jakiro
Source: Coinbase; Compilation: Wuzhu, bitchain vision
summary
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We expect thatThe fourth quarter of 2024 will see constructive growth as the U.S. rate cut and China introduces large fiscal and monetary stimulus measures, which will enhance market liquidity and support BTC’s performance.
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The SEC approval of the iShares Bitcoin Trust option is a positive signal.These options can enhance institutional adoption and liquidity.
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On-chain activity is growing, DEX trading volume continues to increase, and Ethereum gas prices continue to rise.
Market Perspective
Investor sentiment positive
Our impression of Token2049 meeting is that sentiment among cryptocurrency investors seems to be quite positive, although this may be related to the incident coincide with the Fed’s 50 basis points cut on September 18.However, while many market participants are optimistic about BTC, we have met some people who are skeptical about ETH because the token does not seem to benefit from the launch of the U.S. ETH ETF more than two months ago.(Note that many attribute this to the recent surge in Ethereum Tier 2 activity, but we have explained before why we think this is an incomplete reason why ETH is not performing well relative to its peers.) In addition, some believe that, nowadays, higher beta tools based on ETH (such as L2 tokens) are more than in the previous cycle, which leads to a crowding out effect.
at the same time,We have not seen a significant shift in the theme of the crypto community, which is consistent with the prospects we proposed at the end of 2023.That said, it seems that people are more focused on emerging alternative layer 1 networks than Ethereum layer 2 networks, and the potential of Bitcoin L2 to provide enhanced programmability to the network and the potential to provide miners with new revenue streams.The demand for general consumer applications is also more urgent than crypto infrastructure protocols, which corresponds to a broader review of crypto fundamentals.
Finally, several announcements were issued during both events, including:
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Sui announced a partnership with MoviePass and incorporated USDC into the network.Sui is also accepting pre-sale orders for its SuiPlay0X1 handheld console, which was previously previewed in April.
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A few days before the event, The Open Network (TON) announced a partnership with Tada, a popular taxi-hailing app in Southeast Asia, to continue to attract attention at the conference.This highlights the potential utility of Telegram Mini Apps and the expansion of TON’s L1 in the crypto ecosystem.
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Solana Mobile has launched its second-generation phone, Seeker, as the successor to Saga phones, which are scheduled to be released in 2025 and are now available for pre-orders.
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Contrary to previous expectations from Breakpoint, Jump Crypto has not announced when the new Solana client Firedancer will be available on the mainnet (currently on the testnet), but they did confirm that an earlier version called Frankendancer was available.
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WisdomTree announces the creation of WisdomTree Connect, a platform for tokenized real-world assets (RWAs) that “enables customers to work with any WisdomTree-issued tokens on supported blockchains in any wallet over time.Interaction”.
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Solana seems to be attracting more RWA projects to its platform, with Franklin Templeton announcing plans to launch money market mutual funds on the network, similar to its products on Stellar, Arbitrum and Polygon.
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Tokenization as a service provider Securities also announced native support for Solana through the integrated Wormhole, aiming to provide cross-chain capabilities for tokenized assets on its platform.
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Coinbase announced that cbBTC (packaged bitcoin) will be launched on Solana soon after the platform was launched on Ethereum and Base earlier this month.Please note that the Sky community has formally voted to waive wBTC as collateral for its platform from October 3.
Macro Outlook
Looking to the future,We are constructive about the outlook for the fourth quarter of 2024, This is mainly based on our optimistic view of the current macro environment, as well as the above special factors.For example, just last week, we think a more important impact of the Fed’s decision to cut interest rates by 50 basis points is that it provides cover for other monetary authorities to take more stimulus measures.China then unveiled a massive fiscal and monetary dual stimulus plan that included record rate cuts, liquidity support for stocks and a decline in bank reserve ratios – all to “promote loans and ease them.”Existing loan burden”.The decline in bank reserve ratio should be particularly beneficial to market liquidity, which we previously found positively correlated with BTC’s performance.Having said that, we expect the positive impact of these measures on cryptocurrency performance to lag a bit.
In the United States, the economy remains resilient despite the concerns about the labor market that sparked at the last FOMC meeting.The GDP figures for the second quarter of 2024 were higher than expected at 3.0% (2.9% median Bloomberg survey), which reaffirms our view thatThe risk of a recession remains low in the short term.That being said, we are focusing on the strikes in the eastern U.S. (and Gulf) coastal ports that may begin next week (October 1), which could drag down the economy in the fourth quarter of 2024.JPMorgan estimates that supply disruptions caused by the strike could cost the economy about $5 billion a day.However, concerns about the possible impact of strikes on inflation have been exaggerated, as shipping still accounts for only a small part of commodity costs.For now, this will not change our view on the macro situation of the cryptocurrency market.
Spot BTC ETF Options?
The Securities and Exchange Commission (SEC) formally approved spot Bitcoin ETF options, especially BlackRock’s iShares Bitcoin Trust (IBIT), although these contracts were approved by the Options Clearing Corporation (OCC) and Commodity Futures Trading Commission (CFTC)Unable to trade.The timeline is still uncertain.But we think,This means greater liquidity and trading volume for asset classes, as the product may expand Bitcoin adoption primarily among institutional investors (and to a lesser extent retail investors).While CME does have Bitcoin futures options, these options are troublesome for US institutional investors from a management perspective.
However, IBIT options will allow the group to directly trade options for the underlying Bitcoin and help minimize credit risk as investors face clearing houses as counterparties.This provides a new entry for institutions to enter the field, potentially leading to new derivatives/earnings-enhanced strategies that were previously impossible.in short,We can see more market participants entering this field, thereby attracting more liquidity.On the other hand, we thinkThe impact on BTC spot prices may be minimal (at least initially) and the impact on volatility may be low.(Note that the impact on implied volatility ultimately depends on whether most end users are option sellers or option buyers.)
On-chain activities
Ethereum transaction fees have risen slightly over the past week as on-chain activity generally recovers.Although the absolute number of transactions and active addresses remained stable, the average gas price over the last 10 days (September 16-26) has risen 498% from the average price in the previous 30 days.The average transaction fee on Ethereum is now $1.69, compared to $0.09 earlier this month.(For reference, the average fees are $6.45 and $0.59, respectively. They are high due to a set of high priority and complex transactions.)
There is no single driver that leads to increased activity.Ethereum Decentralized Exchange (DEX) trading volume rose slightly, up 9% on the week-on-month.The USDC deposit rate on lending platform Aave also rose modestly from 3.5% to 4.5%, indicating a slight increase in leverage.Meanwhile, with the increase in fees, the total ETH transfer volume increased by 17% week-on-month.
That being said, the increase in mainnet Ethereum activity is lower than the WoW changes in L2 and Solana activity – although the latter did not experience a similar fee increase.DEX trading volumes on Base and Solana increased by +28% and +35% WoW, respectively, while the average transaction cost did not change.(In fact, the average Base gas fee dropped by 10% WoW.) We believe this is due to the sensitivity of block space limitations on the mainnet Ethereum, demonstrating the success of extending block space through integrated networks and L2.
Coinbase Transaction Insights
Recently, the correlation between cryptocurrencies and stock markets has been high, close to 50%, thanks to global easing in the United States and China.ETH has seen a significant rebound, up 8% in the past 7 days, outperforming BTC.Altcoins continue to receive new attention from buyers.Games, scaling solutions and Layer-0 are some of the best performing industries, up 17%, 11% and 9% respectively in the past week.
Overall, key indicators indicate strong markets.Financing rates are stable, with open contracts approaching the six-month average.Overall,This shows that the market is ready to enter the month when cryptocurrencies usually perform well, with BTC gaining 8 in October of the past 10 years.
