Bitcoin breaks $70k! In our last snapshot, we were celebrating Bitcoin’s breakthrough of 60k, and over two weeks the rally has not stopped. Every new ATH came with a minor correction that lasted for a few hours before being overturned by the incredible demand for BTC. Of course, the question on everyone’s mind is: when will the rally end?
We are not fortune tellers here, but Bitcoin market metrics suggest that we have not hit the peak yet, but we are getting closer. Many Bitcoin analysts have suggested lofty ceilings of 100k or even 300k. Could BTC go there? It’s hard to say. Digital assets such as BTC overturn decades of traditional financial thought. But here are some things to consider: 1) demand for Bitcoin has reached new highs in the past few weeks, driven primarily by ETF issuer demand. 2) The halvening, which will further restrict supply, is due in a few weeks and has historically been a price rally event. 3) “Big Crypto” is working hard to convince the SEC to release an ETH ETF. Should that happen, we will likely experience the rising tide effect, where the strong demand for ETH will likely also raise the price of BTC. At the very least, the bull run is not stopping in the immediate future, and with all of these bullish signs, the sky's the limit for Bitcoin.
In other news, early Wednesday morning ETH performed the Dencun upgrade! Dencun implements Proto-Danksharding, which adds a new blob storage data field. In practice, this means that L2s will experience lower trading fees, as they can store the large amount of proof data they currently write in call data to this blob storage. Though mostly overshadowed by the hype of the Bitcoin rally, this small but major milestone for ETH will open the pathway to eventually seeing smaller fees via sharding - though that upgrade will still live in the distant future for now.
Centralized Exchange (CEX) comparisons from weeks 3/5/2024 and 3/12/2024
Trading pair market share for btc_usd, btc_usdt, and btc_usdc
Bull markets are the money makers for CEXs, and this bull market is no exception. Coinbase has suffered multiple outages every time BTC hits a new ATH, but its market share of BTC_USD trades does not appear to have taken a significant hit as Coinbase holds a steady 16% of the market share for these pairs. Binance remains king over the other CEXs though, comprising over 36% of the market share for BTC_USD. Bybit and OKX remain healthy competition to Binance, making up roughly the same market share as Binance. What’s interesting is that traders are more or less evenly split between the large CEXs - we do not see any breakout exchange trying to capitalize on the bull market frenzy.
Trading volume by pair
We also see BTC_USD hit multiple monthly highs in trading volume last week, with the two peaks coming in at $5.4B and $6.7B, respectively. Not to be counted out, ETH_USD also hit a monthly high last week with a respectable $2B in trading volume. Other pairs seem to be lagging behind the Bitcoin rally but expect in the coming weeks to see new ATHs for every other coin as BTC drags the laggards to their limit.
Decentralized Exchange (DEX) protocol from weeks 3/05/2024 and 3/12/2024
Uniswap v3 DEX volume on top pools since Jan 1, 2024
Decentralized Exchanges have not missed a beat with the current run. March has been shaping up to be even bigger than January and February. Uniswap v3 saw nearly $3 billion in volume in a single day in early March for just the top 10 pools alone, with USDC/WETH, WBTC/WETH, and WETH/USDT leading the charge. USDC/WETH on its own had $1.34 billion in trading volume.
DeFi Lending borrow and lend volumes over the last 30 days
Stablecoins and WBTC lead the charge for DEX trading still, but we’re also seeing the return of PEPE. The memecoin was a big standout last year, and the current memecoin craze has brought old memes back from the dead in a major way.
DeFi Lending protocol comparisons from weeks 2/28/2024 and 3/12/2024
DeFi Lending borrow and lend volumes over the last 30 days
Alt-coin price runs have also been supported by liquidity injections of new loans; the volumes borrowed over the last month have grown from the bear market lows. A major spike this week shows us that token price gains are surpassing the yields to borrow and leverage is the best way to earn access to memes and long-tail assets.
DeFi Lending unique address counts for borrows over the last 30 days on the top 5 pools
It isn’t just whales that are borrowing. The growth in borrow volumes corresponded to more unique addresses borrowing than months before. Unsurprisingly, the tokens borrowed by most users are dominated by stablecoins which benefit the borrowers as it is a predictable amount to repay, whereas more volatile tokens like WBTC and WETH may require some back-of-the-envelope math to forecast yields and gains to repay when trading alt-coins.
Network comparisons from weeks 2/27/2024 and 2/19/2024
Net Unrealized Profit / Loss. The indicator shows whether the network is in a state of profit or loss.
As Bitcoin rides into new ATHs, we see the cyclical nature of NUPL coming into effect. NUPL is a good metric for evaluating market sentiment, and as the indicator drives past the optimism line, we see it grows closer to the hope line every day. If we look at the past, we can see that previous tops of the NUPL indicator typically indicate a top to the market cycle, and so in theory we are closing in on the end of this market rally.
Pi Cycle Indicator is a market top signal metric. When the blue and orange lines touch, that typically indicates the top or bottom of a market cycle.
On the topic of topping a market cycle, the Pi Cycle indicator shows there is still some life left in this cycle. However, the Pi Cycle appears to be a lagging indicator as evidenced by the price peaking slightly before the correction. The indicator is not perfect either, as we can see the 2022 bull run peak did not have the two indicator lines touch. Metrics are good ways to spot-check our gut, but we have to make sure to take a holistic view of the market and the fundamentals of what is driving the price up or down.
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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
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