Analysis from Coinbase Researchers: Is the Bull Market Just Beginning?

Insights into the Cryptocurrency Market

David Duong and David Han of Coinbase recently provided an analysis of the current state and future prospects of the cryptocurrency market, focusing on a range of economic indicators and market trends.

Market View and Economic Indicators

Coinbase’s analysis of the recent US CPI data indicates a potential rally in risk assets towards the year’s end. They anticipate a softer trend in the US dollar strength and suggest that the diminishing fiscal support for the US economy is likely to prevent further Federal Reserve rate hikes.

Crypto Market Trends

November and December have been weaker months historically for crypto. However, Coinbase believes that the current macro environment and narratives around spot bitcoin ETFs and the upcoming Bitcoin halving could foster market resilience. They report a surge in BTC and ETH spot volumes in November, marking the highest since March 2023, along with a significant increase in futures volumes.

Institutional Interest in Bitcoin

There has been a notable increase in institutional demand for bitcoin, with a 44% increase in open interest on traditional CME futures over the last four weeks, according to Coinbase’s analysis.

Onchain Developer Activity

Coinbase proposes evaluating the proportion of blockspace demand spent deploying new contracts as a way to measure developer activity in the crypto space. Ethereum serves as a baseline for this measurement, with around 1.5% of blockspace demand.

Coinbase Exchange & Coinbase Execution Services (CES) Insights

Volumes have increased across a wide range of assets on the exchange, raising the question of whether this signals the start of a bull market. Coinbase also observes new money entering the space from various client segments and diversification beyond major cryptocurrencies into higher beta sectors.

Hot Take

It is clear that Coinbase’s analysis offers valuable insights into the current and future state of the cryptocurrency market, providing crucial information for investors and enthusiasts alike.