Key Market Insights
1. TVL Growth Outpaces Market Capitalization
- Adjusted TVL Growth: Total Value Locked (TVL) has grown 24% faster than overall crypto market capitalization year-to-date.
- Top Performers: Emerging chains like TON, Aptos, Sui, and Base show rapid adoption due to their early-stage growth cycles.
2. On-Chain Activity Drivers
- Fee Trends: Most networks saw reduced fees in May, except Solana and Tron.
- User Growth: Ethereum L2s (e.g., Arbitrum) spiked in active addresses post-EIP-4844 upgrade, which lowered transaction costs.
3. Ethereum Fee Dynamics
- Post-Dencun Shift: Rollup-related fees dropped from 12% to <1% of mainnet fees. MEV-driven activity rose to 14%, while direct trading fees increased to 36%.
- Inflation Offset: Despite ETH becoming inflationary since April, higher volatility may counterbalance this trend.
4. Layer-2 Expansion
- TVL Surge: Ethereum L2 TVL hit $9.4B by May (2.4x growth YTD), led by Arbitrum (33%), Blast (24%), and Base (19%).
- Cost Efficiency: Blob storage adoption after Dencun slashed fees despite record-high transactions.
5. Bitcoin Supply Dynamics
- Active Supply: Peaked at 4M BTC in April (highest since 2021) before retreating to 3.1M by June.
- Long-Term Holders: Dormant BTC (>1 year unmoved) remained stable, signaling sustained institutional confidence.
Technical Indicators
1. Macro Correlations
- BTC: Moderately correlated with U.S. equities (0.36) and commodities. Weak gold correlation persists.
- ETH: Tracks S&P 500 returns (0.37) similarly to BTC. Crypto pairs maintain high intra-sector correlation (~0.81).
2. Liquidity Trends
- Trading Volume: Spot BTC CEX volume rose 50% from December ($7.6B vs. $5.1B). ETF trading accounted for 14% of global spot volume in May.
- CME Dominance: Bitcoin futures OI hit $9.7B (30% of total perpetual futures OI), reflecting U.S. institutional demand.
3. ETH Futures Landscape
- CME OI: Nears all-time highs but remains overshadowed by perpetual contracts (85% of $12.1B total OI).
- Catalyst-Driven Peaks: OI surged post-ETH ETF approval and Dencun upgrade.
4. Spot BTC ETF Impact
- Basis Trade Influence: Since April, ETF inflows largely tied to CME basis trading.
- Directional Buying: ETF-held BTC stabilized at 825K–850K BTC after initial March growth.
FAQs
Q1: Why did L2 TVL grow despite fee reductions?
A: Lower fees (post-Dencun) attracted more users and dApps, driving net value creation beyond price appreciation.
Q2: How does BTC’s active supply affect prices?
A: Declining active supply post-peak suggests reduced speculative trading, often preceding consolidation phases.
Q3: What’s fueling CME’s Bitcoin futures growth?
A: U.S. institutions leverage ETFs for basis trades, simplifying arbitrage via traditional brokers.
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Note: Data reflects market conditions as of June 2024.