Bulls Are Back? 👀👀

December 11, 2023

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Bitcoin Transaction Fees Outpace Ethereum, DeFi TVL Surges 11% in November: Binance

The digital asset market surged by 11% last month, showcasing Solana (SOL) and Chainlink (LINK) as top performers amid a decentralized finance (DeFi) volume surge, as per a recent Binance Monthly Market Insight report. This growth pushed the total market cap above $1.5 trillion, painting an optimistic outlook.

November saw an initial bullish wave with a 12% increase, followed by a nuanced oscillation between bullish and bearish sentiments, marking a market correction. This positive trend, with October and November gains of 19% and 11% respectively, marked a robust end to the year, recuperating previous losses linked to broader macroeconomic factors. The report highlighted Solana's resurgence and its community interest, drawing over 13,000 attendees across four venues.

A notable deviation occurred in Bitcoin (BTC) transaction fees surpassing Ethereum (ETH) fees, an anomaly given Ethereum's historical pattern. The shift was influenced by increased activity on Ethereum's network due to Bitcoin Ordinals, the prominent non-fungible tokens, which congested the mempool earlier in the year.

DeFi volumes surged by 11%, propelled by institutional funds flowing into digital asset products during this bullish phase. Solana (SOL) particularly soared with a 56% increase in the past month, attracting institutional investors despite altcoin figures remaining low. Ethereum also experienced an influx of institutional interest as its price surpassed $2,000.

Optimism and Avalanche witnessed gains in DeFi Total Value Locked (TVL) by 17% and 16% respectively, while NFT volumes saw a remarkable turnaround, marking a 200% growth, reaching $0.91 billion in the previous month.

Here’s How Stablecoins Are Revolutionizing the Financial System

Coinbase, a leading US-based cryptocurrency exchange, highlighted the vital role of stablecoins in streamlining transactions, emphasizing their benefits in a recent blog post. The exchange noted the frustration many Americans face within the traditional financial system and posited stablecoins as a solution, offering cash benefits without the drawbacks.

As a stakeholder in Circle, the issuer of USD Coin (USDC), Coinbase argued that physical cash no longer meets the needs of digitally inclined consumers. They highlighted the slow and costly nature of interbank transfers compared to the swift and economical alternatives in the crypto space.

Pointing out cash's enduring popularity due to privacy, stability during economic volatility, and support for instant person-to-person payments, Coinbase advocated integrating these strengths into future payment systems.

However, regulatory barriers impede the US from becoming a true crypto hub, unlike countries like Nigeria and Brazil that actively promote stablecoin and cryptocurrency adoption globally. To counter this, Coinbase stressed the urgency of clear, sensible regulations governing stablecoins to prevent the US from lagging in the rapidly evolving crypto landscape.

While not offering specific regulatory suggestions, Coinbase urged the crypto community to engage with Congress members, supporting legislation enabling stablecoins while ensuring consumer protection. They encouraged participation in communities advocating comprehensive crypto regulations.

Despite their potential, stablecoins face liquidity risks. In March 2023, reports surfaced that Coinbase extended a $3 billion credit line to Circle after USDC deviated from its value due to Circle's exposure, necessitating intervention following a bank takeover.

Coinbase's global expansion efforts continued despite regulatory hurdles in the US. Securing Anti-Money Laundering (AML) compliance registration from the Bank of Spain positioned Coinbase as a registered crypto exchange in Spain, allowing them to operate under the country's legal framework. Expanding into various European countries and launching services in Singapore, Brazil, and Canada showcased their global push amid regulatory challenges in the US, highlighted by the SEC's lawsuit against Coinbase.

The Bulls Are Back: Crypto Institutional Inflows Balloon To 2021 Levels

For ten consecutive weeks, crypto investment products have seen consistent inflows, totaling $176 million last week and reaching a staggering $1.76 billion over this period, according to CoinShares’ recent report. The resurgence coincided with cryptocurrencies trending positively in price action, marking a significant turnaround after a lackluster year with intermittent net outflows.

The resurgence in smart money investments within digital asset funds spans the last two months, ignited by the mid-October crypto market bull run. These continuous inflows have surpassed levels not witnessed since the 2021 crypto market surge.

In November, inflows into digital asset investment funds hit $176 million, slightly down from the previous week's $346 million. Bitcoin attracted the lion's share of last week's investments, garnering $133 million in inflows. The cryptocurrency's appeal to institutions surged, especially amid the anticipation of spot Bitcoin ETF approvals in the US, fueling Bitcoin's rally past various price levels, including the recent breakthrough of $42,000.

Ethereum followed suit, attracting $31 million in inflows, sustaining a five-week streak totaling $134 million. Multi-asset investment products, offering exposure to diverse crypto assets, gained $2.3 million in fresh investments.

Solana and XRP welcomed $4.3 million and $0.5 million in inflows, respectively, while Litecoin experienced outflows of $0.2 million. Notably, after three weeks of outflows, Short Bitcoin products reversed the trend, capturing $3.6 million in inflows.

The bulk of inflows hailed from Canada, Germany, and the US, with $79 million, $57 million, and $54 million, respectively. Conversely, Australia and Sweden experienced outflows of $0.5 million and $0.2 million. However, the overall trend underscores institutional bullishness towards crypto's long-term prospects.

This sustained inflow trend mirrors past bullish sentiment in the crypto industry, now marking the most significant since October 2021 when the US saw the launch of futures-based ETFs. Assets under management surged by 107% this year to reach $46.2 billion, although still trailing the 2021 peak of $86.6 billion. Nonetheless, this data reinforces the belief that institutional interest in the crypto market will persist, potentially surpassing previous records in the coming year.

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