Cheers to new ETH ATH, but stay focused on Spot-ETF flows
Summary:
ETH surged above $4900 to a new ATH on Sunday after Jerome Powell’s dovish remarks at Jackson Hole boosted September rate cut optimism.
The weekend’s move has been amplified by lower liquidity, while Jerome Powell’s dovish remarks created a short-term catalyst for the cryptomarket as a whole.
US spot ETF flows today will be a strong indicator of whether or not this upward momentum is sustainable beyond the low-liquidity weekend.
In the meantime, let’s take a recap on last week's spot-ETF flows: A mid-week run of spot-ETF redemptions in both BTC and ETH tightened risk and knocked momentum, but flows steadied into Friday as Powell’s Jackson Hole remarks cooled rate volatility and nudged risk back on.
The market closed the week in rotation mode: BTC dropped on the outflow shock yet defended the mid-July demand band (~112-114k) and finished back inside the 113-119k base, while BTC dominance stayed heavy, marking new multi-month lows.
After breaking the ~63% neckline of a double-top (see BTC.D), breadth has held even as BTC traded just under ATH territory.
The cross to watch remains ETH/BTC around ~0.040, with acceptance or rejection at this level set to steer allocation skew into month-end.
Source: TradingView [Bitcoin’s Dominance]
1. ETH - heavy ETF outflows, orderly reset, ETH/BTC at ~0.040 decision
ETH surged above $4900 to a new ATH on Sunday after Jerome Powell’s dovish remarks at Jackson Hole boosted September rate cut optimism.
Entered a price discovery stage after a clean, 5-year breakout. Correction came on Monday, Asia morning, for the broader cryptomarket, which is largely expected. Pulled back to the previous breakout zone ~$4,750, but it doesn’t invalidate a bullish trend or not.
What’s more telling will be spot ETF flows today, which is a strong indication of whether or not the upward momentum is sustainable beyond the low-liquidity weekend.
Early in the week, U.S. spot ETH ETFs posted several of their largest daily redemptions since launch, which immediately compressed front-end funding and narrowed short-tenor basis; perp markets cheapened and spot-perp spreads briefly flipped toward flat/negative on some venues.
Into Thu–Fri, prints normalised and basis recovered, exactly the reset-then-re-risk sequence we’ve highlighted in prior shocks.
On-chain, exchange inventories remained thin versus June/July, and stETH/ETH basis held tight; there was no collateral stress accompanying the flow wobble.
Spot respected structure as the shelf at the high-$3k absorbed the ETF shock, with ETH holding above $4k into the back half of the week, preserving a higher-low cadence.
Relative performance is doing the heavy lifting: after July’s clean ETH/BTC breakout through 0.0250, the pair drove into the first weekly supply zone around ~0.040, the prior breakdown zone and a natural first-reaction area.
Weekly acceptance above ~0.040 confirms extension toward ~0.043-0.046 (next liquidity pocket); a rejection points to a standard post-breakout retest ~0.034-0.035, rather than trend failure.
Last week was cash-flow validation, not a squeeze: flows hit, microstructure compressed, but buyers stepped at structure and ETF prints stabilised alongside calmer macro into Friday.
With positioning already cleaned up by the early-week redemptions, this week’s ETF streak around this 0.040 gate will decide whether first touch breaks or backs off.
Spot BTC ETFs registered a mid-week outflow spike followed by mixed prints; the immediate response was front-end basis/funding compression and a brief tilt toward protective skew.
As rates/FX vol faded after Jackson Hole, basis re-normalised, skew mean-reverted, and perp funding crawled back toward neutral, i.e. rotation without stress, not de-risk capitulation.
BTC wicked into the mid-July floor (~112–113k), absorbed supply, and re-based inside the 113k-119k range by week’s end, consistent with a new weekly consolidation just beneath highs.
Think of 119k as the range lid and 112k–113k as the defence zone; weekly acceptance >119k reopens the ATH magnet, while loss of ~112k would hand bears their first real structural win of the quarter.
The crucial tell stayed intact: BTC.D printed/held new six-month lows (now ~58% handle). Making/holding highs without a dominance bid confirms leadership hand-off to ETH and select alts.
Until BTC.D reclaims the early-summer band (~60.5%), the base-case assumption is ongoing breadth, with BTC’s reserve-asset rails (ETFs, corporate balance sheets, improving public-equity access) continuing to underwrite the floor while non-BTC assets harvest incremental risk budgets.
VanEck’s JitoSOL (staked SOL) ETF filing is the clearest U.S. test yet of how staking economics are treated inside a ’40-Act wrapper.
The mechanics matter for desks: reward pass-through, fee drag, and create-redeem frictions will re-price basis and LST spreads if a listed fund becomes a marginal JitoSOL buyer. It also formalises a SOL “yield leg” for allocators who can’t (or won’t) run DeFi plumbing.
Technically, SOL is pinning the March-2024 high (~$200-205) from above a rising weekly trendline, with the $188–190 zone acting as near-term support and Jan-2023 AVWAP (~$108) well below as a cycle context. This is effectively an ascending triangle at resistance: a weekly acceptance above ~$206–210 projects a measured move of ~$45–55 (pattern height) towards the SOL’s January 2025 highs, implying ~$250–260 as the first extension. Failure back through ~$188–190 keeps the range intact and defers the signal.
Perps OI continuity through the breakout test, funding behaving constructively (not euphoric), and JitoSOL vs baseline SOL staking spread stability can provide a flow-sustained move which isn’t headline-rented.
Source: TradingView [SOL/USDT]
4. Tokenised-credit rails went live - issuance + custody + servicing in production
Away from L1 beta, real-world asset rails moved from pitch decks to production. DBS began distributing tokenised structured notes on Ethereum, i.e. permissioned instruments, but on public rails, converting a pilot into live issuance and distribution.
In parallel, State Street became the first third-party custodian on J.P. Morgan’s Digital Debt Service, anchoring a nine-figure tokenised debt placement with full lifecycle servicing (issuance, DvP settlement, servicing) inside bank-grade stacks.
The sequencing matters: issuance + custody + servicing landed in the same window, stitching the institutional triangle that tokenised credit needs to scale.
As these rails thicken, expect knock-on demand for attestation/data (e.g., proof-of-reserves feeds, low-latency data streams) and for interop/messaging that can move assets across venues without breaking audit trails. That is the path from narrative to recurring on-chain cash flows.
5. Dollar distribution re-routes - MetaMask mUSD (wallet-native) + Wyoming FRNT (state-issued)
The dollar distribution story also evolved in two orthogonal but complementary directions. MetaMask unveiled mUSD, a wallet-native stablecoin with M0/Stripe-Bridge plumbing, that relocates stablecoin distribution to the wallet UI most familiar to retail and SMB users.
It’s a routing change disguised as a product announcement: when the wallet can default to its own dollar, you should see measurable shifts in router paths, on-chain settlement, and payment share once it’s live at scale.
Meanwhile, Wyoming launched FRNT across seven chains, the first U.S. state-issued, fully reserved stablecoin with statutory over-collateralization.
That introduces a public-sector issuer with explicit policy scaffolding and Fireblocks-style institutional infra, opening a compliant faucet for liquidity that isn’t beholden to a single corporate balance sheet.
The immediate tells are stablecoin-share changes on major DEX routes, bridge utilisation where FRNT is supported, and early merchant/payment uptake once mUSD toggles on inside the wallet.
Outlook for the Week
The decisive inputs for next week are simple: ETF streaks (do they turn positive), ETH/BTC resolution at ~0.040, dominance path (does BTC.D snap back or stay heavy), and SOL’s weekly close vs $206–210.
Absent a sharp reversal in dominance or a relapse in ETF prints, the bias remains rotation-friendly with structure, not squeeze, doing the work.
All eyes are on Nvidia’s earnings report this week.
Markets are now pricing in an 87% chance of a 25bps rate cut in September FOMC meeting.
