Bitstamp Monthly Briefing – July 2024
Get the latest in crypto with Bitstamp’s July Monthly Briefing! This month, we’re covering the hottest topics in the industry, including the debut of Ethereum ETFs and key trends shaping the market. Stay informed and ahead of the curve with our insights into the ever-changing crypto landscape.
Let’s jump in!
Market update
The total crypto market cap increased by 1.1% month-over-month, reaching $2.28 trillion at the end of July. Trading volume on the leading crypto spot exchanges we monitor saw an 8% increase during this period.
BTC's market dominance rose by 1.2 percentage points month-over-month to 56.0%.
Total crypto market cap (grey) and BTC dominance (green)
Past performance is not a reliable indicator of future results. The performance of crypto assets can be highly volatile. Data taken on August 1, 2024.
Source: Total crypto market cap, Bitcoin dominance
Best performing CMC 100 assets in July
- +49.0% Mantra (OM) – A rally throughout July resulted in OM hitting a new all-time high of $1.41.
- +41.4% Helium (HNT) – A strong position within the DePIN narrative and a clear crypto and token use case have increased demand for the token.
- +30.9% XRP (XRP) – Ripple experienced high on-chain activity in July.
Worst performing CMC 100 assets in July
- -32.8% Starknet (STRK) – The price failed to break through resistance around $0.60.
- -30.2% Fantom (FTM) – A negative market sentiment is driving the declining price trend.
- -29.2% Flare (FLR) – The price failed to break through resistance around $0.022.
Past performance is not a reliable indicator of future results. The performance of crypto assets can be highly volatile. Data taken on August 1, 2024.
Key macro & crypto events in August 2024
- August 7-9: The Science of Blockchain Conference 2024 in New York, USA
- August 13-14: ETHToronto & Blockchain Futurist Conference in Toronto, Canada
- August 13-14: Istanbul Blockchain Week 2024 in Istanbul, Turkey
- August 14: US Core Inflation Rate
- August 19-21: Web3 Summit 2024 in Berlin, Germany
- August 21: FOMC Minutes
- August 22: S&P Global Composite PMI Flash
- August 22-23: Coinfest Asia in Bali, Indonesia
- August 24-25: Baltic HoneyBadger 2024 in Riga, Latvia
- August 28-29: WebX 2024 in Tokyo, Japan
Spot Ethereum ETF market sizing
Eight spot Ethereum exchange-traded funds (ETFs) debuted on July 23 after SEC approval, with approximately $1.11 billion traded on the first day. According to K33 and Galaxy Research, spot Ethereum ETFs could attract between $3.1 billion and $5 billion in net inflows over their first five months.
For months, analysts were skeptical about the SEC approving spot-based Ethereum ETPs due to the SEC's ambiguity on whether Ether is a commodity, lack of engagement with issuers, and ongoing investigations. Bloomberg analysts initially estimated a 25% approval chance but increased it to 75% after the SEC contacted securities exchanges. Ultimately, the SEC approved all spot ETH ETF applications.
Drawing from the example of Bitcoin spot ETFs, which saw $15 billion in net inflows within the first six months, it's estimated that Ethereum ETFs could attract as much as $5 billion in the first five months, or roughly 30% of Bitcoin's inflows. Bitcoin spot ETFs have seen substantial inflows, positively influencing Bitcoin prices, with retail investors driving demand and institutional interest rising. Inflows have been partly responsible for Bitcoin's price appreciation, and the conversion of GBTC to an ETF resulted in significant outflows. Institutional adoption is growing, although wealth management platforms have yet to fully embrace Bitcoin ETFs. This gradual adoption is expected to spur significant future inflows.
Using Bitcoin ETFs as a benchmark, Ethereum ETF inflows are estimated to be about one-third of Bitcoin's, translating to $1 billion per month initially, according to Galaxy Research. Factors like the lack of staking rewards for spot ETH and potential outflows from Grayscale’s ETHE Trust conversion might limit demand. Hedge fund interest, driven by arbitrage opportunities, could also influence inflows.
Several structural differences might make Ethereum more price-sensitive to ETF flows than Bitcoin, such as a lower supply on exchanges and negative net issuance. Adjustments for staked, dormant, and bridged supplies suggest that the available market supply of ETH is significantly lower than BTC. Consequently, Ethereum's price could be more responsive to ETF inflows.
Looking forward, questions remain about the impact of staking, potential new buyers, and the approval of ETFs for other cryptocurrencies. Overall, the launch of spot Ether ETFs is expected to enhance Ethereum's market adoption by increasing accessibility and acceptance through regulatory recognition and trusted financial services, potentially accelerating investments and the adoption of Ethereum technology.
Recommended reads
On Token Migrations by Decentralised
Maslow's Hierarchy of Needs outlines human motivation, starting with basic needs like food and shelter and progressing to higher-order needs like self-actualization and transcendence. The journey through these needs symbolizes personal growth and fulfillment. The author describes their own experience of feeling trapped in a cycle of work and consumption until they discovered Bitcoin. Bitcoin's decentralized nature and limited supply offer a potential solution to the problems inherent in traditional fiat currencies, providing a pathway towards financial stability and personal growth. This journey mirrors Maslow's concept of self-transcendence, where individuals move beyond their own concerns to contribute to a greater cause, envisioning a world where monetary systems are equitable and sustainable. The author invites readers to explore Bitcoin as a tool for creating a better future, one where personal and societal well-being are intertwined.
DeFi Yield protocols by OurNetwork
This text covers select "Yield" protocols within decentralized finance (DeFi), a category that includes over 500 protocols with a combined total value locked (TVL) of $7.95 billion, despite a significant decline from November 2021. Highlighting the dynamic nature of the market, it notes that Pendle, a fixed-rate lending protocol, has emerged as a leader by growing its TVL tenfold to $3.5 billion in the first half of 2024. Pendle's success is marked by a 300% increase in its token value and holding 44% of the Yield category's TVL, collecting an estimated $22.6 million in annualized fees. The text encourages readers to explore these DeFi opportunities, accessible globally to anyone with a digital wallet and internet connection.
Waiting for “The Dip” to Invest by Mike Piper
The author discusses a common strategy among newer investors of waiting for a specific market signal before buying, rather than investing immediately. They argue that this approach is generally unhelpful because it limits potential gains to a small percentage if prices dip but can result in significant missed opportunities if the market rises and the intended lower purchase price never materializes. The strategy often leads to buying at higher prices rather than benefiting from lower ones, as markets typically have positive returns over time. Thus, delaying investment reduces time in the market, usually resulting in missed gains.
Plan B – An Investment Strategy for the 21st Century by Andrea Bertame
This free e-book aims to educate readers about money and advocate for adopting a Bitcoin standard for individuals, families, and businesses to secure future success. It provides a comprehensive overview of money, its evolution from commodity money to fiat currency, and the emergence of digital currencies, specifically Bitcoin. The book compares Bitcoin to other investment vehicles like real estate and equity, highlighting Bitcoin's unique advantages and the potential benefits for companies adopting it. The author argues that Bitcoin represents a significant shift in our understanding of money.
No information in this blog is intended to provide any personal investment services or advice nor is it an investment recommendation. Clients are responsible for making their own investment decisions. Bitstamp accepts no responsibility for any damage and/or loss arising from the use of information provided herein. Past performance is not necessarily an indicator of future results. Please consider your individual position and financial goals before making an independent investment decision.
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