Hi all, happy Tuesday. Crypto markets started the week green, with outperformers showing a dichotomy between value- vs. flows-based surges. On the fundamentals side, a battle is intensifying between various stablecoin issuers to win Hyperliquid's "USDH" ticker while Pump continues to buy back its token at an aggressive pace. On the momentum side, new DATCO raises are driving bids into WLD, ENA, and SOL. Finally, we discuss why this fundraising cycle looks different from 2022 and what it means for the industry.

Momentum vs. value

Crypto markets have had a positive start to the week, with clear outperformers but for very different reasons. The chart below shows the week-over-week performance of various assets as of Sept. 8. We observe that WLD (+84%), PUMP (+39%), ENA (+25%), HYPE (+18%), and SOL (+9%) have shown remarkable relative strength against BTC (+3%) and ETH (flat).

Let's start discussing HYPE and PUMP, whose outperformance has been primarily fundamentals- or value-driven. Regarding Hyperliquid, major stablecoin issuers including Paxos, Frax, Sky, and Agora are outbidding each other ahead of a Sept. 14 validator governance vote that will determine who gets to have Hyperliquid's native "USDH" ticker, with proposals offering aggressive revenue-sharing agreements (up to 100%).

The USDH debate has centered around institution- vs. native-team issuance and ecosystem alignment. For instance, Native Markets, led by Max Fiege, proposed that 50% of the reserve yield be immutably contributed to the Assistance Fund, while the other 50% be dedicated to USDH growth through partnerships with builder-code interfaces, HIP-3 markets and HyperEVM apps. Paxos, on the other hand, proposed allocating 95% of interest from reserves backing USDH to buy back HYPE and redistributing it to applications and validators proportional to their USDH balances across their platforms.

While Native Markets would be GENIUS-compliant via Bridge, Paxos has highlighted it’s already proven global regulatory coverage and reach (not only GENIUS, but also MiCA and MAS-compliant), with existing payment corridor integrations across the Middle East, Latam, Africa and Asia. While it's still unclear who will come out on top, it's evident that Hyperliquid wins regardless. Migrating $5 billion in USDC deposits to USDH could represent an additional $200 million in revenue for Hyperliquid annually, representing ~20% of its ~$1 billion revenue run rate. At the same time, the battle to win the USDH ticker showcases the conviction and value these issuers see in Hyperliquid's exchange and the HyperEVM ecosystem, with HYPE hitting an all-time high of $52.67 today.

While Hyperliquid has been the center of attention, PUMP has actually been the best-performing asset of the two in the past week, up 39% (vs. 18% for HYPE). Pump has decisively reclaimed its launchpad market share, now above 85%, running at an annualized revenue rate of $540 million and using 100% of its revenues to buy back the token. Moreover, it remains surprisingly attractively priced, with a circulating P/S of three and FDV/Sales of  nine.

The other side of HYPE and PUMP's fundamentals-driven price increases are SOL, ENA, and WLD’s DATCO-driven flows. Yesterday, Forward Industries (NASDAQ: FORD), Galaxy-Multicoin’s SOL DATCO, announced $1.65 billion in cash and stablecoin commitments, confirming Kyle Samani as chairman. With this announcement, the big question regarding whether DATCO purchases would translate to buying SOL with cash on the secondary market vs. simply purchasing locked SOL at a discount has been answered. Combined with Solana ETFs under the '33 Act likely being approved in October, SOL is poised for outperformance into year-end as the third crypto asset with a structural funnel to TradFi flows after BTC and ETH.

On its part, StablecoinX announced on Friday an additional $530 million capital raise to buy ENA on the open market. The planned deployment schedule for ENA purchases will be dynamic based on price: $5 million per day if ENA is above $0.70, and $10 million per day if ENA is below $0.70 or if it's down more than 5% in a 24-hour period. Importantly, the Ethena Foundation has the right to veto any sales of ENA by StablecoinX at its sole discretion.

Finally, Eightco Holdings (NASDAQ: OCTO) announced on Monday a $250 million raise to implement the first Worldcoin-focused DATCO strategy, with Dan Ives appointed as chairman. Notably, Tom Lee’s Bitmine (BMNR) had purchased 13.7 million shares of OCTO at $1.46, which rose ~3,000% to $45 on Monday, meaning that the $20 million investment is now worth more than $600 million. On its part, WLD rose as much as 85% on Monday, hitting a high of $1.92.

The contrast between value- vs. momentum-driven price action is interesting to think about, especially in the context of investment horizons and sustainability of flows. The buying pressure from DATCOs has been telegraphed to the market, leading to frontrunning by traders and investors. The main uncertainty for these vehicles is whether they will trade at a premium to NAV, in which case they will be able to sell equity to buy more of the underlying token, à la BMNR. On the other hand, Hyperliquid and Pump's flows are more reliant on these apps expanding their leading position in each of their respective verticals and increasing their revenue (and thus buybacks) growth rate. That is, of course, not to say assets like SOL and ENA are devoid of fundamentals, since they have clearly found product-market fit and are quality tokens. Still, the majority of their inflows in the past few weeks have come from DATCOs' expectations as opposed to fundamental catalysts.

— Carlos

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This fundraising cycle looks different

Regardless of the summer doldrums, money has been pouring into the industry over months past. Tracking total crypto fundraising data, July and August exhibited $6.5 billion and $4.8 billion in fundraising activity, respectively, with each month posting higher figures than the peak of $4.6 billion exhibited in January 2022. Despite the positive price action on many majors throughout 2024, fundraising activity never materially followed suit until the spring and summer of this year. Cycle over cycle, the appetite to allocate to this industry is increasing. 

Thematically, Finance-related business remains the primary sector receiving this deal flow, accounting for 50%-70% of funds raised.  

Interestingly, this surge in dealflow is not coming from venture checks into startups and private companies. Instead, a majority of this fundraising activity is attributable to deal activity in public markets for listed equities or IPOs. Bucketed under “Others” in the chart below, these deals include the DATCO financings and recent IPOs. While public market fundraising activity was once trivial, these deals now account for 66%-76% of total fundraising activity and explain the majority of the recent rise.

The trend demonstrates a growing acceptance of crypto-related businesses by traditional markets and capital bases. Be it IPOs like Circle or Bullish, or fundraising for DATCO crypto purchases, the marginal fundraising dollars in size are not for venture-stage deals, but rather publicly-listed and SEC-registered companies trading on major US stock exchanges. 

— Luke

1. Pump.fun's Sapijiju: First-ever discussion on building the future of social trading

Anil Lulla and Yan Liberman from Delphi host Noah (@Sapijiju), the lesser-known co-founder of Pump. Noah shares Pump’s vision beyond memecoins, aiming to be the most rewarding social platform for creators. Topics include revolutionizing creator monetization, building a $2 billion backed financial ecosystem, Pump’s buybacks, why people use Pump and the culture shift of crypto.

2. Trading the MetaGame: In pursuit of narratives

Mary (@howdymerry) published an article examining why crypto markets are governed by narratives more than technology, a dynamic she calls the “metagame.” She reframes “why people buy tokens” through an attention and story lens, arguing that technology needs a compelling narrative to attract capital and adoption. The piece explains how narratives form, rotate and drive flows, encouraging builders and traders to align with prevailing stories rather than fight them. The takeaway is that trust and valuable stories are how other humans discover and underwrite value into technology.

3. TCGs & Collector Crypt

Kyle from DeFiance Capital published a report on TCGs & Collector Crypt. He argues that Solana-based Collector Crypt (and its token CARDS) is the leading play on tokenized trading cards due to hard-to-replicate real-world moats. The piece highlights logistics and distribution advantages, founder alignment and unique supply access. Kyle contends that Collector Crypt’s business model has a far more defensible moat than purely digital projects like launchpads and DEXs because of the years spent in building real-world relationships and infrastructure. He concludes that Collector Crypt is the likely category winner of the emerging TCG narrative.