Monthly Update - August

After July's narrow, sentiment-lagging recovery, August delivered one of the sharpest turnarounds crypto has seen all year. A market that looked stuck in a tight range through the first half of the month broke out decisively in the back half, with Bitcoin and Ethereum both closing near their highest levels in months.

MN Fund closed August at +15.33% gross, with the Core Holding as the primary driver of returns.

Gross Return

+15.33%

Net Return

+15.09%

Net YTD '26

-21.68%

Main Driver

CORE

The markets have turned upwards, meaning that the markets require more confidence to be seeing a broad upwards move in the entire ecosystem.

Historically, this upwards move starts with a strong impulse of Bitcoin, of which liquidity will be dragged towards Bitcoin. The longer Bitcoin consolidates, the more the liquidity will be spread out towards other assets in the ecosystem.

That's why our team has decided to allocate more towards the base assets over the period of July/August as the expectancy is to generate higher returns within the base assets over the coming months.

August split cleanly into two halves. The first two weeks were quiet and range-bound, weighed down by a soft July jobs report and lingering caution after an exchange hack. The second half saw a rapid, multi-catalyst breakout that pushed Bitcoin from the low-$60,000s to nearly $82,000, and Ethereum from under $1,900 to above $2,500.

The August Turnaround

Bitcoin spent the first half of the month range-bound between roughly $62,000 and $65,000, with Ethereum similarly stuck between $1,900 and $2,000. The break came in the second half, driven by three catalysts landing close together: the U.S. Treasury announced it would at least double its liquidity-support buybacks of longer-dated government bonds, from roughly $2 billion to $4 billion per operation, easing bond yields and boosting risk appetite; the SEC published "Regulation Crypto Assets" on August 18, a proposed framework for crypto-related capital raises that signalled a shift from enforcement-first to framework-first regulation; and Bitcoin and Ethereum ETFs together pulled in $1.1 billion in a single day by August 15, with institutional capital returning at pace. On August 19 and 20 alone, Ethereum surged as much as 18–23% in 24 hours. By month-end, Bitcoin had gained roughly 25% and Ethereum roughly 32%, with the ETH/BTC ratio extending its recovery from June's lows.

Ethereum ETFs Post Their Best Month in a Year

Institutional demand for Ethereum was the standout story of the month. U.S. spot Ethereum ETFs pulled in a nine-to-ten day streak of net inflows starting August 17, totalling $1.42 billion, with BlackRock's ETHA fund responsible for roughly 72% of that streak. August 27 alone brought $225.8 million in net inflows, the strongest single day since October 2025. Cumulative Ethereum ETF inflows have now crossed $12 billion since launch. Corporate treasury accumulation added to the picture: BitMine disclosed on August 24 that it now holds 5.85 million ETH, worth approximately $14.3 billion, with 87% of that staked.

CLARITY Act Misses the August Deadline

As flagged last month, the Senate's August 10 recess was the effective deadline for the CLARITY Act this year. It wasn't met. The Senate adjourned on August 8 without a final vote, but Majority Leader Thune filed a cloture motion on the motion to proceed just before recess, setting up a procedural vote for September 15, the day after the Senate returns. Unresolved disputes remain around government ethics provisions (a proposal would require federal officials to divest crypto holdings worth over $1 million or exceeding 10% of a company's value), law enforcement provisions, and a Democrat-pushed closure of the stablecoin yield loophole. The bill now has to compete for floor time with a continuing resolution to fund the government and the run-up to November's midterms, a genuinely narrow window.

Jackson Hole: A Hawkish Surprise

Fed Chair Kevin Warsh gave his first Jackson Hole address on August 28, and it landed more hawkish than markets expected. Warsh emphasised that underlying inflation trends "are not showing any improvement in recent months" and reaffirmed short-term rates as the Fed's primary tool, without offering the kind of forward guidance markets have grown used to from his predecessors. Fed funds futures pushed the odds of a September rate hike up to roughly 60%, gold fell, and Asian equities dipped on the Monday after. Crypto largely held its August gains through the news, with Bitcoin still trading near $78,900 at month-end, though the hawkish tone is worth watching heading into September.

A Record Month for Hack Frequency

August saw 50 major crypto security incidents, the highest monthly count of 2026, though total losses fell 49.5% month-over-month to roughly $136 million as the average loss per incident dropped sharply. The standout was a $110–130 million exploit of Coldcard hardware wallets, a five-year-old firmware flaw that drained over 1,700 BTC from wallets marketed as offline and "unhackable," a notable blow to the self-custody security narrative. A separate incident on Cronos was contained via a chain rollback after roughly $75 million was temporarily at risk, limiting the attacker's actual take to about $6 million.

Ethereum

August was Ethereum's strongest month in nearly a year, both in price and in institutional demand, as detailed above. Layer-2 activity continued to build alongside the ETF story, with Robinhood Chain's DEX volume reportedly crossing $1.3 billion. The network's fundamentals and its ETF flow story are now pointing in the same direction for the first time since Glamsterdam launched.

NEAR

NEAR activated its quantum-safe mainnet upgrade on August 7, implementing NIST-approved post-quantum signatures alongside the dynamic resharding capability that lets the network add shard capacity automatically as demand grows. This is a genuinely forward-looking security upgrade, positioning NEAR ahead of most L1 peers on quantum resistance. The one note of caution: Grayscale trimmed its NEAR position within its AI-focused fund on August 6, though NEAR reportedly remains the fund's largest single holding. Worth watching whether that's routine rebalancing or an early signal.

SUI

SUI absorbed a modest, on-schedule token unlock on August 1 (roughly $9.9 million, smaller than some earlier reports suggested) before joining the broader market rally, climbing from the high-$0.60s to around $0.77 by late August. The network also shipped its own post-quantum cryptography integration in August, and Tether's Hadron platform expanded onto Sui for tokenized real-world assets on August 13, adding another institutional tokenization rail alongside our existing RWA thesis. Sui remains the leading network for stablecoin transaction volume this year, a structural strength independent of month-to-month price action.

RWA Infrastructure (Morpho, Ondo, Plume)

Following the scale-down of our Morpho and Ondo positions through July, we now hold both at reduced size and are tracking their fundamentals rather than treating them as core sizing. Morpho had a genuinely strong August on the fundamentals side: a record 5.59 million tokens left exchanges on August 13, the largest single-day outflow since the token began trading, and Pendle deepened its incentive program on Morpho markets on August 17. That said, Morpho's TVL has drifted down from its April peak above $10 billion to roughly $8 billion, worth monitoring. Ondo's institutional narrative continues to build, but its price action was the weakest of the group in August, testing support near $0.31 in a descending channel even as the broader market rallied. Plume continues to see reported smart-money accumulation, though we don't have a major protocol-specific catalyst to flag this month.

August was a reminder of how quickly crypto sentiment can turn: a market that looked stuck near $62,000 in early August was trading near $82,000 three weeks later, without any single piece of news fully explaining the move on its own. Our systematic engine is built for exactly this kind of environment, where confirmed moves matter more than trying to predict the next headline.

Looking into September, the CLARITY Act's September 15 cloture vote is the most important near-term regulatory catalyst, timed the day after the Senate returns from recess. We're also watching whether Warsh's hawkish Jackson Hole tone translates into an actual September rate move, and whether Ethereum's ETF inflow streak and BitMine-style treasury accumulation can sustain the ETH/BTC rotation beyond a short-covering-driven rally. On the portfolio side, we're monitoring Morpho's TVL trend and Grayscale's NEAR trim for early signals of any broader shift in institutional positioning across our core holdings.

If you would like to discuss August's events, the fund's positioning, or anything else, you are welcome to schedule a call with Jeremy.

Alternatively, you are more than welcome to call us at +31 6 48265717 (WhatsApp possible as well).

To our investors, thank you for your continued trust in MN Fund.