This Monday, the global financial market was rocked by the news coming from the land of the rising sun. Last Wednesday, the Bank of Japan raised its interest rates to 0.25%, marking only its second hike in 17 years. This move sent the Nikkei 225 index tumbling nearly 22% over the following trading days (corrected to -10% since). The BoJ rate hike also threatened the years-long carry trade practice, where investors borrow low-interest yen to buy assets denominated in higher-interest currencies like the dollar. The weak labor market data that came from the U.S. on Friday suggested that the Fed interest rate cuts were inevitable in the short term, further reducing the difference between the two currencies and effectively unwinding the carry trade. These developments eroded risk-on sentiment and triggered a sharp sell-off across global markets: Nasdaq100 -7%, S&P500 -5%, CAC40 -5%...

The crypto market was no exception, shedding some $430 billion, or 17%, since last week. However, different assets reacted in varying degrees. With the dust now settling and markets beginning to recover, it’s the perfect time to assess which cryptocurrencies proved most and least resilient.

A look at the top 10 cryptocurrencies by market cap (excluding stablecoins and wrapped coins) paints an interesting picture. Ignoring XRP's  30-day rebound from previous underperformance, Bitcoin reacted predictably well, Ethereum underperformed compared to its main competitor Solana, and Tron showed surprising resilience. Let’s take a closer look at those coins.

Bitcoin, still strong

The leading cryptocurrency lost 16% over the past week and is nearly flat compared to the past 30 days. Its growing institutionalization and politicization likely contributed to the reduced panic. As noted by CryptoQuant’s CEO Ki Young Ju, the Bitcoin market now has very few new retail investors, suggesting a prevailing long-term holding vision.

Bitcoin whales reacted in a typical manner, scooping some 404,448 BTC over the past 30 days, indicating an ongoing accumulation phase.

BTC spot ETFs also held well, losing only $243 million in the past two days (not counting Grayscale, whose outflows are mostly due to high fees) according to the data compiled by Farside. Compared to the total assets under management exceeding $70 billion, these outflows are relatively negligible.

Ethereum, the disappointment

Unlike Bitcoin, which is firmly established as an independent store of value, Ethereum competes in the field of smart contract platforms, designed to support decentralized applications (DApps) and the creation of various tokens.

Ethereum has long been the dominant smart contract platform, but the new blockchains with lower fees and higher transaction throughput have challenged its position. The Merge event in September 2022 turned out to be rather disappointing, and Ethereum saw its market dominance declined from almost 20% to 14% today.

The BoJ-induced market sell-off impacted Ethereum more severely than some of its competitors, namely Solana. ETH is currently down 24% from last week and 17% from last month. Additionally, blockchain observers from Lookonchain have noted a large selling of ethers by Jump Trading: 83k wstETH (wrapped ether) sold since July 24th, and another 120k sent to exchanges.

Even the debut of ETH spot ETFs on July 23rd failed to enhance ether's appeal. So far, fund flows have been negative, with more outflows from Grayscale than inflows to other funds (data: Farside).

Tron, the surprise

Probably the biggest surprise of this market downturn was Tron, whose coin TRX lost only 6% over the past week and 1% over the past month. The native cryptocurrency of the eponymous blockchain founded by Justin Sun, Tron has been treated cautiously for years. The blockchain was intended by Mr. Sun to become the key decentralized tool for content creation, but neither the acquisition of the peer-to-peer file-sharing system BitTorrent in 2018 nor that of a decentralized blogging platform Steemit has borne fruit so far.

However, in a surprising turn of events, Tron has emerged as the main competitor to Ethereum in the realm of… stablecoins.

Indeed, Tron has attracted the world’s leading stablecoin issuer Tether, and positioned itself as the blockchain of choice for USDT transactions, much cheaper than on Ethereum. As of today, an impressive 36.5% of all stablecoins circulate on Tron (data: Dune). For Tether, Tron has even become the leading blockchain: the company issued over $60 billion of USDT on Tron compared to $52 billion on Ethereum.