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The SEC has officially approved Spot Bitcoin ETFs, giving digital assets a monumental occasion to celebrate. If the ETF launch has shown us anything, it is that we are still in the early days of this new asset class. We saw huge trading volumes and liquidity shifting from GBTC to other ETFs, but the biggest thing that stood out was the reactions. It was incredible to see how companies like Blackrock and Fidelity are completely embracing digital assets as a new asset class. More adoption over time will be seen as Bitcoin starts to become a hedge against inflation and portfolio managers, who manage significant amounts of funds, rebalance portfolios.

On the other hand, some commentary from traditional financial news outlets shows that many simply don't understand how the technology works. Seeing traditional financial institutions like Vanguard preventing users from investing in ETFs shows us how early we are. With the ETFs opening doors for traditional finance to move liquidity onto blockchains, and a path now paved for more alternative token options such as an ETH ETF, there is still much more to come down the road.

In other news, the ongoing case between Coinbase and the SEC went to the courts on Wednesday as a federal judge pressed the securities regulator for more specifics. In addition to the charges against Coinbase for listing “securities,” the regulator also targets the CEX’s staking program. These charges could bring about major changes to how the United States treats cryptocurrencies and rewards programs like staking, but after a series of SEC admissions within the last year (such as losing the case against Ripple and approving spot ETFs), Judge Failla will likely take full consideration before issuing a judgment. Thus far, she has been critical of the regulator’s boundaries and arguments used, and without additional clarity, this could take some time to play out.

After issuing a requirement that businesses and individuals must report the receipt of digital assets more than $10,000, the Treasury Department and Internal Revenue Service announced that the requirements are not upheld until regulations are issued. The highly controversial rule would require significant upheaval to how digital assets are transferred and necessitate the collection of an extremely large amount of Personally Identifiable Information (PII). In many ways, the PII collected far exceeds requirements for other transactions of similar size. By now granting an opportunity to the public to comment on the proposed regulation, we may see this overturned, but that is not guaranteed.

Spot Market

Amberdata API Centralized Exchange (CEX) comparisons from weeks 1/9/2024 and 1/16/2024

Centralized Exchange (CEX) comparisons from weeks 1/9/2024 and 1/16/2024

Amberdata API CEX trading volume market share for BTC/USD, BTC/USDC, and BTC/USDT between 12/17/2023 and 1/16/2024

CEX trading volume market share for BTC/USD, BTC/USDC, and BTC/USDT between 12/17/2023 and 1/16/2024

Outside of ETF issuers, the biggest winner of the ETF listings has to be Coinbase. The US-based exchange has been accumulating market share quickly, especially as they were listed on a large majority of the ETF issuer’s filings as the custodian for the spot Bitcoin underlying the ETFs. Market share for key BTC trading pairs (BTC/USD, BTC/USDC, and BTC/USDT) grew over the previous 30 days from 40% to 51% and hit a high of 57% during that period.

Amberdata API Top 5 trading pairs for Coinbase between 12/17/2023 and 1/16/2024

Top 5 trading pairs for Coinbase between 12/17/2023 and 1/16/2024

An interesting comparison to make is how the top tokens by trading volumes differ between exchanges. Taking Coinbase and Bybit as an example, Coinbase’s fiat on-ramp is the biggest contributor to their market share. All 5 of their top traded trading pairs are between a token and USD, which can be either USD or USDC as Coinbase does not differentiate between the two. Essentially, the trading pairs are base trading pairs as there is no crypto-to-crypto element, and all but USDT are native tokens to their respective blockchains.

Amberdata API Top 5 trading pairs for Bybit between 12/17/2023 and 1/16/2024

Top 5 trading pairs for Bybit between 12/17/2023 and 1/16/2024

Meanwhile, Bybit, which had the second highest market share for the key BTC pairs at around 20-30%, has several stablecoin trading pairs – none of which are fiat trading pairs. Of Bybit’s top 5 trading pairs, two are BTC, and two are ETH pairs. By comparing the two, we can see that Coinbase is acting as a fiat on-ramp as users are swapping USD for crypto and are trading across multiple blockchains. Bybit users, on the other hand, are swapping tokens and investing in the top two blockchains. A signal to watch would be how much Coinbase funds move from the exchange to the blockchains, as it is likely to be new money moving in.

DeFi DEXs

Amberdata API Decentralized Exchange (DEX) protocol from weeks 1/9/2024 and 1/16/2024

Decentralized Exchange (DEX) protocol from weeks 1/9/2024 and 1/16/2024

Amberdata API Average LP IL to pool liquidity since January 1, 2023, for WBTC/WETH

Average LP IL to pool liquidity since January 1, 2023, for WBTC/WETH

Average Impermanent Loss, or unrealized losses caused by price fluctuations for underlying tokens, for Uniswap v3 WBTC/WETH liquidity providers (LPs), became extremely large since November 2023 and currently sits around 3.5%. This was caused by the Bitcoin and Ethereum price divergence which grew over this period as investors began to swap WETH and ETH for WBTC and BTC.

Amberdata API Average LP IL to cumulative holder fees generated since January 1, 2023, for WBTC/WETH

Average LP IL to cumulative holder fees generated since January 1, 2023, for WBTC/WETH

Although IL caused some impact on LP positions, cumulative fees also skyrocketed for this pool.

DeFi Borrow/Lend

Amberdata API DeFi Lending protocol comparisons from weeks 1/9/2024 and 1/16/2024 Aave v2 v3 compound v2 MakerDAO

DeFi Lending protocol comparisons from weeks 1/9/2024 and 1/16/2024

Amberdata API DEX deposit and withdrawal volume between 12/17/2023 and 1/16/2024

DEX deposit and withdrawal volume between 12/17/2023 and 1/16/2024

Deposit volumes on DeFi lending protocols have been falling since the ETF approvals after hitting highs on January 5, 2024, and January 9, 2024. We see that deposit volumes were ramping up at the start of the year with high expectations for the approvals with lenders expecting higher than usual borrow volumes (and subsequent higher lending rates) or with the opportunity to leverage collateral and speculate on token price fluctuations.

Amberdata API DEX borrow and repayment volume between 12/17/2023 and 1/16/2024

DEX borrow and repayment volume between 12/17/2023 and 1/16/2024

When we add in our borrow volume to the analysis, we can see that the high lending volume dates also coincided with borrow volumes. The ETF was considered by many to be a “sell the news” event. Once the ETFs were all but confirmed (and after the start-stop by the SEC’s X account), borrowers began to cash out their positions and repay loans that were accrued. With an ETH ETF looming in the next few months, a similar pattern is likely to play out around ETH and alt-coins gaining.

Networks

Amberdata Network comparisons from weeks 1/9/2024 and 1/16/2024 Bitcoin Bitcoin Cash Ethereum and Litecoin

Network comparisons from weeks 1/9/2024 and 1/16/2024

Amberdata API Network transactions between 1/17/2023 and 1/16/2024. Bitcoin, bitcoin cash, ethereum, litecoin.

Network transactions between 1/17/2023 and 1/16/2024

Litecoin has been growing in volume over the last few months. The Bitcoin offshoot has been staying quiet in the background for the last few years as Bitcoin and Ethereum (not to mention Solana and L2’s) gained popularity. But with the Bitcoin ETF speculation several investors have been speculating that a Litecoin ETF is possible.

Amberdata API Network average transaction fees between 1/17/2023 and 1/16/2024

Network average transaction fees between 1/17/2023 and 1/16/2024

Network transaction fees continue to trend high for Bitcoin and Ethereum, though Bitcoin’s transaction fees seem to be in a decline while Ethereum fees have been quickly dropping since the start of 2024.

Links

Recent from Amberdata

  • Amberdata / CryptoNews Podcast: ‎CryptoNews Podcast: #300: Greg Magadini, Director of Derivatives at Amberdata, on the Bitcoin ETF Approval, Volatility, and Crypto Derivatives
  • Kitco: Spot Ether ETFs more significant than BTC ETFs for the broader cryptos industry – Analysts
  • Benzinga: Beyond Bitcoin: Ethereum ETF Approval Has Investors Craving Liquid Staking Gold Rush
  • Coindesk: Bitcoin, Asian Stocks Drop as Traders Pare March Fed Rate Cut Bets
  • Kitco: Cryptos surge, stocks slump, as investors await the spot BTC ETF decision
  • Reuters: Cryptoverse: Bitcoin derivatives traders bet billions on ETF future
  • Schwab: Bitcoin Awaits SEC ETF Decision
  • MarketWatch: Bitcoin ETFs finally approved after a chaotic, ‘embarrassing’ 24 hours for SEC

Spot Market

Spot market charts were built using the following endpoints:

Futures

Futures/Swaps charts were built using the following endpoints:

DeFi DEXs

DeFi DEX charts were built using the following endpoints:

DeFi Borrow/Lend

DeFi lending charts were built using the following endpoints:

Networks

Network charts were built using the following endpoints:

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