Introduction to Crypto Markets
The crypto market has been experiencing significant growth and changes, with the introduction of spot Bitcoin ETFs being a significant component. These ETFs have amassed near $50 billion in assets under management (AUM) inside six months, attracting recent investors and deepening market liquidity. In this text, we’ll delve into the important thing highlights of the Q3 ‘Guide to Crypto Markets’ by Glassnode and Coinbase Institutional, providing an update in the marketplace cycle, the impact of ETFs, and key on-chain activity metrics.
Key Highlights
The crypto market is thought for its distinct cycles of gains and drawdowns. Recent data suggests that despite a second-quarter pullback, we’re likely in the course of the present bull cycle that began in late 2022. Historical patterns indicate that such corrections are typical and align with past market behaviors. The introduction of spot Bitcoin ETFs has altered the landscape, providing a regulated and familiar investment vehicle that enhances existing options. On-chain activity is increasing rapidly, with metrics similar to total value locked (TVL), energetic addresses, and user base size indicating a big uptick in on-chain activity.
Gauging the Market Cycle
Crypto markets are known for his or her volatility, with prices fluctuating rapidly. The current bull market, which began in late 2022, has seen Bitcoin prices increase by 400%. Following the collapse of FTX, Bitcoin experienced 18 months of regular price appreciation, reaching an all-time high (ATH) of $73k. Afterwards, the market entered a range-bound phase for 3 months, followed by a -26% drawdown. This downtrend is shallower in comparison with previous cycles, indicating a sturdy market structure and reduced volatility.
ETFs Have Altered the Landscape
Spot Bitcoin ETFs have been a game-changer within the crypto market, providing a regulated and familiar investment vehicle that enhances existing options. These ETFs have attracted recent investors and deepened market liquidity, with over $50 billion in AUM. The introduction of ETFs has also led to increased trading volumes in each spot and derivatives markets.
On-Chain Activity is Increasing Rapidly
On-chain activity is a key metric for measuring the health of the crypto market. Recent data shows a big uptick in on-chain activity, with metrics similar to TVL, energetic addresses, and user base size indicating a rapid increase in on-chain activity. This surge is driven by diverse use cases, including lending, staking, and trading. As existing use cases mature and recent innovations emerge, on-chain adoption is anticipated to grow further.
Key Q3 Trends
The past quarter has seen several key trends which are price highlighting from an investor perspective. One of the important thing trends is the rise in investor profitability, with the MVRV ratio finding support near its 365-day moving average. This suggests that the 2024 uptrend stays intact, with positive investor profitability. Another key trend is the rise in on-chain activity, with metrics similar to TVL, energetic addresses, and user base size indicating a big uptick in on-chain activity.
Investor Profitability Trends with MVRV
MVRV Momentum is a tool that helps analysts monitor market trends by tracking the common unrealized profit multiple held by investors (MVRV) relative to its 365-day moving average. When MVRV trades above its 365-day average, it typically indicates robust uptrends and improving investor profitability, often resulting in increased positions during market corrections. Conversely, when MVRV falls below the 365-day average, it often signals significant unrealized losses, increasing uncertainty and risk-off decisions.
BTC Cycle Performance and Drawdowns
The current bull market, which began in late 2022, has seen Bitcoin prices increase by 400%. Following the collapse of FTX, Bitcoin experienced 18 months of regular price appreciation, reaching an ATH of $73k. Afterwards, the market entered a range-bound phase for 3 months, followed by a -26% drawdown. This downtrend is shallower in comparison with previous cycles, indicating a sturdy market structure and reduced volatility.
BTC Spot ETF Balances
Tracking the balances of the highest ten US-traded Bitcoin ETFs provides a view of the capital inflow into these products. Spot Bitcoin ETFs have seen unprecedented success, with over $50 billion in AUM, making them probably the most successful ETF launch in history. Since their launch, ETF inflows have also significantly outpaced recent Bitcoin issuance, creating substantial demand. This increased demand has driven up trading volumes in each spot and derivatives markets.
Conclusion
In conclusion, the crypto market has experienced significant growth and changes, with the introduction of spot Bitcoin ETFs being a significant component. The key highlights of the Q3 ‘Guide to Crypto Markets’ by Glassnode and Coinbase Institutional provide useful insights into the market cycle, the impact of ETFs, and key on-chain activity metrics. As the crypto market continues to evolve, it is crucial for investors to remain informed and adapt to the changing landscape. By understanding the important thing trends and metrics, investors could make informed decisions and navigate the complex world of crypto markets.
