The Scoop: It's looking like a memecoin summer

This column was co-written by Frank Chaparro, director of special projects at The Block, and Laura Vidiella of MNNC Group. The views expressed in this column are their own and do not reflect the opinions of their employers.

Every summer in the crypto world seems to have a unique theme. We've witnessed ICO summer, DeFi summer, NFT summer, and now, much to some people's dismay, it's memecoin summer. 

Gen Z is diving into memecoins much like they use TikTok: among the many coins, one will inevitably go viral, making the time and stress spent in front of the screen worthwhile. The dopamine rush is akin to playing online casino games from the comfort of your home — though we don't endorse that. In March, political memecoins were all the rage. Today, while politics still heavily influence crypto (and memecoins), the focus has shifted to Gen Z-centric memes like "aura," "let him cook," and "brat," among others.

This week, the number of weekly active addresses on Solana hit a new high, reaching 2 million. This surge is likely due, in part, to the increased memecoin activity. Much of this trading is done on Jupiter, an aggregator on Solana that recently reached new highs in the number of swaps. However, trading volumes are lower today than during the March craze, as this new wave of memecoins has lower market caps and faster turnover.

This trend also appeals to traders looking to boost their PnL during typically low-volatility periods, such as the summer. Although the current DVOL Index is above historic levels for both BTC and ETH, this is likely due to trading events surrounding the launch of the spot ETH ETF, marking another distinctive characteristic of this summer compared to others. Maybe it's memecoin and ETF summer? Surprisingly, the launch and first trading week of the spot ETH ETF were successful, given summer trading expectations and the slight retrace in equities.

Perhaps less surprisingly, ETH initially dropped about 9% after the ETF started trading but has since recovered slightly, now sitting around 4.5% below its pre-launch level. This decline was largely due to Grayscale’s ETHE outflows, which saw about $811 million leave the fund over the first two trading days, nearing 10% of the total initial AUM and 13% by the end of day three. Their equivalent mini trust picked up some of the outflows, but only 10%. The pace of this unwind appears faster than that of its cousin trust, GBTC, which took about nine trading days to see 13% of outflows.

On Saturday, former President and current election candidate Donald Trump is set to take the stage at Bitcoin Nashville, the largest Bitcoin conference globally. He is expected to discuss his evolving stance on digital assets and outline his vision for the crypto industry's future and the regulatory frameworks needed to support its growth. The general sentiment is notably bullish, and some volatility is expected around his talk. Many traders and analysts are anticipating a potential breakout for Bitcoin, with hopes that Trump might announce significant pro-crypto policies, such as endorsing Bitcoin as a strategic reserve asset for the U.S.

I’m looking forward to seeing what the spot ETH ETF brings once our investment colleagues return from their trips to Montauk, St. Tropez, or Mykonos.