Research Summary
The report discusses the current economic climate, with a focus on the US dollar, the Federal Reserve, and the impact on crypto markets. It also highlights the increase in BTC and ETH spot volumes, the role of institutions in bitcoin demand, and the challenges in measuring developer activity in the crypto space. The report further provides an overview of crypto and traditional assets, insights from the Coinbase Exchange, and notable crypto news.
Key Takeaways
Economic Climate and Crypto Markets
- US Dollar and Federal Reserve: The report suggests that the strength of the US dollar has peaked and predicts a softer path into the next year. It also mentions that fiscal support for the US economy is starting to wane, which could prevent the Federal Reserve from additional rate hikes.
- Crypto Market Resilience: Despite November and December traditionally being weaker months for crypto, the report suggests that the current macro environment, along with the narrative surrounding spot bitcoin ETFs and the bitcoin halving, could accommodate some market resilience.
Spot Volumes and Institutional Demand
- Spot Volumes: Average BTC and ETH spot volumes across global exchanges have climbed to $8.9B per day this month, more than double the daily average in October and the highest since March 2023.
- Institutional Demand: Bitcoin demand appears to be driven heavily by institutions, with total open interest on traditional CME futures increasing by 44% over the last four weeks.
Developer Activity in the Crypto Space
- Challenges in Measurement: The report discusses the difficulties in measuring developer activity in the crypto space, citing limitations of heuristics such as commits, active developers, or lines of code added on Github.
- Alternate Heuristic: An alternate heuristic for developer activity could be evaluating the proportion of blockspace demand that is spent deploying new contracts. This measure may offer a clearer perspective on developer activity trends in an ecosystem.
Crypto and Traditional Overview
- Asset Overview: The report provides an overview of various crypto and traditional assets, including their price, market cap, 24-hour change, 7-day change, and BTC correlation.
- Exchange Volumes: Volumes on exchange have been steadily increasing across a large breadth of assets, with new money entering the space from a range of client segments.
Notable Crypto News
- Institutional News: JPMorgan and WisdomTree are teaming up with Avalanche, Axelar, LayerZero on blockchain interoperability. Ethereum Platform Infura’s step toward decentralization includes Microsoft, Tencent.
- Regulation News: The SEC has proposed changes for RIAs in Crypto. The US could potentially harm DeFi unless IRS changes course on tax rules.
Actionable Insights
- Monitor the US Dollar and Federal Reserve: Given the potential impact on crypto markets, it would be prudent to keep a close eye on the US dollar and the Federal Reserve’s actions.
- Investigate the Potential of BTC and ETH: With spot volumes increasing significantly, there may be potential opportunities in BTC and ETH.
- Consider the Role of Institutions: Institutions appear to be playing a significant role in bitcoin demand, which could have implications for the market.
- Understand Developer Activity: Gaining a clear understanding of developer activity in the crypto space could provide valuable insights into the health and future direction of various projects.
- Stay Informed on Crypto News: Keeping up-to-date with institutional and regulatory news in the crypto space can help inform investment decisions.
