Data & Insights: BlackRock Dominates, Onchain Searches New Highs

BlackRock Eating Volume Share

 

• The iShares Bitcoin Trust (IBIT) has roared to a new all-time high, capturing an impressive 67% of the spot Bitcoin ETF volume market share. This surge surpasses its previous record of 61%, further cementing BlackRock's dominance in the crypto ETF space.
  • Despite this record-breaking market share, IBIT's trading volume for the day stood at $1.2 billion, which is only average for the fund. This suggests that while IBIT is outperforming its competitors, overall market activity remains steady.
  • The discrepancy between record market share and average volume implies that other Bitcoin ETFs may be experiencing a slight dip in trading activity, allowing IBIT to capture a larger slice of the pie without necessarily seeing a surge in its own volume.
• BlackRock's success with IBIT comes as no surprise to many market observers. The asset management giant has a long history of dominating the ETF landscape across various asset classes.
  • BlackRock's reputation, extensive distribution network, and marketing prowess have made it a go-to choice for both institutional and retail investors venturing into the crypto ETF space.
  • The firm's ability to quickly establish IBIT as a market leader showcases its skill in navigating new and complex markets, even in the face of stiff competition from both traditional finance and crypto-native firms.
• As the crypto ETF landscape continues to evolve, all eyes are now turning to the imminent launch of Ethereum ETFs, slated for tomorrow, July 23rd.
  • BlackRock's success with IBIT may signal continued dominance as it enters the Ethereum ETF market. The firm's track record and the trust it has built with investors through IBIT could give it a significant advantage in attracting early inflows to its Ethereum product.
• However, the Ethereum ETF space may present unique challenges and opportunities. It remains to be seen whether the ETF providers will be successful in replicating the success they saw with their Bitcoin ETFs.

Mining America Great Again

• The past two weeks have seen a remarkable uptick in the market capitalization of major crypto mining stocks, with most companies experiencing double-digit percentage growth.
  • Marathon Patent Group ($MARA) led the pack, seeing its market cap jump from $5.51 billion on July 8th to $7.56 billion by the end of the week, a staggering 37% increase in just five days. While there was a slight pullback to $6.99 billion over the following week, the company still maintained a 27% gain over the 11-day period ending on July 19th.
  • Riot Blockchain ($RIOT) followed a similar pattern, climbing from $2.78 billion to $3.67 billion, netting a 32% weekly increase in the second week of July 2024 before settling at $3.16 billion towards the end of last week. Hut 8 Mining ($HUT) saw more modest but still significant growth, rising from $1.58 billion two weeks ago to $1.76 billion to close out this week, an 11% increase.
  • Smaller players in the space also benefited from this surge. BIT Digital ($BTBT) grew from $456 million to $508 million two weeks ago, before ending at $470 million this week, while Hive ($HIVE) increased from $392 million to $427.9 million during the same period. Canaan and BIT Mining saw gains as well, though less pronounced than their larger counterparts.
• While it's always challenging to attribute market movements to specific events, it's hard to ignore the impact recent political developments had on the crypto sector.
  • On July 13th, former U.S. President Donald Trump, the presumptive Republican nominee for the 2024 presidential election, survived an assassination attempt during a campaign rally, which saw Trump wounded in his right ear.
  • Trump has positioned himself as a pro-crypto figure in recent months, even stating recently that he wants all future Bitcoin to be mined in the United States.
  • It's worth noting that the most significant gains in mining stocks occurred between July 8th and July 15th, encompassing the date of the assassination attempt and the statement on mining itself. While correlation doesn't imply causation, the timing is certainly intriguing.
  • The crypto market, and particularly the mining sector, may have responded positively to Trump's survival as his continued presence in the political landscape could mean ongoing support for crypto-friendly policies, including increased attention towards domestic BTC mining

Searching Onchain 

• Google search volume for the term "onchain" is hitting unprecedented heights, signaling a surge in mainstream interest in blockchain technologies. The search interest has skyrocketed 5x from around 19 at the start of 2024 to a peak of 100 in recent weeks, marking an all-time high.
  • This milestone coincides with record-breaking DEX to CEX trading volume ratios, as discussed in last week's newsletter.
  • While impressive, it's worth noting that search volume doesn't always directly correlate with adoption or market performance, suggesting there's still room for growth in actual blockchain usage.
• Coinbase's recent promotion of "onchain summer” could further amplify this trend, potentially driving the search volume to new heights.
  • As one of the largest and most recognizable crypto exchanges, Coinbase's endorsement of onchain activities could introduce the concept to millions of retail investors, possibly leading to sustained interest and higher search volumes from its almost 10M active users. 
• The landscape of blockchain interest is evolving, with some exciting shifts in focus:
  • DeFi continues to dominate, with DEX to CEX volume ratio hitting an all-time high of 13.76% in July 2024.
  • Other notable apps include social platforms built on blockchain, like Farcaster, which have seen substantial growth in user engagement, indicating interest is expanding beyond financial applications.
• Several factors are likely contributing to the increasing appeal of blockchain technologies. Improved user experiences have made interactions more accessible to newcomers while growing incentives like airdrops and yield opportunities are attracting more participants. The expanding ecosystem of decentralized applications also offers a broader range of functionalities, catering to diverse user needs.
• However, the growth is not without challenges. Smart contract risks remain a concern, as complex code vulnerabilities could lead to significant losses. Regulatory uncertainty also looms as increased mainstream attention may attract more scrutiny from regulators.
• As decentralized apps continue to gain traction, we’re seeing a reevaluation of how we own data and interact. 
  • The competition between centralized and decentralized solutions drives innovation across the entire tech ecosystem, ultimately benefiting users with more choices and improved services.
• Looking ahead, it will be interesting to see if this heightened interest translates into sustained growth or if it's a temporary spike driven by purely speculative users. 

Base(d) Department Is Calling

• Base recently saw all-time highs in both transaction count and the number of active addresses in the chain. This surge has solidified Base's position as a leading Layer 2 solution, surpassing other optimistic roll ups such as Arbitrum and Optimism.
  • On July 15th, Base chain recorded 3.28 million transactions. By the end of the week, on July 19th, this number had climbed to a staggering 3.52 million transactions, reflecting an average gain of approximately 1.8% per day over the week.
  • Parallel to the surge in transaction counts, the number of active addresses on Base also hit record highs. Starting at 567,000 on July 15th, the number of active addresses rose to nearly 650,000 by Friday, July 19th, achieving an average gain of about 3.5% per day over the same period.
  • With this, Base has experienced a notable spike in fees, reaching its highest single-day total in over a month with $177K collected on Saturday, July 20th. This surge in activity is reflected in the past week’s cumulative fees, which amounted to $967K.
• Base, a Layer 2 solution, was anticipated to capture a significant retail user base due to potential direct support and onboarding capabilities from Coinbase. This prediction is now materializing as Base has outperformed competing optimistic roll ups such as Arbitrum and OP Chain, making it the most popular optimistic rollup in terms of transaction count and number of active addresses.
  • However, it is worth noting that Base is still behind Arbitrum in terms of total value locked (TVL) within the chain, with Base having $1.77 Billion in TVL while Arbitrum has $3.25B, at the time of writing. Base has long surpassed OP Chain’s TVL of $787M.
• A notable driver of this recent surge in activity on Base has been the memecoin MIGGLES, which was deployed on ape.fun, a fork on Base of Solana’s popular pump.fun platform. The MIGGLES memecoin was deployed, and subsequently saw a surge in popularity, following a tweet from the official Coinbase account, which featured an advertisement of a cat with a similar name.
  • The MIGGLES coin has since reached a market capitalization of nearly $120M, with daily trading volumes reaching upwards of nearly $150M per day for the four days it has been live.

BTC OI Flat Despite Price Hike 

• Bitcoin's aggregated open interest is holding steady at around $29 billion, a level last seen in June, despite recent price volatility.
  • This stability comes even as Bitcoin's price has surged approximately 25% in the last two weeks, recovering from a low of $54,550.
  • Open interest peaked at $40 billion on the 4th of July after prices tumbled more than 5% that day. 
  • For context, open interest represents the total number of outstanding derivative contracts that have not been settled.
• Bitcoin futures trading volume remains consistent at about $1.5 trillion month-over-month, indicating sustained trader engagement despite price fluctuations. This scenario presents an interesting divergence from traditional market expectations:
  • Typically, high levels of open interest coupled with significant price increases can signal market 'froth', where enthusiasm potentially outpaces fundamental value.
  • However, the current steady open interest alongside price growth suggests a more measured market sentiment.
• Several factors could be contributing to this cautious optimism:
  • Traders may be hesitant to aggressively bid up the market following the recent dip, adopting a more conservative stance.
  • The approaching U.S. presidential election in November might be influencing positioning, as investors anticipate potential shifts in the crypto regulatory landscape under a potential new administration.
• While the steady open interest could hint at room for further price appreciation without overheating the market, it's important to approach such interpretations with caution. The crypto market is known for its unpredictability, and current trends don't guarantee future movements.