Coinbase just released their "Crypto Outlook" for Q3 2024.
Packed with alpha, I've read all 60 pages, so you don't have to.
Here are the top takeaways you need to know (🧵👇)
1/ Market Value to Realized Value (MVRV):
The MVRV ratio is a metric used to assess the overall market sentiment and potential price movements of a crytpto.
It compares the current market price of the crypto to the average price at which holders bought their coins.
Corrections in the market, where the MVRV ratio finds support (doesn't drop below), can be good times to buy.
Currently, the MVRV ratio has bounced off its support level, which suggests that the uptrend is still ongoing.
Source: Glassnode
2/ Bitcoin ROI From Cycle Low:
Bitcoin has gone through four market cycles, each with periods of rising (bull) and falling (bear) prices.
The current cycle, starting in 2022, has seen BTC increase by approximately 400% since its low in November 2022.
This cycle is similar to the 2018-2022 cycle, where BTC surged by 2,000% from its low.
We could experience a few months of sideways movement (chop) ahead.
Source: Glassnode
3/ Crypto Correlations Drop:
In Q2, the correlation between crypto assets fell, with ETH at 0.7 and some altcoins below 0.5.
This decoupling shows a deeper market understanding of fundamentals, with returns becoming more widely dispersed.
Further declines in correlation are expected with more regulatory clarity and institutional adoption.
Source: Coinbase
4/ Volatility Perception Vs. Reality:
The paradigm for crypto is changing with the introduction of US spot crypto ETFs, expanding access and reducing volatility.
- Perception: Digital assets are too volatile for many investors
- Reality: Crypto market cap volatility is similar to that of major tech stocks.
Source: Tephra Digital
5/ Spot ETF Impact:
Spot ETFs have significantly boosted BTC demand, yet the supply remains limited to miner rewards.
Since their introduction, ETF demand has far exceeded the new BTC issuance rate.
Source: Glassnode
6/ Ethereum Market Cycles:
ETH has completed two full market cycles. The current cycle, which began in 2022, has seen ETH rise over 150% since November 2022.
This cycle mirrors the 2018-2022 period, where ETH surged 6,000% from its low.
However, ETH has faced significant short-term challenges. Time will tell if ETF products will fuel a sustainable long-term recovery.
Source: Glassnode
7/ ETH Total Value Locked (TVL):
TVL tracks the value of altcoins and stablecoins in smart contracts and dApps, reflecting financial activity and liquidity.
In Q2, TVL rose by 9%, indicating increased activity on the Ethereum blockchain.
Source: Glassnode
8/ FTX Cash Distribution:
FTX will soon distribute $16B in cash to its recipients.
This distribution could lead to significant inflows into the crypto market if the recipients choose to reinvest their funds.
Important dates to note are August 16, when the trustee vote occurs, and October 7, the deadline for court approval.
9/ Stablecoins:
The stablecoin market cap is currently $160B+ at the time of writing, having increased by $2B in two weeks, surpassing pre-3AC levels.
As a reflection of crypto liquidity, stablecoins are a key long-term price predictor.
With capital flowing in, a long-term bearish outlook is hard to justify.
For the full Coinbase report: Guide to Crypto Markets - Q3 2024
