Markets Erase Weekly Gains After SEC Delays Bitcoin ETF Decisions

Crypto markets posted a “Bart Simpson” pattern for the week, with yesterday’s sell-off erasing all of Tuesday’s $60B digital asset rally.

The reversal was triggered on Thursday by the U.S. Securities and Exchange Commission postponing decision-making on Bitcoin ETFs proposed by BlackRock, the world’s largest asset manager, and Valkyrie, WisdomTree, and Invesco.

The combined cryptocurrency capitalization slumped 3.7% in 24 hours, sliding $40B from roughly $1.08T to a low of $1.04T. BTC shed nearly 5% and is trading for $25,960, while ETH is down 3.6% at $1,644.

The result? Market action that resembles the popular spiky-haired character from The Simpsons.

Just 19 of the top 100 digital assets are up more than 1% in the past seven days, while 46 cryptocurrencies shed more than 1% over the same period. The top gainers were Toncoin (TON), Maker (MKR), and Mantle (MNT) with gains of 21.4%, 14.9%, and 8.7% respectively.

KuCoin (KCS) suffered the heaviest loss with 21.2%, followed by Hedera (HBAR) with 14.3%, and Kaspa (KASO with 9.4%.

The market cap of DeFi assets also finished the week where it started with $42.8M after pushing up to $44.5M.

Despite the late-week retracement, four DeFi assets rallied more than 40% for the week among eight double-digit gainers, with Unifi Protocol (UNFI), Tellor Tributes (TRV), and Joe (JOE) topping the list. InSure (SURE) was the week’s worst-performing DeFi asset with a 14.5% loss, followed by Redacted (BTRFLY) with 12.7%, and Gains Network (GNS) with 11.2%.

Yesterday’s bearish momentum put a dampener on celebrations after a U.S. judge ruled against the SEC in Grayscale’s challenge to the SEC’s decision to reject its application for a Bitcoin ETF on Tuesday.

Grayscale, a top crypto asset manager, argued that its proposed exchange-traded fund was “materially similar” to exchange-traded products tracking Bitcoin futures that the SEC approved last year.

The judge shared Grayscale’s assessment, describing the SEC’s decision to deny the ETF as “arbitrary and capricious because the Commission failed to explain its different treatment of similar products.”

zkSync Challenges Ethereum’s Throughput Dominance

Many of Ethereum’s top Layer 2s witnessed impressive growth over the week.

zkSync Era is giving the Ethereum mainnet a run for its money, processing 28.5M transactions over the past 30 days, compared to Ethereum’s 30.9M, according to L2beat. Era also posted a record daily throughput of 15.2 transactions per second (TPS) on Aug. 26.

Starknet’s throughput pushed to a daily record high of 8.5 TPS on Aug. 31 to rank second, a 53.5% gain compared to seven days ago.

The recent frenzy of activity on Base, Coinbase’s recently launched L2, appears to have subsided. The network processed 5.6 TPS over the past 24 hours, down from a high of 15.9 TPS on Aug. 21. However, when coupled with Optimism — its Superchain sister network, the pair drove 10.5 TPS yesterday.

Combined L2 throughput tagged 53.5 TPS on Aug. 31, just shy of last week’s all-time high of 54 TPS, despite the decline in activity on Base.

L2 TVL Consolidates Below $10B

The total value locked in Ethereum L2s is at $9.6B, down from a record high of $10.7B at the start of the month.

Base was the week’s top gainer with $359M, a 47.6% increase. The spike was driven by the launch of liquidity mining rewards from the Aerodrome DEX, overtaking its Optimism-based predecessor, Velodrome, within two days. Aerodrome is now Base’s top protocol by TVL with $203.8M, according to DeFi Llama.

However, combined DeFi TVL trended sideways near $38B this week.

Ethereum’s burn rate also remained steady over the past seven days, with only 417.4 Ether ($690,000) removed from supply, according to Ultra Sound Money. Around 4,840 ETH were burned in the past week ($8M).