Research Summary
The report discusses the recent surge in the digital assets market, with a focus on Ethereum’s performance and the impact of traditional finance (TradFi) players on the crypto market. It also highlights the growth of total value locked (TVL) across all chains and the increasing interest of TradFi in Bitcoin and crypto stocks.
Key Takeaways
Digital Assets Market Momentum
- Market Capitalization Milestone: The total digital assets market capitalization surpassed $2 trillion, a level last seen in March 2022. This surge was largely driven by Ethereum, which outperformed both Bitcoin and Solana.
- Token Performance: A significant number of tokens, including Bitcoin, Solana, and Ethereum, are now trading above their pre-Luna collapse levels. More than half of the tokens in the report’s coverage universe are above their pre-FTX levels.
Total Value Locked (TVL) Growth
- TVL Increase: Since the beginning of February, the total value locked across all chains has increased by $14.5 billion. This growth is partly attributed to Eigenlayer, a re-staking project on Ethereum, which saw its TVL increase from $1.1 billion to $4.3 billion.
- Chain Gainers: The biggest gainers in terms of chains have been Ethereum, Solana, and Sui, with Ethereum’s injection moving the global needle.
TradFi’s Impact on Crypto Market
- Bitcoin ETFs: The new Bitcoin spot ETFs have seen significant volumes and inflows, accumulating roughly 10K BTC per day, which is over 10x the amount of BTC mined in a given day.
- TradFi Banks: Traditional finance banks are seeking to overturn a guidance that prohibits them from holding crypto assets, indicating their desire to participate in the profits from the crypto market.
Volatility and Leverage
- Increased Volatility: Coinbase and Bitcoin mining stocks have exhibited higher trading volumes and volatility this year than most digital assets. This volatility is driven by the influx of traditional finance players into the crypto market.
- Leverage Levels: Open interest on Bitcoin and Ethereum Futures via the CME is back to levels not seen since 2021, indicating that leverage is back in the market.
Actionable Insights
- Monitor Ethereum’s Performance: Given Ethereum’s recent outperformance, it may be beneficial to keep a close eye on its price movements and market trends.
- Assess Impact of TradFi on Crypto: The increasing involvement of traditional finance players in the crypto market could significantly impact market dynamics. Understanding these changes could provide valuable insights for future strategies.
- Consider TVL Growth: The growth of total value locked across all chains could indicate increased activity and interest in the crypto market. This could present opportunities for further exploration and analysis.
