On-chain analytics firm Glassnode, in cooperation with Coinbase International COIN, provides a comprehensive analysis of Bitcoin BTC/USD and Ethereum ETH/USD in its quarterly crypto market guide research report.
What Happened: The report highlights the historical performance of Bitcoin, which has been the top-performing asset in eight out of the last eleven years, delivering an annualized return of 124% from 2013 to 2023.
Despite its impressive returns, Bitcoin has also experienced significant volatility, with average intra-year declines of 47%. The current market cycle, which began in November 2022, has seen prices rise around fourfold from the lows, closely resembling the 2018-2022 cycle.
The overall market capitalization of cryptocurrencies increased by 63% in the first quarter of the year.
The report points out several contributing factors:
- Approval of spot Bitcoin ETFs by the SEC in January 2024.
- The introduction of these ETFs has led to record-breaking inflows, with assets under management reaching nearly $60 billion by the end of March 2024.
- Demand surge has significantly outpaced the new supply of Bitcoin issued by miners, creating a supply-demand imbalance.
Ethereum, the second-largest cryptocurrency by market capitalization, has also experienced significant growth and development. Ethereum’s price performance has been impressive, with the current cycle closely resembling the 2018-2022 cycle, which ended with Ethereum up 1,000% 24 months after the low.
Factors contributing to that:
- Successful implementation of the Dencun and Shapella upgrades, which have enhanced the network’s scalability and security.
- Rapidly expanding DeFi (Decentralized Finance) ecosystem built on the Ethereum network.
- The total value locked (TVL) in Ethereum’s DeFi protocols rose by 85% in Q1 2024, indicating a surge in financial activity and liquidity.
- The number of ETH staked and the total value staked increased in Q1 2024, as more participants were attracted by the yields offered through staking.
Both the Bitcoin and Ethereum derivatives markets have experienced significant growth, with trading volumes and open interest reaching new all-time highs. The upcoming Bitcoin Halving and the potential approval of Ether ETFs by the SEC are expected to further drive market activity and investor interest.
Glassnode also highlights the effect of adding cryptocurrency to a 60% MSCI ACWI and 40% U.S. Agg portfolio. With the rising crypto component in the portfolio, returns rise from 33.3% (no crypto allocation) to 67.03% (5% allocation).
What's Next: The influence of Ethereum and Bitcoin as an institutional asset class are topics expected to be thoroughly explored at Benzinga's upcoming Future of Digital Assets event on Nov. 19.
Read Next: Peter Schiff Predicts Bitcoin ETFs Will Lead To Its ‘Biggest Crash Ever’
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