Coinbase: Guide to Crypto Markets 2024 Q4

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The 2024 Q4 Guide to Crypto Markets by Coinbase Institutional and Glassnode, published on October 16, 2024, dives into the pulse of the crypto economy.

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From stablecoin momentum and Layer 2 breakthroughs to the ripple effects of spot ETFs, this Market centric report unpacks Correlations, L1s vs L2s comparison, and future market activities focused on General Market , Bitcoin and Ethereum.

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*Credit: David Duong, Head of Institutional Research, Coinbase

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Consumer dApps are now generating substantial revenue compared to the blockchains they’re built on, without incurring significant costs for using the underlying chain’s security or rollups. This shift highlights key developments:

• Ethereum’s Post-EIP-4844 Landscape:  With the rollout of Proto-Danksharding (EIP-4844), Ethereum has reduced transaction fees, encouraging more activity on Layer 2 networks while lightening the load on the main net resulted in ETH supply dynamic shift.

• dApps Building Their Own Rollups: Major players like Uniswap and MakerDAO (now Sky) are moving towards launching their own rollups, aiming to enhance performance and reduce operational dependence on Ethereum, while still leveraging its security.

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The drop in Bitcoin and Ethereum volatility is a clear sign of a market growing smarter. Broader liquidity is smoothing out price swings by allowing capital to flow more efficiently. The rise of derivatives has given traders better tools to hedge and manage exposure. At the same time, the market’s adaptation to price movements reflects sharper instincts from participants, leading to more strategic behavior. These shifts are building a more stable ecosystem, making crypto increasingly attractive to institutional investors.

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The data suggests that Bitcoin’s current cycle remains on track, following historical patterns with no major deviations. The only notable shift is that we are now past the 4th halving, a critical Supply side event that historically drives long-term price growth.

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Demand is further fueled by record ETF inflows, adding to market momentum. Additionally, the shift toward lower interest rates creates a favorable macro environment, historically linked to increased asset prices.

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Once the post-halving accumulation phase concludes, Bitcoin is expected to enter a significant rally—especially as it approaches the $100K mark, likely sparking renewed retail interest and driving the next phase of market growth.

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PWC: 6th Annual Global Crypto Hedge Fund Report

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Next is The 6th Annual Global Crypto Hedge Fund Report by PwC and AIMA, published on October 10, 2024, delves into the evolving landscape of digital asset investments. It captures hedge fund managers’ views on the impact of ETFs, rising institutional interest in blockchain, and the shift in investment strategies. The report also offers a forward-looking perspective on how both traditional and crypto-focused hedge funds are navigating this rapidly developing market

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Credit: Albertha Charles, Asset & Wealth Management Leader, PwC United Kingdom

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ETPs and ETFs have emerged as pivotal components in both digital asset and traditional hedge fund strategies, on par with spot allocations. Particularly among traditional funds, ETFs/ETPs are the second most preferred investment vehicle, outpacing Venture Capital and Fund of Funds. This highlights the advantages of liquidity, transparency, and accessibility, reinforcing why these products are gaining traction in institutional portfolios.

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The approval of spot Bitcoin ETFs has significantly boosted confidence among digital asset hedge funds, which were early adopters in establishing investment vehicles for this asset class. While digital asset funds remain highly optimistic, with 85% viewing the approval positively.

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Traditional hedge funds have shifted away from negative sentiment. Many are now either neutral or actively exploring opportunities to launch digital asset products, reflecting a growing acceptance of crypto as part of their investment strategy.

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Despite the approval of Bitcoin and Ethereum ETFs and the introduction of new derivatives, regulatory uncertainty remains the top concern across both traditional and digital asset hedge funds. Our view is that this concern is more related to altcoins rather than Bitcoin or Ethereum. With assets like Solana and XRP already making strides, and others likely to follow in the next few years, we expect this regulatory risk factor to gradually decrease as frameworks become clearer and more inclusive of a broader range of digital assets.

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A16ZCrypto: State of Crypto Report 2024: New data on swing states, stablecoins, AI, builder energy, and more

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The 2nd Annual edition of A16zCrypto’s state of Crypto published on October 16, 2024, Covers the crypto’s growing role in policy, recent breakthroughs in blockchain tech, and emerging trends among builders and users.

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It highlights stablecoins as crypto’s “killer app,” examines intersections with AI, social networks, and gaming, and offers insights into crypto interest across U.S. swing states. The report also charts all-time highs in blockchain activity, driven by scaling upgrades and the rise of Ethereum Layer 2 networks.

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Credits: Daren Matsuoka Robert Hackett  Eddy Lazzarin

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With the U.S. election fast approaching and a close contest between Trump and Harris, swing states are emerging as decisive battlegrounds. Crypto has become a strategic narrative, initially popularized by Trump to attract younger, tech-savvy voters and reshape voter demographics.

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In response, Harris’s campaign has adopted a more crypto-friendly stance, though with a cautious, measured approach compared to Trump’s more aggressive proposals. The recent approval of Ethereum spot ETFs indicates that both parties recognize the growing importance of the crypto community and its potential to influence the election outcome in these key swing states.

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The surge in stablecoin supply—from less than $20 billion to over $180 billion—along with major fintech players like PayPal launching their own stablecoins, reinforces that stablecoins are still the most widely adopted consumer application of blockchain technology.

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Stablecoins provide:

• A stable medium of exchange and store of value, especially for high-inflation countries like Argentina, and a practical tool for cross-border remittances.

• A game-changer for market liquidity, becoming the go-to liquidity solution across both CEXs and DEXs, regulated or not.

• A low-cost revenue stream for issuers, generating reliable income through fees and services.

• New yield-generating opportunities for participants, unlocking additional income streams across DeFi and trading platforms.

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The overlap between crypto and AI users reflects a growing synergy between the two spaces. AI’s dominance in crypto discussions shows how integrated these technologies are becoming, with platforms like Etherscan, Binance, and Coinbase sharing significant audience crossover with ChatGPT. This trend goes beyond interest—AI enhances blockchain applications by automating smart contracts and optimizing DeFi strategies, while blockchain infrastructure supports AI through governance, model training, GPU capabilities, and future agent payment systems. Together, these technologies unlock new possibilities, driving mutual growth and innovation.

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Resources

• Coinbase: Guide to Crypto Markets 2024 Q4: https://www.coinbase.com/institutional/research-insights/research/market-intelligence/guide-to-crypto-markets-q4-2024‍
• PWC: 6th Annual Global Crypto Hedge Fund Report: https://www.pwc.com/gx/en/industries/financial-services/assets/6th-annual-global-crypto-hedge-fund-report.pdf
• A16ZCrypto: State of Crypto Report 2024: New data on swing states, stablecoins, AI, builder energy, and more: https://a16zcrypto.com/posts/article/state-of-crypto-report-2024

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Disclaimer: This content is for educational and informational purposes only and does not constitute trading, legal, or investment advice. It is directed at our followers in Switzerland and may not represent the views of FiCAS. The author may hold assets mentioned in this article and assumes no obligation or responsibility for any actions taken based on the information provided.