The report “Digital Assets: Insights and Market Trends” for the first half of 2024, produced jointly by CME Group and Glassnode, offers a comprehensive analysis of the crypto market.
This article delves into the main findings and trends highlighted in the report, providing essential insights for institutional investors who wish to navigate the complexities of this expanding asset class.
Overview of the crypto market landscape according to Glassnode: Bitcoin
The market of digital assets has seen significant growth and increasing institutional interest in recent years. In the first half of 2024, the market capitalization of digital assets is approximately 2.56 trillion dollars, with Bitcoin and Ethereum leading the charge.
The market capitalization of Bitcoin has increased by over 1.13 trillion dollars (+370%) from its cyclical low in November 2022, while the valuation of Ethereum has increased by 354 billion dollars (+267%).
Stablecoins have emerged as a critical component of the digital asset ecosystem, with a total supply of 145 billion dollars. Tether (USDT) and USD Coin (USDC) dominate the stablecoin market, representing 74% and 22% of the supply respectively.
Bitcoin operates on a fixed supply schedule, with the emission rate halving every four years. The current circulating supply is 19.696 million BTC, with a recent halving that reduced the emission rate to 3.125 BTC per block.
This halving mechanism plays a crucial role in Bitcoin’s value proposition, contributing to its scarcity.
The Bitcoin network processes approximately 46.4 billion dollars in daily on-chain volume, comparable to major payment processors like Visa and Mastercard. After applying advanced filtering heuristics to exclude internal transactions, the economic transfer volumes are closer to 6.5 billion dollars per day.
The ecosystem of Bitcoin miners continues to thrive, with the network hashrate reaching a new all-time high of over 617 exahash per second. Despite the high aggregate revenues of miners, the competitive mining environment has led the hash price to a new low of 48K per exahash per day after the fourth halving.
Ethereum and the bull and bear markets of derivatives
Ethereum, the second largest digital asset, has a circulating supply of 119.76 million ETH. The network transitioned from a Proof-of-Work (PoW) consensus mechanism to Proof-of-Stake (PoS) in September 2022, significantly reducing the issuance rate from about 14.3K ETH/day to 2.6K ETH/day.
The PoS system of Ethereum currently boasts over one million active validators, with 32.2 million ETH locked as staked collateral. This staked supply represents over 27% of the circulating ETH, reflecting the growing security and decentralization of the network.
The derivatives markets for Bitcoin and Ethereum have shown substantial growth, with the futures markets dominating the trading volume. The open interest in Bitcoin and Ethereum futures has surpassed previous highs, reaching 29.0 billion dollars and 14.7 billion dollars respectively.
The demand for futures with calendar expiration has increased, driven by institutional interest, particularly for Bitcoin, where the CME Group’s instruments play a significant role.
The futures markets remain the main venue for trading digital assets, with daily contract volumes for Bitcoin and Ethereum reaching $34.4 billion and $26.7 billion respectively. These volumes are comparable to previous market cycles, although they remain below the all-time highs seen in early 2021.
Synchronicity of different crypto markets: the research by Glassnode
The on-chain metrics provide valuable insights into market behavior and investor sentiment. For Bitcoin, the Realized Cap, which measures the aggregate value of all coins at the time of their last on-chain transaction, currently stands at 591 billion dollars.
The MVRV ratio, a derived metric, helps to evaluate the overall profitability of investors in Bitcoin by comparing the Market Cap with the Realized Cap. Values above 1.0 indicate large unrealized profits, while values below 1.0 suggest unrealized losses.
The on-chain metrics of Ethereum reveal similar trends. The Realized Cap of Ethereum is 240 billion dollars, often intersected by the Market Cap during advanced bear markets. This indicates that the average unit of ETH is held in unrealized loss during these periods.
The approval and launch of Bitcoin Spot ETFs in the United States in January 2024 were a significant milestone for the digital asset market. These ETFs opened access to a broader pool of investors, providing regulatory clarity and consolidating Bitcoin’s status as an institutional asset. The trading volume of these ETFs reached approximately 2.5 billion dollars per day, comparable to the spot trading volume across criptovalute exchanges.
The report “Digital Assets: Insights and Market Trends” for the first half of 2024 highlights the continued growth and institutionalization of the digital asset market. With Bitcoin and Ethereum leading the way, the market has seen significant capital inflows and growing interest from institutional investors.
The evolution of the derivatives markets, together with on-chain metrics, provides a comprehensive view of market dynamics and investor behavior.
