Grayscale: The trend of BTC and ETH diverged in August, is there an excess of DAT?

TechFlame

2025-09-03 15:01

TechFlame2025-09-03 15:01

English

The market's focus on favorable regulations may have contributed to Ethereum's excellent performance.

Original title: August 2025: The Road to Regulatory Clarity

Original author: Grayscale

Original text compilation: Deep Wave TechFlow

digital assets in the US has been in the works for a long time — despite the future The road is still unfolding, but policymakers have made meaningful progress this
The market's focus on favorable regulations may have contributed to Ethereum's excellent performance. Ethereum is a leader in the blockchain financial market, so if regulatory clarity promotes the popularity of stablecoins, tokenized assets, and/or decentralized finance applications,
Digital Asset Treasury (DAT) — the one that holds cryptocurrencies on the balance sheet Listed companies — have surged in recent months, but investor demand is likely to be saturated. Valuation premiums for large projects
Bitcoin's price once hit an all-time high of around $125,000, but that month The day closed lower. Although Bitcoin's price trend in August wasn't as good as others, the pressure surrounding the independence of the Federal Reserve reminded investors why Bitcoin

The total cryptocurrency market value stabilized at around $4 trillion in August 2025, but there were significant sector fluctuations within the market. The crypto asset class encompasses various software technologies, and the

underlying drivers vary, so token valuations don't always fluctuate synchronously.

Despite a drop in the price of Bitcoin in August, Ethereum rose 16%. [1] The second-largest public chain by market capitalization appears to benefit from investors' attention to regulatory changes, which may support the adoption of stablecoins, tokenized assets, and decentralized finance (DeFi) applications — and Ethereum is currently leading the industry in these areas

Figure 1 According to The Crypto Sectors framework (a digital asset classification and index product developed in collaboration with FTSE/Russell) saw significant changes in the market segment in August. The currency, consumer and culture, and artificial intelligence (AI) crypto sector indices all declined slightly, and the weakness in the AI sector reflected the poor performance of AI-related stocks in the open stock market. Meanwhile, indices for the financial, smart contract platforms, and utilities and services sectors rose this month. Despite the month-on-month decline in the price of Bitcoin, it reached a record high of about $125,000 in mid-August; the price of Ethereum also reached a record high of close to $5,000. [2]

Figure 1: Significant rotation in the crypto sector in August

GeniusAct (GeniusAct) and the future

We believe that Ethereum's recent excellent performance is mainly related to improvements in fundamentals, the most important of which is the increased regulatory clarity of digital assets and blockchain technology in the US. One of the most impactful policy changes this year was the GENIUS Act (GENIUS Act) passed in July. This legislation provides a comprehensive regulatory framework for payment stablecoins in the US market (see related background “Stablecoins and the Future of Payments”). Ethereum is today's leading stablecoin blockchain (in terms of transaction volume and balance). After the GENIUS Act (GENIUS Act) was passed, The price of Ethereum rose by nearly 50% in July, [3] It continued to push its price higher in August

However, the US policy changes this year were not limited to stablecoins, but also covered a range of topics from crypto asset custody to banking supervision guidance. Looking ahead, these policy changes could further push institutional investors into the crypto industry. According to our observations, the most important policy actions taken by the Trump administration and federal agencies in the field of digital assets are summarized in Figure 2. These policy changes, and more policies that may be introduced in the future, are triggering a wave of institutional investment in the crypto industry (see more details here (March 2025: Institutional Chain Reaction”).

Figure 2: Policy changes bring greater regulation to the crypto industry

transparency

In August of this year, Federal Reserve Governor Waller and Bowman both attended the blockchain conference in Jackson Hole, Wyoming. This scenario was unimaginable a few years ago. This meeting followed the Federal Reserve's annual Jackson Hole Economic Policy Meeting. In their speech, they emphasized that blockchain should be viewed as a fintech innovation, and regulators need to find a balance between maintaining financial stability and creating space for the development of new technologies. [4]

In September, the US Senate Banking Committee plans to review crypto market structure legislation — this regulation will cover issues related to the crypto market other than stablecoins. The Senate's efforts are based on the Clarity Act (CLARITY Act), which was passed by the House of Representatives with bipartisan support in July. Senate Banking Committee Chairman Scott said he expects market structure legislation to also receive bipartisan support in the Senate. [5] However, there are still significant issues that need to be addressed. Industry groups are particularly concerned with ensuring that market structure legislation protects the rights of open source software developers and unmanaged service providers. The issue is likely to continue to spark debate among legislators in the coming months. (Notably, the Grayscale Fund (Grayscale) was recently submitted by an industry group to members of the Senate Banking and Agriculture Committee (One of the signatories of the letter of opinion

Have you received enough DAT?

In August, Bitcoin did not perform well, while Ethereum's performance was impressive. This trend was evident in the flow of funds from multiple trading

platforms and products.

Part of the drama happened with Hyperliquid, a company that offers spot trading and perpetual contracts Decentralized Exchanges (DEX) (Background) Please refer to the information 《The appeal of DEXs: The rise of decentralized exchanges》 ). Beginning August 20, a Bitcoin “big whale” (an investor holding a large amount of BTC) sold around $3.5 billion of BTC and immediately bought around $3.4 billion of ETH. [6] Although we can't speculate on this investor's motives, it is encouraging that this scale of risk transfer occurred on DEXs rather than centralized exchanges (CEXs). In fact, on the day of the month's biggest trading volume, Hyperliquid's spot trading volume once surpassed Coinbase's spot trading volume (

see Figure 3).

Figure 3: Hyperliquid spot trading volume Surge

In the same month, similar ETH preferences were reflected in crypto Net capital inflows into exchange-traded products (ETPs). The US-listed spot Bitcoin ETP saw a net outflow of $755 million in August, the first net outflow since March. In contrast, the US-listed spot Ethereum ETP had a net inflow of $3.9 billion in August, a sharp increase after a net inflow of $5.4 billion in July (see Figure 4). After the net inflow of ETH surged in the past two months, ETPs for both BTC and ETH currently

hold more than 5% of the circulation of their respective tokens.

Figure 4: ETP net inflow to ETH

Bitcoin, Ethereum, and many other crypto assets have also received Support for Digital Asset Treasury (DATs) purchases. DAT is a composition of publicly traded companies that hold crypto assets, providing equity investors with access to cryptocurrencies. Strategy (formerly MicroStrategy) purchased an additional 3,666 BTC (approximately $400 million) in August to hold Bitcoin's largest digital asset treasury. Meanwhile, the two largest Ethereum treasurers have collectively purchased 1.7 million ETH (around $7.2 billion). [7]

According to media reports, at least three new Solana DATs are in preparation, including a more than $1 billion project sponsored by Pantera Capital and a consortium composed of Galaxy Digital, Jump Crypto, and Multicoin Capital. [8] Additionally, Trump Media and Tech Group announced plans to launch a DAT based on CRO tokens linked to Crypto.com and its Cronos blockchain. [9] Other recent DAT announcements have focused on Ethena's ENA token, Story Protocol's IP token, and Binance Smart Chain's BNB token. [10]

Although the sponsor continues to provide these investment tools, price performance indicates that investor demand may be becoming saturated. Analysts usually monitor its “mNaV,” the ratio of a company's market capitalization to the value of crypto assets on its balance sheet, to measure the imbalance between supply and demand. If there is an excess demand for crypto assets in the form of public equity instruments (that is, insufficient DAT), MNaV may exceed 1.0; if there is an oversupply of crypto assets in the form of public equity instruments (that is, too much DAT), MNaV may fall below 1.0. Currently, MNaV for some large projects appears to be trending towards 1.0, which indicates that supply and demand for DAT is balancing (see Figure 5)

Figure 5: DAT's valuation premium is falling

Back to basics: the case of Bitcoin

As with all asset classes, public discussions about the crypto market often focus on short-term issues such as regulatory changes, ETF funding flows, and DAT. However, taking a step back, it may be more important to re-examine Bitcoin's core investment logic. Among the many assets in the crypto sector, the purpose of Bitcoin's existence is to provide a monetary asset and peer-to-peer payment system based on clear and transparent rules, independent of any specific individual or institution. The recent threat to central bank independence

reminds us once again why so many investors are so interested in these assets.

In terms of context, most modern economies use a “statutory” monetary system. This means that the currency has no clear backing (that is, it is not tied to any commodity or other currency), and its value is based solely on trust. Throughout history, governments have repeatedly used this characteristic to achieve their short-term goals (such as re-election). This could lead to inflation

and reduce people's trust in the fiat money system.

Therefore, in order for fiat money to function effectively, it is necessary to ensure that the government can fulfill its promises and not abuse this system. The approach adopted by the US and most developed market economies gives central banks clarity targets (usually in the form of inflation targets) and Operational independence. Elected officials usually exercise some oversight over central banks to ensure democratic accountability . In addition to a brief spike in post-COVID-19 inflation, this clear goal, operational independence, and democratic accountability system has achieved low and stable inflation in major economies since the mid-1990s (Figure 6)

Figure 6: Independent central banks achieve low and stable inflation

In the US, the system is currently under pressure, and the root cause is not inflation, but rather deficits and interest expenses. The US federal government currently has a total debt of around $30 trillion, or 100% of GDP, which is the highest level since World War II, despite the current state of peace and low unemployment. As the Ministry of Finance refinance the debt at an interest rate of around 4%, interest expenses on debt continued to rise, crowding out resources for other uses (see Figure 7)

Figure 7: Interest Expenses Take Up More of the Federal Budget

The “One Big Beautiful Bill Act” (OBBBA) passed in July this year will lock in high deficits for the next 10 years. Unless interest rates fall, this will mean higher interest expenses and further squeeze other uses of government revenue. As a result, the White House repeatedly pressured the Federal Reserve to lower interest rates and asked Federal Reserve Chairman Powell to resign. These threats to the independence of the Federal Reserve escalated further in August with the removal of Lisa Cook, one of the six current members of the Federal Reserve's seven-member board. [11] Although it may benefit elected officials in the short term, weakening the independence of the Federal Reserve will increase the risk of high inflation and currency weakness in the long

run.

Bitcoin is a monetary system based on transparent rules and predictable supply growth. When investors lose confidence in institutions that protect the fiat money system, they turn to more trustworthy alternatives. Unless policymakers take steps to strengthen institutions that support fiat currencies, make Investors can trust promises to keep inflation low and stable over the long term

; otherwise, demand for Bitcoin is likely to continue to grow.

Index meaning:

FTSE/Grayscale Crypto Industry Total Market Index (FTSE/ Grayscale Crypto Sectors Total Market Index)
The index measures the price returns of digital assets listed on major exchanges around the world. It is The overall trend in the crypto market provides
FTSE Grayscale Smart Contract Platform Crypto Industry Index ( FTSE Grayscale Smart Contract Platforms
The index aims to evaluate the performance of crypto assets that support the development and deployment of smart contracts, these Assets serve as the basic platform for self-executing contracts
FTSE Grayscale Utilities and Services Crypto Industry Index ( FTSE Grayscale Utilities and Services CryptoVector Index)
The index focuses on measuring crypto assets designed to provide practical applications and enterprise-grade functionality performance.
FTSE Grayscale Consumer and Cultural Crypto Industry Index ( FTSE Grayscale Consumer and Culture CryptoVector Index
The index assesses the performance of crypto assets that support consumption-centered activities, such activities It involves various fields of goods
FTSE Grayscale Cryptocurrency Industry Index (FTSE) Grayscale Currencies CryptoVector Index)
The index measures the performance of crypto assets that have one of the following three core functions: Value Storage, medium of exchange, and unit of account
FTSE Grayscale Financial Crypto Industry Index (FTSE) Grayscale Financials
The index specifically assesses the performance of crypto assets designed to provide financial transactions and services.

Source:

[1] Source: Bloomberg. Data as of August 29, 2025. Past performance is not indicative of future results.

[2] Source: Bloomberg. Bitcoin hit an all-time high on August 14; Ethereum hit an all-time high

on August 24.

[3] Other organizations have also recently announced Layer 1 blockchains for stablecoin use cases, including Circle (Arc), Stripe (Tempo), and Bitfinex (Plasma). Google also began promoting its Layer 1 GCUL in August. While Ethereum is currently

the market leader, many blockchains will compete for a share of stablecoin trading volume and associated fees.

[4] Source: The Federal Reserve, Federal Reserve

[5] Source: CoinTelegraph.

[6] Sources: mempool.space, hypurrscan.io, etherscan.io, Grayscale Investments. Prices are in US dollars as of August 29, 2025

[7] Sources: BitcoinTreasuries.net, strategicethreserve.xyz, Bloomberg, Grayscale Investments. Data as of August 29, 2025

[8] Source: unchained, CoinDesk

[9] Source:

Reuters.

[10] Source: CoinDesk, The Block, DL News

[11] Source: The New York Times.

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