OVERVIEW

Watching Bread Mold Is More Exciting 🍞

Here’s What’s Happening 👇️

Today’s top trending tickers: $AVT ( ▼ 4.72% ) , $ETH ( ▼ 1.48% ) , $ZBCN ( ▼ 3.73% ) , $KTA ( ▲ 2.32% ) , and $ONDO ( ▲ 0.6% )

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NEWS
The Leverage Absorption Ratio 📊

Today's issue is all LAR. 👈️

Everyone watches open interest. Rising OI is bullish, falling OI is bearish, and that read is incomplete. The question isn't whether leverage is growing. It's whether the market can digest it without coming apart. That's what the Leverage Absorption Ratio (LAR) measures.

The LAR takes four things: price, open interest, funding rates, and volatility. Open interest is how much borrowed money is in the market. Funding is what it costs to keep that borrowed money in place. Volatility is how rough the ride is. And price is self explanitory.

Those four get boiled into a single score from 1 to 5. Above 4.0 is Smooth Sailing (bullish/good). Between 3.0 and 4.0 is Check Engine. Below 3.0 is the Danger Zone (bearish/bad).

The LAR does not predict. It tells you whether the leverage underneath is load-bearing or improvising.

Let’s get into it. 👇️

ON-CHAIN ANALYSIS
Bitcoin: The Rally Nobody Financed 🪙

$BTC ( ▼ 1.65% ) ’s LAR reads 1.90 and it got there the way a roof leak gets there - through the ceiling, weeks after the pipes went. ⤵️

Fourteen sessions ago this printed 4.59. The slide since has been close to monotonic (always wanted to use that word): 3.91, 4.24, 3.61, 3.69, 3.10, then straight down through the floor.

Price is up 8% over 28 days. That should help. It doesn't, because raw open interest fell $3.27 billion over the same stretch, so the adjustment takes a second bite. Funding-adjusted OI is down $1.02 billion. Price rose and the leverage left.

Volatility has compressed to 2.64% against a window that ran as hot as 12.13%. That's a small denominator making an ugly numerator look worse, and the ugliness is real regardless. Bitcoin is $63,226, down 25.2% from where January opened, up 8% off the June 30 low at $58,562.

So the tape went up and the perp market sat it out. Those two don't stay disagreed for long. ⌛️

ON-CHAIN ANALYSIS
Ethereum: Same Machine, Running Backwards 🏃

Ethereum is the inverse to what Bitcoin is doing. 🔄 

$ETH ( ▼ 1.48% ) longs stopped paying a premium to be long, and they did it while price ran 20.1% off the June 25 low at $1,565. Raw open interest added $1.19 billion. Funding-adjusted OI added $4.40 billion, which is what happens when a crowd thins out of an expensive trade.

LAR sits at 3.34. Check Engine, but one of the few readings in this batch that got there by improving rather than by mechanical accident. Fourteen sessions back it was 2.39. Volatility is 5.05%, dead center of the window. No compression trick propping the ratio up, no spike wrecking it.

The leverage structure has genuinely repaired itself. The price has clawed back a fifth of a hole it spent six months digging. ⚒️

ON-CHAIN ANALYSIS
XRP: The Indicator Is Reading Last Week's Paper 📰 

XRP went off the same ledge Bitcoin did, only faster. The worst of the nine tickers we’re looking at today. 😱

The annoying part is that today's raw print flipped positive. Funding has drained and funding-adjusted open interest is up $400 million even as the raw OI shed $75 million.

Six of the last seven raw values were negative, several badly, and the average is still buried under them. Price is $1.05, up 1.4% over 28 days and sitting a percent and a half off the June 30 low. Volatility is 2.46%. It’s gone flat the way a balloon does with a slow leak.

$XRP ( ▼ 2.57% ) ’s structure may be turning. The tape has not been informed. 📣

STOCKTWITS
Stuff Stocktwits People Said 👇️

ON-CHAIN ANALYSIS
Solana: Marked Down For A Rounding Error ➗

$SOL ( ▼ 2.47% ) ’s funding-adjusted open interest is up $1.09 billion over 28 days despite raw OI dropping $531 million. That's some major deleveraging going on with the expensive longs going home and what's left is cheap. 🪗

Price is down 0.3% over 28 days. Not down fifteen percent. Down a third of one percent. The way the formula works means SOL is getting marked down over a move you'd need a magnifying glass to locate.

Volatility is 2.24%, price is $73.34, down 37.6% from January, up 17.9% off the June 6 low at $62.20.

Two green days and this prints above 3.00 with nothing else changing. 😶

ON-CHAIN ANALYSIS
Hyperliquid: The Seismograph 📈

Hyperliquid's last fourteen LAR readings: 1.95, 1.14, 1.30, 1.22, 1.19, 1.68, 1.11, 1.08, 2.93, 3.12, 3.99, 4.24, 1.38, 2.74. 🤯

Four zone changes. One of them a 2.86-point drop inside a single session.

And the swings? Holy cow. Here are $HYPE ( ▼ 3.17% ) ’s last seven, in billions: -0.11, +32.12, +2.13, +8.39, -0.15, -39.19, +1.05. That's a seventy-billion swing between two consecutive days on an asset carrying $1.73 billion of open interest. Hell, I added the seven-day smoothing specifically to make readings like this legible, and it is losing.

Funding sits at the 87.8th percentile, unchanged from a month ago. Raw OI down $300 million, funding-adjusted down $36.5 million.

Price is $54.83, off 15.6% in 28 days and 26.4% below the June 3 high at $74.52. Still up 108.5% from February, which is the number the bagholders will bring up. 💰️

ON-CHAIN ANALYSIS
Ondo: Thirty-One Percent And A Shrug 🤷

Ondo ran 31.1% over 28 days and the LAR didn't look up. 👀 

Smoothed raw values on $ONDO ( ▲ 0.6% ) run from -$0.42 billion to +$0.87 billion. The current print is +$0.05 billion. Open interest is $92 million. Total. Funding-adjusted OI moved $7.7 million over the month. On a book that size the structural signal is thin enough to see through.

Volatility is 9.26%. Fourteen sessions ago it read 1.93, ran to 4.89, collapsed to 1.03, and has crawled back to 2.85. Three zone changes in two weeks on an open interest book that couldn't finance a mid-size regional car dealership.

Price is $0.404, 10.3% under the May 8 high and 79.9% over the February low.

The RWA narrative is doing all the work here. Leverage is riding in the back. 🚓 

ON-CHAIN ANALYSIS
Cardano: A 4.73 With One Load-Bearing Day 😕

Cardano’ LAR is 4.73 and I didn't believe it. Then I ran it again and I still don’t believe it. 🤔 

Two weeks back, the LAR sequence went like this: 1.41, 1.63, 1.35, 1.16, 1.44, 1.11, 1.03, 1.05, 1.24. For nine straight sessions, $ADA ( ▲ 0.65% ) pinned near the absolute floor of the scale. Then 2.33, 2.63, 2.99, 4.46, 4.73.

What moved it was a single raw print of +$2.76 billion inside a seven-day window where the other six averaged close to zero. Pull that one day out and this is Check Engine at best.Open interest is $158 million. Funding-adjusted OI moved $2.1 million over 28 days. Raw OI is down $7.3 million. These are rounding errors wearing a structure costume.

Funding sits roughly where it was a month ago. Longs are paying full retail on a coin at $0.156, down 53.2% since January, up 9.1% off the June 25 low.A 4.73 built on one session and a $158 million perp book is a smoke detector with the battery pulled. Green light, no wiring. ⚠️

STOCKTWITS
Stuff Stocktwits People Said 👇️

ON-CHAIN ANALYSIS
Zcash: Smooth Sailing On A Volatility Floor ⛵️

Zcash’s LAR reads 4.65 and it’s already stale.

The last four raw prints, in billions: +8.82, +10.38, +8.97, and then today, +0.07. The seven-day average is still riding those three good sessions. It won't be by Friday. $ZEC ( ▼ 3.83% ) volatility is 4.64%, funding is at the 87.8th percentile. Raw open interest added $48.8 million over 28 days while funding-adjusted OI added $3.1 million.

Price is $468, up 17.3% over 28 days, 30.2% below the May 20 high at $671, up 137.2% from the March low.

ON-CHAIN ANALYSIS
Chainlink: The Only Honest One Here 👍️

Chainlink earned its number. 🧠

The LAR of 4.95 is effectively the ceiling. And for once the inputs agree with each other instead of canceling out. Shorts are close to paying longs to hold the other side, which means the open interest in this market gets full credit. Funding-adjusted OI is up $164 million against raw OI up $32.6 million.

Cheap carry, mid-range vol, real OI growth, price cooperating. That combination shows up maybe twice a year. Perfect setup for $LINK ( ▼ 2.56% )  👍️ 

OLD NEWS
Crypto Stuff That Happened Today, But A Long Time Ago 📜

Here’s what was happening in the newsletter a year ago today:

• PayPal launched “Pay with Crypto” - letting U.S. merchants accept BTC, ETH, SOL, USDC, and nearly 100 other coins through wallets like MetaMask, Coinbase, Binance, Phantom, and Exodus.

• Tron Inc. tried to raise up to $1B - the former SRM Entertainment, now wearing its Tron costume.

• The crime story was deranged - South Florida’s Shlomo Haim Akuka allegedly tried to cover a $3M USDT debt by plotting kidnappings and finger-chopping with undercover agents.

OLD NEWS
Other Stuff That Happened Today, But A Long Ass Time Ago ⌛️

July 28

• 1402 - Timur crushed the Ottoman army at Ankara and captured Sultan Bayezid I alive.

• 1540 - Henry VIII executed Thomas Cromwell, then married Catherine Howard on the same day. Busy schedule.

• 1794 - Robespierre and 21 allies were guillotined.

• 1821 - José de San Martín declared Peru independent from Spain.

• 1868 - The 14th Amendment established birthright citizenship and equal protection under U.S. law.

• 1914 - Austria-Hungary declared war on Serbia, officially starting World War I.

• 1942 - Stalin issued “Not One Step Back,” threatening retreating Soviet soldiers with prison or execution.

• 1973 - Roughly 600,000 people attended a rock festival at Watkins Glen, more than Woodstock.

• 1976 - China’s Tangshan earthquake flattened a city and officially killed 242,769 people.

• 2002 - Rescuers pulled 9 Pennsylvania miners out alive after 77 hours trapped underground.

Get In Touch 📬

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Author Disclosure: The author of this newsletter holds positions in AVAX, ADA, PUDGY, WLD, NEAR, INJ, LTC, LINK, ZEC, XLM, and FET. 📋