Crypto keeps grinding higher, with the total crypto market cap touching 1.4 trillion, the highest point in the year, and trading above the $38k level for the second time over the past week.
Price action was flat across majors BTC and ETH, with the latter outperforming the former one more week, coupled with a wide dispersion of returns among alts. HNT and UNI were up almost 20%, while SOL and MATIC were down double digits as they continued to correct from strong performances between mid-October and mid-November.
As we highlighted last week, the Binance settlement did not impact prices to a meaningful extent and was interpreted by the market as removing a potential overhang.
Net outflows from Binance, a metric that is somewhat hard to track precisely, seem relatively muted so far. Data from Nansen suggest a little over $200 million net outflows in ETH and another $280 million net outflows in ETH-related tokens and stablecoins. CoinMetrics shows a similar number for ETH ($180 million) but adds that another $656 million worth of BTC also left the exchange over the past seven days.
All in all, these net outflow figures appear relatively modest when considering the exchange's scale and comparing them to recent outflows. The accompanying chart showcasing Binance's net outflows for BTC and ETH, utilizing data from CoinMetrics, highlights the comparatively modest net outflows even when compared to 2023.
As we approach December, the market should increase its focus on the BTC spot ETF approval process in the U.S. as it approaches its home stretch. The filling of more amended S1s indicates that conversations between issuers and the SEC continue to evolve.
Over the past ten years, BTC yielded positive December returns in four instances. The potential BTC spot ETF approval, the removal of the Binance potential overhang, and the healthy market activity as measured in trading volumes suggest the odds favor us going for five out of eleven.
Other Top Trends We’re Watching
FalconX Trading Desk Color: ETH trading volume surpassed BTC’s for the second week in the past eight weeks. Most investor personas were net buyers, especially in majors BTC and ETH versus alts. There were a few notable exceptions among specific personas, such as prop trading desks and specific alts that sold off considerably. Buy/sell ratios were slightly above 1x for BTC and under 1x for ETH. Majors BTC and ETH traded 1.68x more than alts, which saw flows mainly from the sell-side.
Ethereum Staking Withdrawal Queue Outpaces Activation Queue for the First Time Since Shappela: For a couple of months now, we’ve been highlighting how the Ethereum staking activation queue, a proxy for how heated the demand for additional ETH staking, has been shrinking. The queue, which stood at almost 100,000 validators in June, barely surpassed 1,000 on busier days by October.
On the other hand, the withdrawal queue grew over the past week beyond 2,500 validators. The chart below shows the activation and the withdrawal queues in green and red, respectively.
This trend is important because it is one of the top 11 daily prints since the Shapella upgrade activation on April 12th and marks the first time the withdrawal queue is longer than the activation queue by a significant amount. If this trend remains, the growth prospects of assets that depend on more ETH staked, such as the liquid staking protocols, would be at risk.
Token Unlocks Schedule Warms Up Throughout the Week: While all eyes are on the DYDX unlock (83.2% of the total circulating supply, November 30), there are other noteworthy upcoming unlocks. According to data from TokenUnlocks, the most relevant unlocks over the next seven days include 1INCH (9.5% of circulating supply), SUI (8.5%), NYM (4.1%), ACA (3.3%), and OP (2.7%). Although the bullish market environment could provide a more supportive price action during unlocks, it’s probably still a good idea to keep an eye on the bigger ones.
Spot Trading Volumes During U.S. Hours Outperform Other Regions: After reaching an all-time high a few months ago, the share of crypto spot volumes during U.S. hours started to climb back near the 50% level again. I expect this share to keep grinding higher even if most of the crypto spot volume does not come from U.S. exchanges as U.S.-centric news flow in crypto (spot ETF potential approvals, regulatory developments, etc…) should remain front and center throughout at least early 2024.
