Author: Marc Arjoon & Jake Koch-Gallup
Compiled by: TechFlow
TechFlow Insights: On-chain gacha experienced its first monthly decline since February, with July trading volume dropping from June's $354.8 million to $290.3 million. Meanwhile, trading volume on platforms like Pump.fun for Memecoins has been rising. This suggests that crypto speculative funds may be rotating—some gacha players exit when the Memecoin market recovers. Notably, Courtyard, with the least crypto-native user base, hit a record high, indicating that genuine collecting demand remains strong.
The market is quiet but lacks the final push! Market volatility and asset correlations continue to decline, entering a calmer state. This leaves the market with the final piece needed to start a new bull run. Meanwhile, on-chain gacha saw its first monthly decline since February, hinting that some speculative funds may be flowing back into Memecoins. Let's dive deeper.
Market Dynamics
In the past 24 hours, the 2025 crypto stock sector led the market, rising 2.6%, the only sector with significant gains. The increase was concentrated in Galaxy (+3.6%) and Circle (+3.1%), which just released Q2 earnings. Circle benefited from low expectations after Morgan Stanley recently slashed its price target by 64% to $38. But the strength was narrow. Bullish (-1.5%) and Gemini (-0.6%) closed lower, and the broader crypto stock index fell 1.1%. This suggests the rally was driven by company-specific earnings reactions, not a revaluation of the entire sector.
Outside this sector, market performance was negative. As stocks consolidated below record highs this week, BTC fell 0.4%, roughly in line with gold (-0.4%) and the S&P 500 (-0.3%). BTC's resilience to equity pullbacks once again failed to translate into upside participation. The relative strength story was internal to crypto. BTC ranked at the top of the digital asset sectors, with long-tail assets selling off, led by Meme (-5.0%), Solana Ecosystem (-3.4%), and AI (-2.7%).
As mentioned in yesterday's article, we know crypto ETF flows have been weak. BTC and ETH ETF flows are becoming increasingly synchronized. Their 60-day rolling correlation has risen to +0.67, near the top of its range. ETF demand is behaving more like a single crypto allocation, but this isn't surprising, as this tends to happen during downtrends.
Fortunately, overall correlation has been trending down since March 2026. This has led to weaker market co-movement and a more fragmented trading environment.
Similarly, market volatility has dropped from over 60 in March to the low 30s in August. The decline indicates the market is entering a calmer state, with readings now comfortably below risk thresholds.
As market volatility and correlation decline, the only element left to start a new bull market is a sustainable rise in BTC price.
Gacha Cooling Down
On-chain gacha was one of crypto's hottest sectors in 2026, but July marked the first monthly decline since February.
Total on-chain gacha spending in July was $290.3 million, the second-highest monthly total on record, just 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, Collector Crypt's monthly spending fell 26% sequentially from June's $209.5 million.
Courtyard achieved its best monthly record in July, reaching a historical high of $85.3 million, up 7% sequentially. Courtyard's performance is particularly noteworthy because it likely has the least crypto-native user base among major platforms. Its continued growth indicates that on-chain gacha is a product category that resonates beyond the existing on-chain user base. Courtyard accounted for 29% of gacha spending in July.
The platform rankings also saw a reshuffle, with Monster surpassing Phygitals and Beezie to become the third-largest gacha platform in July. Monster generated $14.3 million in volume, up 15% sequentially, and released a series of updates aimed at improving user experience:
Lucky Boost - Opening a pack and getting a common card increases the expected value of the next pack by 0.1%
Dupe Shield - Drawing the same card in consecutive packs grants the user a free pack
These updates went live on July 17 and 23 respectively. From the launch of Lucky Boost to month-end, Monster generated $9.7 million in volume, accounting for 68% of its July total.
Both Phygitals ($13.4 million, down 34% sequentially) and Beezie ($12.9 million, down 30% sequentially) experienced down months despite launching significant product updates. Phygitals launched a mobile app at month-end, while Beezie expanded to Solana on July 23. Overall, the top five gacha platforms (Collector Crypt, Courtyard, Monster, Phygitals, and Beezie) accounted for 97% of on-chain gacha spending in July.
Looking beyond on-chain gacha, trading card secondary market volume remained essentially at its all-time high of $694.7 million, compared to $695.6 million in June. Weakening trading card demand was not the reason for July's on-chain gacha decline.
It's also possible that a one-month decline doesn't have much to read into. On-chain gacha spending grew at a staggering pace in the first half of 2026; some degree of pullback was inevitable. However, another possible explanation is that on-chain gacha faces new competition for attention and funds from crypto-native traders.
Throughout July, Collector Crypt spending declined while Pump.fun trading volume rose. Collector Crypt's average daily spending fell from $5.6 million in the first 7 days of July to $3.4 million in the last 7 days, a 39% drop. During the same period, Pump.fun's average daily trading volume increased from $320.6 million to $388.5 million, a 21% rise. This relationship doesn't necessarily imply causation, but it intuitively makes sense. A significant portion of Collector Crypt's user base consists of active on-chain traders who rotate into whatever hot sector emerges. When Memecoins regain momentum, some of the capital and attention flowing into on-chain gacha may shift elsewhere, even as trading card demand remains strong.
Courtyard's performance further supports this possibility. While most crypto-native gacha platforms experienced pullbacks, Courtyard hit a record high in July. As mentioned, Courtyard likely has the least crypto-native user base among major platforms, meaning its users may be less inclined to rotate back into Memecoins when speculative activity heats up.
For now, July's decline looks more like a natural correction, potentially amplified by the resurgence of Memecoin activity, rather than evidence of a broader slowdown in the trading card market.
