Crypto stocks tumble after Grayscale's legal victory

Crypto stocks tumble after Grayscale's legal victory

Bullish Momentum From Grayscale's legal victory on Tuesday gives way to Regulatory Pessimism.

The week ended in a pattern, with yesterday's sell-off erasing all of Tuesday's $60B digital asset rally.

The reversal came on Thursday from the U.S. Securities and Exchange Commission's decision to postpone decision-making on Bitcoin ETFs proposed by BlackRock, the world's largest asset manager, and Valkyrie, WisdomTree, and Invesco.

In 24 hours, the combined cryptocurrency capitalization dropped 3.7%, falling from about $1.08T to a low of $1.04T. BTC sank nearly 5% and is trading for $2,960, while ETH is down 3.6% at $1,644.

In just 19 of the top 100 digital assets are up more than 1% in the past seven days, while 46 cryptocurrencies have shed more than 1% in the same period. Top gainers were Mantle, Maker, and Toncoin, with gains of 21.4%, 14.9% and 8.7% respectively.

The heaviest loss came to KuCoin, who lost 21.2%, followed by Hedera with 14.3% and Kaspa (KASO with 9.4%).

The market cap of DeFi assets also finished the week, where it started with $42.8 million after pushing up to $44.5 million.

Four DeFi assets rallied more than 40% for the week among eight double-digit gainers, with Unifi Protocol, Tellor Tributes and Joe topping the list. InSure was the worst-performing DeFi asset of the week with a loss of 14.5%, followed by Redacted with 12.7% and Gains Network with 11.2%.

After a U.S. judge ruled in favor of the SEC in Grayscale's challenge to the SEC's decision to reject its bid for a Bitcoin ETF on Tuesday, yesterday's bearish momentum put a dampener on celebrations.

The top crypto asset manager, Grayscale, said its proposed ETF was'materially similar' to exchange-traded products tracking Bitcoin futures approved by the SEC last year.

Many of Ethereum's top layer 2s had impressive growth over the week.

zkSync Era is giving Ethereum mainnet a run for its money, processing 28.5M transactions over the past 30 days, compared to Ethereum's 30.9M. On Aug. 26th, Era posted a record daily throughput of 15.2 transactions per second.

On Aug. 31, Starknet's throughput surged to a record-high of 8.5 TPS, a 53.5% gain compared to seven days ago.

The current frenzy of activity on Base, recently launched L2, appears to have slowed down. The network processed 5.6 TPS in the past 24 hours, down from a high of 15.9 TPS on Aug. 21. When combined with Optimism - its sister network - its Superchain, the pair pulled in 10.5 TPS yesterday.

On Aug. 31, Combined L2 throughput tagged 53.5 TPS, just shy of last week's all-time high of 54 TPS.

The total value of Ethereum L2s is $9.6B, down from a record $10.7B at the start of the month.

The week's gain, with $359 million, the most in the past week, was a 47.6 percent increase. The surge was triggered by the launch of liquidity mining rewards from the Aerodrome DEX, which overtook its Optimism-based predecessor, Velodrome, within two days. Aerodrome is now Base's top protocol by TVL with $203.8M, DeFi Llama said.

But the combined DeFi TVL trended sideways near $38B this week.

The burn rate of Ethereum has also remained steady over the past seven days, with only 417.4 Ether removed from supply, according to Ultra Sound Money. In the past week, around 4,840 ETH were burned.