double digits despite a $280M net loss. 

Circle beat expectations in Q2 on August 5, with earnings per share up 104% and free cash flow up 113%. The stock has held those gains even after Morgan Stanley downgraded it to underweight and cut its price target from $106 to $38. Miners went the other way on Q2 losses and compressed economics.

The monthly board is now a list of assets that report earnings or route fees, and everything else is down double digits. Tokens need a catalyst that survives contact with the tape, and UNI giving back 13.3% two weeks after the clearest value-accrual upgrade in DeFi is not encouraging. What is still green sorts into two buckets: the 2025 cohort at 12.1%, where investors get audited financials and shareholder rights, and Exchange Tokens at 5.0% and Buyback Leaders at 4.6%, where the economics are strong enough to make the missing protections worth accepting. Deep into a bear market that is the only trade-off still clearing, and anything offering neither is down 10% or worse.

— AJC

Factor Analysis - YTD returns 

Let’s look at the market YTD using factor analysis. The protocols with the strongest fee growth (represented by Q1) returned roughly 15% (YTD), while the other quintiles posted a loss. Performance deteriorated steadily across the buckets, with Q2 down 22% and Q5 down 40%, creating a spread of around 55 percentage points between the strongest and weakest fee growers. It should be obvious, but this suggests the market has rewarded projects with PMF and growth. 

This pattern does not hold as cleanly for revenue growth (partly because Q2 is a mix of growers and slowers) but the difference between Q1 and Q5 was 68 percentage points (shown below). Either way, I really like these two results because they’re some of the clearest pieces of evidence that fundamentals do matter. These premiums can and will change within a new regime but I suspect growth will remain a winner.

The next factor I will highlight is size. And we see a pronounced preference for larger assets this year. The smallest projects in Q1 declined roughly 50%, with losses becoming progressively less severe as market cap increased. The largest assets in Q5 were the only group to generate a positive return, albeit a modest 4%, creating a spread of approximately 54 percentage points between the smallest and largest quintiles. This is consistent with a risk-off market in which liquidity and established scale matter more. Investors have generally moved up the quality curve, while smaller and less liquid tokens have absorbed the majority of the drawdown.

Lastly, the value factor shows that cheaper assets have held up better than expensive ones. Q1 (the lowest P/S projects) declined roughly 14%, compared with a 28% loss for the most expensive group in Q5 – so double the loss. As with the previous examples, returns generally weakened across the quintiles, producing a spread of around 14 percentage points from cheapest to most expensive – so the least pronounced of all that I’ve highlighted.  

So overall, the results give us a clearer picture of where capital has concentrated this year. Investors have rewarded improving fundamentals and scale, while cheaper valuations have offered some downside protection. Note that this is not a comprehensive analysis, as other factors also perform well (such as momentum). And as I mentioned earlier, these factor premiums can and will change within a new regime, but I suspect growth will remain a winner.

— Marc

Dollars are a Technology

Blockchains and stablecoins are evolving beyond speculation to become the vital orchestration layer for global finance, effectively exporting the stability of American institutions. By utilizing tokenization as a shared, enforceable language for international commerce, a new wave of startups is actively solving real-world dollar scarcity and streamlining capital formation.

Innovators like Keyrails (optimizing cross-border trade settlements), SemiLiquid (enabling programmable credit for institutional collateral without losing custody), and USD.AI (financing physical AI GPU infrastructure) illustrate crypto's transition into a mature operating system for real-world assets. Ultimately, the next decade of crypto's value will be captured by platforms that build deep contextual trust by bridging regional economic needs with global, dollar-backed liquidity. 

When the Market Doesn't Buy the Revenue Story

The author finds that low revenue multiples in crypto are not automatically a buy signal because they often reflect doubts about whether revenue will last. PUMP and AERO show the difference. PUMP rerated higher once the market gained confidence that its revenue was durable, while AERO still looks cheap on trailing numbers but its current revenue run rate has fallen sharply. The piece argues that the real opportunity is finding protocols with strong verified revenue, compressed valuations, and a market that has not yet accepted the durability of the business.