Source: TradingView, CNBC, Bloomberg, Messari
Bear Market Rally? Or Just a Nonsense Selloff to Begin With?
The digital assets market gained momentum last week, notching its third straight week of gains, further separating from both equities and gold. Granted, equities also had large gains last week, and so did Treasuries, as the inconsistent correlations between asset classes continue (hint: that’s the definition of uncorrelated, when short-term correlations come and go). Unlike the last few weeks though, there was much less dispersion amongst digital assets. Pretty much every token was higher last week, with BTC, ETH and SOL all up roughly 10%, though we did see much larger gains from the more beaten-up sectors like AI and DeFi, generally rising 20% or more.
I personally think the base case is "much ado about nothing" as it pertains to the tariff-fueled selloff in both equities and digital assets, because every problem area can be unwound pretty easily and still declared a "victory" by the Trump administration via minor negotiations. No real damage has been done yet, but the threat of damage is real. Just about every hard data point (jobs reports, manufacturing data, retail sales, corporate earnings, etc) has been incredibly strong still in the face of the tariff wars. In contrast, every forward-looking survey or expectation-based data report has been a train wreck (inflation surveys, manufacturing surveys, consumer confidence surveys, etc). Moreover, this problem is entirely U.S.-based, as international equities and consumer-facing data continue to be as strong as ever. Apollo Global, which famously assigned a 0% probability of recession before the year started, has now shared a slide deck indicating that we’re likely already in a recession (a nice 180). But if you go through each slide, you’ll once again note that every graph indicating such is based on expectations, not reality. As the notes from the Federal Reserve indicate, “the disconnect between what consumers have been saying and doing suggests that consumer sentiment surveys on their own have become weaker indicators of future consumer behavior and of the health of U.S. consumers."
Now, that’s not to say that we are 100% out of the woods. Expectations can easily become reality if the uncertainty persists for too much longer. But there are easy ways forward that don’t include recession. As Lyn Alden pointed out on a recent podcast, there is a history of major global monetary and currency accords being named after the hotels where the agreements took place (most notably Bretton Woods in 1944), and we know how much Trump would love Mar-a-Lago to be in the history books even if the “tariff deals” are more headline than substance. Further, even if the global economy is ultimately heading towards a recession, we're likely in the March 2008 - July 2008 period where markets ripped higher between Bear Stearns imploding (March 2008) and the ultimate failure of global banks (August 2008 - September 2009). The fact that Bitcoin, equities and other digital assets are so much higher in recent weeks suggests that market participants are sniffing this out – that there is no new news to make markets go materially lower right now. Either a fix is on the way via government negotiations, or we’re in a holding period where nothing happens until we start to see real economic failure, followed by government bailouts. Either way, shorts are scrambling for the time being.
TRUMP token – An Example of How Tokenomics and Value Capture are Changing
While the digital assets market was broadly higher last week, there was a big difference between last week’s rally and most of the last few months. Crypto has been devoid of news this year, but we saw many positive and distinct updates from different token issuers last week.
For example, Helium announced a partnership that allows AT&T users to use Helium's hotspot network, similar to the partnerships announced with Telefonica and Movistar. While the Helium (HNT) token lagged because DePIN token investments are largely poorly designed for short-term gains, this is still a good data point as it shows how crypto incentive networks can permeate mainstream.
Perhaps even more interesting was the TRUMP token itself. While largely dismissed as a “meme token”, the Trump team added some functionality to the token last week. Trump announced that the top 220 holders of his TRUMP Coin will be invited to dinner with him on May 22nd. The TRUMP token surged almost 100% on the news. There is no denying that this added feature immediately makes the TRUMP token more valuable today than it was prior to the news, as there is definitely some value ascribed to having dinner with the President of the United States.
Source: TradingView
My guess is that this news elicits a response from everyone reading it, because everything Trump and his family do is polarizing. Some were quick to point out that since Trump, his family, and his businesses control the coin and own the majority of the tokens, he’s essentially instituting a “pay-to-play” scheme dressed up as a meme coin. A quick Google search shows how many news articles are pointing to the ethics violations.
The flip side of this argument has nothing to do with Trump himself. As we pointed out back in January, when the TRUMP coin was first issued, the TRUMP coin was less important than the precedent it was setting. We believe we are about to see a gold rush of new token launches, not just by politicians and celebrities, but soon by municipalities, companies, universities, and other entities. So instead of looking at TRUMP, let’s think about what this means for future token issuance.
Tokens themselves are incredibly powerful instruments. They are the best capital formation and customer bootstrapping mechanisms ever created, instantly aligning all of your stakeholders, and turning customers into power users and evangelists for life. Moreover, the issuer of a token (or tokenholders themselves via decentralized governance) can change the functionality and value drivers of a token over time. Maybe a token starts as just a wrapper for any type of asset - equity, loyalty rewards card, governance token, etc - but then you add features along the way – dividends, buybacks, dinners with the founding team, etc. One of the most exciting aspects of token investing has always been that tokenomics and use cases can morph throughout the lifespan of a token. Meaning, you can’t just lock in your opinion of a company or project on day 1 – you have to think about how that company/project can change over time, and what that COULD mean for the token.
This is very different from the fixed income market, for example, which typically locks you in on day 1 via the covenants in the bond or loan agreement. Equities give you some flexibility in the form of potentially issuing future dividends or buybacks, but it is still much more limited than what a token can offer you. The ability to add social value to a token in addition to financial value really sets it apart from all other investment vehicles.
And while this potential change can be both positive and negative, the reality is that almost all of these changes end up being positive because all stakeholders are aligned. When the founding team, employees, customers, and passive investors all own the same instrument, there is good reason to believe that most changes to a token will be “token holder friendly”. There is just no incentive to do anything that harms token holders.
Following up on what we wrote last week about how the Gensler-led SEC killed token creativity, the fact that TRUMP token made this change last week gives us further evidence that the Gensler era is over. More and more companies and projects are going to start doing token holder-friendly announcements without the fear of government retribution. Between TRUMP adding real social benefits to a token in the form of a dinner, or companies adding financial benefits via buybacks, it’s clear why tokens with good tokenomics are outperforming. And as a result, we’re seeing more and more announcements of tokenomics changes for the better. Long gone are the VC-funded, high-inflation, low float token launches that go straight to zero (we’re looking at you, Coinbase and Zora).
These added features ultimately make token investing much more valuable and interesting to analyze. As soon as investors start to realize this shift is happening, you’ll see more value investors, activist investors, and event-driven investors flood this universe. And this will be a positive change for the industry compared to the current investor base that is dominated by chart watchers, macro funds, and sensationalist media members who can’t differentiate between a meme coin and a cash-flow positive token.
The Great Launchpad War Of 2025
Written by Christopher MacPherson, Analyst at Arca
Raydium Network is a protocol that embodies the power of buybacks. At its core, it is a decentralized exchange (DEX) that leads Solana in overall trading volume and ranks #2 in DEX volumes across all chains, behind Uniswap. Generally, decentralized exchanges (DEXs) are simple businesses; they provide users with access to on-chain trading and the protocol collects a small fee for each transaction. The protocol can decide to keep all of the fee as revenue for its treasury, or redistribute some or all of that fee back to users through incentives, buybacks, token burns, and more. Raydium allocates 12% of its total decentralized exchange (DEX) trading volume fees to consistently buy back the RAY token from the open market. Through these buyback activities, it has repurchased approximately $200 million worth of its own token. Of that amount, $170 million was bought back during Q4 2024 and Q1 2025. Unfortunately for Raydium, the significant increase in trading volume has now become the reason for its fall from grace.
Background: In the first quarter of 2024, a grassroots product called "Pump.Fun" emerged on the Solana blockchain. Pump.Fun provides a platform where users can launch a meme token at no cost. Generally, creating a token requires its creators to provide an initial amount of liquidity on a decentralized exchange (DEX) in a trading pair (e.g., Token: SOL), allowing traders to buy and sell the token.
How Pump.Fun works: Pump.Fun allows users to spend SOL to purchase tokens on an exponential “bonding curve”. If the amount of SOL raised reaches 85 SOL, the token “graduates” to a DEX, where the token is paired with SOL to provide initial liquidity. Pump.Fun charges a 1% fee on all trading activities conducted on the bonding curve.
Pump.Fun exploded in popularity in the crypto space, becoming one of the most successful startups in its early life cycle, with $700 million in revenue primarily generated from a 1% trading fee.
Previously, Raydium partnered with Pump where all graduated tokens moved to Raydium, and Raydium would receive normal DEX trading fees in perpetuity. A prime example is Wall Street’s favorite token, Fartcoin, which has achieved a trading volume of $5.72 billion on Raydium since its launch in October 2024. As the saying goes, "Hot Air Rises." Thanks to the virality of Pump.Fun and this partnership, Raydium's revenue increased significantly from $16.5 million in Q3 2024 to $60 million in Q4 2024. While it's true that our market has its share of assets that resemble a pile of excrement, the businesses that facilitate trading these assets are generating substantial revenue.
In February, Pump.Fun announced that it would be creating its own DEX and would no longer be sending graduated tokens to Raydium. This decision had a huge negative impact on Raydium's business, as the largest portion of its trading volume came from graduated tokens. Following the announcement, the value of Raydium’s token, RAY, dropped by 39% within just two days and experienced a peak decline of 66%. As a result, Raydium's business was severely affected, and its annualized run-rate revenue fell to approximately $50 million per year.
As a response, in April, Raydium launched a new product under a newly created Launch Labs division to compete with Pump.Fun. This offering features a bonding curve launchpad and includes a lightweight third-party API SDK, enabling other projects to create their own launchpads. One of the most recent and popular launchpads developed using this SDK is by Bonk.
Raydium now charges a trading fee for all bonding curve transactions executed through Launch Labs. Additionally, all tokens that successfully graduate from these Launch Pads are directed to Raydium to enhance liquidity. For every dollar of trading volume processed through Raydium’s user interface, 50% of the fees will be returned to users, while 25% of the fees will be allocated for a buyback of the $RAY token.
For Raydium, this new product has the potential to be a massive game-changer for their revenue outlook, reviving the business that fell from grace since the start of the year. And thus, the Great Launchpad War of 2025 was on. The prize? A share of $700M in fees (and growing).
Source: Internal Forecasting
