GM. This is Milk Road, the newsletter that reads its stethoscope and thermometer once a month to check the market's health.
August was supposed to be quiet.
Summer months usually bring low volumes, slower moves, and a bit of a holiday mood.
The first two weeks, though, were anything but calm. $ETH ripped higher, up about 36%, and most assets joined in the rally — just not as strongly.
Then came a quick correction, followed by a short-lived boost after Jerome Powell’s dovish comments at Jackson Hole… before prices slipped back again.
So in the end, August actually did finish the way we expected — pretty flat for most assets.
But that doesn’t mean nothing is happening beneath the surface.
The big question now: Have we already topped? 🤔
That’s what we’ll dig into in this report — along with signs of what else might be brewing and where the next opportunities could come from.
And as always at the start of the month, we’ve got another $1K to allocate to the PRO All Access Portfolio and we’ll show you exactly how we’re putting it to work this month.
Let’s get into it.
The Business Cycle
The business cycle is the foundation of how we understand the trend and direction of markets – if you’re new here, you can learn more about how the business cycle impacts crypto markets here.
The chart below shows the ISM, which gives us a pretty solid clue about where we are in terms of economic activity right now.
The ISM Manufacturing PMI for August 2025 came in at 48.7, indicating contraction in the manufacturing sector for the sixth consecutive month. This means that things are not heating up yet, but it also means there’s plenty of room to grow!
The good news is that this represents an increase of 0.7 percentage points from the July 2025 reading of 48.0. So things are moving in the right direction!
Drilling into the data more, we saw that “New Orders” showed growth for the first time in several months, rising to 51.4, which means that things are beginning to pick up.
However, “Production” and “Employment” both declined slightly, so these New Orders haven’t yet led to much increase in output or jobs.
The overall manufacturing sector continues to contract, although the rate of contraction has slowed compared to previous months.
We will continue to monitor this. We expect this to continue to rise in the near future. Keep an eye on this one.
Let’s check if global liquidity is also lining up to support that potential next leg higher.
Global liquidity
Global liquidity tells us how much capital is flowing into the markets. And generally, the more liquidity — or the faster it’s rising — the better it is for risk-on assets like crypto.
We’ve had some headwinds on this front recently, but nothing too concerning.
Some of that is due to seasonality and low volume. Some of it is due to the Treasury Department refilling its general account.
The good news is that these things are temporary and almost behind us.
There are lots of reasons to expect liquidity to increase a lot in Q4:
- China is still injecting a lot of liquidity into its market.
- The Fed is expected to cut rates, which will make debt cheaper.
- And it’s possible that the Fed will also stop rolling off its MBS holdings, which would represent a formal end to its QT schedule and the beginning of a pivot to QE.
No matter how you look at it, there should be a lot more liquidity in the market soon!
And that’s exactly what we were hoping to see. 🥳
But rising liquidity could also fuel higher inflation — and that’s something the market might not take kindly to. So let’s look at that.
Truflation
Instead of looking at traditional trailing inflation metrics, we’re turning to Truflation for a real-time view of what’s actually happening on the ground.
Inflation continues to run higher than the Fed would like, but it also continues not to be a big problem right now. There are reasons to be concerned about it rising, but thankfully, right now, it’s not spiking.
This has given the Fed a chance to say they are going to prioritize strengthening the labor market by cutting rates. This is very good for the economy as well as for investor sentiment.
It also means that as long as inflation doesn’t get too out of hand – good times are likely ahead.
So, the macro in a nutshell? All signs point bullish, and the rest of the year is looking strong.
PERFORMANCE
Let’s see how some major investment classes have been performing. We already touched on this in the intro, but the chart makes it even clearer.
Stocks, gold, and the total crypto market cap all moved more or less in sync in August, each gaining around 2–3%.
We added $ETH to the chart to highlight just how strong its performance was over the month.
The hype around Ethereum sparked by the boom in DATs has started to cool off, but its ripple effects are likely to stick around for a while.
Everyone's now paying attention to $ETH and with big names like Tom Lee predicting it could hit five figures by year-end, the buzz isn’t going away anytime soon.
On the other hand, $BTC didn’t keep up with the rest of the markets and underperformed, ending August down about 3%.
Overall, we’d say the market was mostly flat in August, with $ETH being the clear outlier for the reasons we just covered.
Can that trend continue? Absolutely.
To get a clearer picture of what did well and what didn’t over the past month, let’s check out the top gainers and losers.
Top gainers
Notice we’re only looking at the top 100 tokens by market cap. That way, we filter out the flood of tiny new memecoins that shoot up thousands of percent every month.
What really stood out to us here is the absence of apps on the list. Instead, it’s mostly centralized exchanges and blockchains.
Maybe investors are looking at $ETH’s success and the huge demand for $ETH DATs, and speculating that other chains or big tokens could follow the same path.
That said, we don’t think this trend will last. Sure, some blockchains or tokens will show up here, but we’d also expect to see apps making their way onto the list going forward.
Now let’s take a look at the losers list and see what stands out there.
Top losers
There’s only one app on this list and unfortunately, it’s one we hold: Sky.
Should you be worried about $SKY? We don’t think so.
They’ve been making some accounting updates and protocol changes, which might have looked a bit confusing at first — even to us.
But after spending time on their Discord, forum, and community calls, things became much clearer.
What might look shady at first glance doesn’t seem that way once you understand it. The issue is, not everyone will take the time to dig deeper — so for many, the easier move is just to sell.
Bottom line: there’s nothing to worry about here. 😉
The rest of the losers list is just a mix of memecoins, NFTs, and L1s — nothing that really gives us further insight.
But looking only at winners and losers doesn’t give us the full picture of what’s happening across the market. That’s why we turn to crypto breadth.
Crypto Breadth
Here, we can see how many crypto tokens out of 200 are currently in an uptrend based on the 50-day and 200-day moving averages.
Source: Milk Road Research Hub
On the 200-day timeframe, about 66% of tokens are trading above their moving average, showing a generally positive trend through August.
But the shorter 50-day timeframe paints a different picture.
Only 38% of tokens are above their 50-day trend, and volatility has been high. It started near 50, spiked above 80, and then corrected back down to where we are now — around 38.
Overall, this chart suggests we’re not in a clear bull market or a bear market. And that lines up with the general vibe we’ve been getting from the market over the past month.
Now let’s take a look at how the broader market is performing compared to Bitcoin.
Uh, Oh… 😧 The rest of this report is exclusive to Crypto PRO members!
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WHAT’S LEFT INSIDE? 👀
- Why the altcoin index’s current rise isn’t all its cracked up to be
- Why certain traders are betting against $ETH after its rise (and why they may be in for pain)
- How we’re spending this month’s $1,000 allocation – and the portfolio asset we just sold out of
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