Authors: Marc Arjoon & Jake Koch-Gallup

Translation: TechFlow

TechFlow Introduction: On-chain gacha has experienced its first monthly adjustment since February, with July's trading volume dropping from June's $354.8 million to $290.3 million. Meanwhile, trading volume on Memecoin platforms like Pump.fun is on the rise. This suggests that speculative funds in crypto may be rotating—when Memecoin trends recover, some gacha players may exit the market. Notably, the least crypto-oriented user base of Courtyard has set a new historical high, indicating that real demand for collectibles remains strong.

The current market situation is quiet but lacks a decisive push! Market volatility and asset correlation have been steadily declining, entering a calmer state. This leaves the last piece of the puzzle for the market to initiate a new bull run. At the same time, on-chain gacha has seen its first monthly adjustment since February, suggesting that some speculative funds may be flowing back into Memecoin. Let’s analyze further.

Market Dynamics

In the past 24 hours, the 2025 crypto stocks sector led the market with a rise of 2.6%, being the only sector with a significant increase. The gains were concentrated in Galaxy (+3.6%) and Circle (+3.1%), both of which just released their Q2 earnings reports. Circle benefited from a previous significant downgrade by Morgan Stanley, reducing the target price by 64% to $38 setting low expectations. However, the strong range is quite narrow. Bullish (-1.5%) and Gemini (-0.6%) fell, while the broader crypto stock index declined 1.1%. This indicates that the surge was driven by company-specific earnings responses rather than a broader sector revaluation.

Outside this sector, the market performance is leaning negative. As the stock market consolidates below record highs this week, BTC fell 0.4%, in line with Gold (-0.4%) and the S&P 500 (-0.3%). BTC's demonstrated downward resilience in response to the stock market's pullback has again failed to translate into upward participation. Instead, the relative strength comes from the internal stories within crypto. BTC sits at the top of the digital asset sector, while long-tail assets are getting sold off, led by Meme (-5.0%), the Solana ecosystem (-3.4%), and AI (-2.7%).

As mentioned in yesterday's article, we know that crypto ETF fund flows have been quite weak. The ETF flows for BTC and ETH are becoming increasingly synchronized. Their 60-day rolling correlation has risen to +0.67, nearing the upper range. ETF demand behaves more like a single crypto configuration, which isn’t surprising as this often happens in declining markets.

Fortunately, the overall correlation has been on a downward trend since March 2026. This has led to decreased overall market connectivity, resulting in a more differentiated trading environment.

Similarly, market volatility has dropped from over 60 in March to over 30 in August. The decrease indicates that the market is entering a calmer state, with readings now comfortably below the risk threshold.

With the decline in market volatility and correlation, the only remaining element to kick off a new bull market is the sustainable rise of BTC prices.

Gacha Cooldown

On-chain gacha has been one of the hottest sectors in crypto in 2026, but July marked the first monthly adjustment since February.

In July, the total spending on on-chain gacha was $290.3 million, the second-highest monthly total ever, only behind June’s record of $354.8 million. For the fifth consecutive month, Collector Crypt was the largest gacha platform, generating $154.9 million in spending, accounting for 53% of July’s total. However, the monthly spending on Collector Crypt saw a 26% month-over-month decline from June's $209.5 million.

Courtyard set a record for the best monthly performance in July, reaching a historical high of $85.3 million, a month-over-month increase of 7%. Courtyard's performance is particularly noteworthy given that it likely has the least crypto-oriented user base among major platforms. Its continued growth indicates that on-chain gacha is a product category that can resonate beyond the existing user base on-chain. Courtyard accounted for 29% of the gacha spending in July.

The platform rankings have also shuffled, with Monster surpassing Phygitals and Beezie to become the third-largest gacha platform in July. Monster generated $14.3 million in transaction volume, a month-over-month increase of 15%, and released a series of updates aimed at improving user experience:

Lucky Boost - Opening a pack to receive a common card increases the expected value of the next pack by 0.1%

Dupe Shield - Drawing the same card in consecutive packs gives the user a free pack

These updates went live on July 17 and 23, respectively. From the launch of Lucky Boost to the end of the month, Monster generated $9.7 million in transaction volume, accounting for 68% of its total for July.

Phygitals ($13.4 million, month-over-month decrease of 34%) and Beezie ($12.9 million, month-over-month decrease of 30%) both experienced down months despite launching significant product updates. Phygitals launched a mobile app at the end of the month, while Beezie expanded to Solana on July 23. Overall, the five largest gacha platforms (Collector Crypt, Courtyard, Monster, Phygitals, and Beezie) accounted for 97% of the on-chain gacha spending in July.

Looking at on-chain gacha from a broader perspective, the trading card secondary market transaction volume has essentially maintained a historical high of $694.7 million, compared to $695.6 million in June. The weakened demand for trading cards is not the cause of the decline in on-chain gacha in July.

It is also possible that the month's decline does not carry much interpretive weight. On-chain gacha spending grew at an astonishing rate in the first half of 2026, making some level of correction inevitable. However, another possible explanation is that on-chain gacha is facing new competition for attention and funds from crypto-native traders.

Throughout July, as Collector Crypt’s spending decreased, the trading volume on Pump.fun increased. Collector Crypt's average daily spending dropped from $5.6 million in the first seven days of July to $3.4 million in the last seven days, a decrease of 39%. During the same period, Pump.fun's average daily trading volume increased from $320.6 million to $388.5 million, up 21%. This relationship does not necessarily imply causation, but intuitively it makes sense. A considerable portion of Collector Crypt's user base is made up of active on-chain traders who rotate into any hot sector. When Memecoin gains momentum, some of the inflow of funds and attention to on-chain gacha may shift elsewhere, even if the demand for trading cards remains strong.

Courtyard's performance further supports this possibility. While most crypto-native gacha platforms experienced pullbacks, Courtyard set a historical high in July. As mentioned earlier, Courtyard likely has the least crypto-oriented user base among major platforms, implying that its users may be less inclined to flow back into Memecoin as speculation heats up.

Currently, the July decline seems more like a natural correction that might be amplified by the resurgence of Memecoin activity, rather than evidence of a broader slowdown in the trading card market.