Welcome to this week's PokPok Pulse! 🐔 

We've got today packed with Strategy Updates for the week, some trade ideas and a beautiful micro-lecture to level up your knowledge. 🔥 

WHAT’S HAPPENING? ⌛️

• Ethereum Gas Issues Resolved? — Imminent Takeover or Death? 🔥 

• 👀 Market Eyes Fed Speeches as 50bps Rate Cut Probability Lowers to 28.5% 🏦 

• Big Players on Holiday as ETH Spot ETF underperforms

• (August 21) FOMC Minutes 🚨

• (August 23) Fed Chair Powell Speech 🚨

Coming up this week ⭐️ 

The State of Ethereum — Gas Fee DROP 🔻 

If you’ve used the Ethereum Mainnet in the past — your most distinct memory is probably paying $50-100 just to sell $100 of a meme coin, leaving you with a few pennies to run away with.

This is the whole reason for Layer 2’s to exist, right?

• Improving the Scalability of Ethereum

Recently, though, we’ve had a surprise!

• Gas Fees averaging 2 gwei (~$2 per swap)

Surely this is a reason for Ethereum to take over the world, right? No more $100+ fees? 👍️ 

Well, you might be wrong. ❌ 

• Ethereum Mainnet TVL has seen a ~25% drop since BTC highs a few months back. (~$30B)

• However, chains such as Base, Arbitrum and Solana have had significantly less outflows in TVL.

• Note: We are in a low liquidity market, so we aren’t expecting TVL to increase.

• With other chains providing better scalability and incentives for project development, we may see further underperformance of ETH Mainnet in the future.

• Because of this, gas fees may not have even been “fixed” — while it is great right now, ETH Mainnet demand is LOW, which may mean we may have further surprises unless we have further scalability upgrades.

Will Ethereum ever die?

No. (firmly)

Layer 2’s are Layer 2’s for a reason. They are built on top of Ethereum.

They use Ethereum for gas.

Ethereum will always be in demand; perhaps the Mainnet will not be actively used in the long-term due to scalability issues, however, you will always be indirectly using Ethereum on a Layer 2 EVM.

You are stuck with Ethereum.

Big Brother is watching. 👀 

Ethereum Spot ETF 🎇

Why don’t we have a quick update on the Ethereum Spot ETF progress now that we have (a little) more data? 🫣 

Key Points:

• ETH’s spotty inflows continue to underperform the BTC Spot ETF 📉 

• Grayscale ETHE outflows continue at a relatively slow pace (~$20-30m daily)

• ETF Volume remains around $1B total daily volume (~40% relative underperformance against BTC ETF)

Why is the Ethereum ETF looking so dull?

• We just had one of the toughest “market scares” of the likes of 2020 and 2008 crashes — the market needs time to reassess smart liquidity.

• High ball traders are on Holiday until September — liquidity is low and price action is dominated by high-frequency algorithms. 🏖️

• September’s interest rate cut raises smart money appetite as it allows for cheaper borrowing for investments. (More liquidity injected into the market) — large players may be postponing inflows into ETFs due to this.

US Economic Events this week 📊 

We’ve got an important week ahead as we get an insight from the Fed on September’s rate cut and the state of the US Economy.

We’d love a 50bps rate cut, but, it seems like the tides have changed since we looked a few weeks ago, with only a 28.5% chance of a 50bps cut, the rest being a 25bps cut.

(August 21) FOMC Minutes

Key Questions to Answer:

• How hungry is the Fed to hit its 2% target? (How much risk are they willing to take)

• Clarity on how structured the rate cuts will be, and any target interest rate cuts for the year

(August 23) Fed Chair Powell’s Speech

Key Questions to Answer:

• How confident is Powell that inflation is coming consistently?

• Opinions on the risks of cutting rates, is it too early? (especially with the Japan Carry Trade still holding weight)

Will the market pump on September’s Rate Cut?

Not exactly. 👀 

Zooming into BTC’s historical price action during rate cuts, we’ve only had one period back in 2019-2020 when we’ve seen rate cuts happen.

When the Fed cuts interest rates, it’s usually because the economy is weakening, especially if they are cutting before hitting their 2% target. 👀 

This usually leads to short-term market downturns.

Sure enough, in 2019, we had a drawdown of over 50% for Bitcoin.

Of course, this drawdown was extended by the COVID Crash, which led to an aggressive drop in interest rates.

However, not to worry! The months leading after Interest Rate cuts were the beginning of our famous bull run to 69k 🚀 

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