Data & Insights: Election Data, Record ETF Flows & Bitcoin’s Growing Edge Over Ethereum

Polymarket’s Final Destination

• Traders on Polymarket went absolutely nuts in October, trading over $2.5 billion worth of volume for the month.
  • This completely mountains over the previous month’s total of $533 million in trading volume, representing a nearly 5x month-over-month increase.
  • For added context on how massive October was for the platform, the $2.5 billion worth of volume for the month alone was over 40% higher than the total previous nine months combined.
• Meanwhile, active traders on Polymarket have seen a similar trajectory, recording over 235K active traders for October.
  • This represents a ~160% increase over the previous month’s total and is greater than the previous four months’ total combined.
• With this in mind, open interest (OI) on Polymarket has continued its trajectory into the stratosphere, reaching upwards of $400 million as of the beginning of November 2024.
  • OI on the platform stood at just ~$134M at the beginning of October and proceeded to increase by over 190% in just a month.
• This explosion in activity within Polymarket comes as we approach the final days preceding the US election which culminates on Tuesday, November 5, 2024.
  • Around $198 million worth of OI, representing nearly half of the entire platform’s OI, resides in the bet for the winner of the US presidential election.
  • Of this $198 million at the time of writing, $130 million is betting on Donald Trump to be the winner, while $68 million is betting on Kamala Harris to take the W.
  • Regardless of who will be decided as the winner this coming week, activity on Polymarket, whether it be volume or OI, will likely experience a significant fall, as one of the most anticipated and traded markets in the platform’s history comes to its conclusion.

IBITcoin

• BlackRock's iShares Bitcoin Trust (IBIT) recorded substantial inflows of $2.149 billion in the past week, with $872 million on the 30th marking the largest daily inflow since launch. This surge coincides with Bitcoin's price reaching $71,284, up from $67,670 earlier last week on Monday, October 28.
  • IBIT's market share has grown to approximately 70% of spot Bitcoin ETF volume, suggesting a consolidation of investor interest toward BlackRock's offering. Fidelity's FBTC came second with modest inflows of $133.9 million on Monday, while other ETF providers experienced minor outflows on Thursday.
  • This concentration of flows into IBIT may indicate institutional investors' preference for established financial brands in the crypto space, potentially strengthening Bitcoin's position as an institutional-grade investment asset.
• The U.S. elections have also helped bring cryptocurrency into the spotlight, with former President Donald Trump's recent engagement with crypto markets, including the launch of World Liberty Financial and acknowledgment of the Bitcoin whitepaper’s 16th anniversary.
• Vice President Kamala Harris has also voiced support for crypto in her recent proposal, stating, "She will make sure owners of and investors in digital assets benefit from a regulatory framework so that Black men and others who participate in this market are protected."
• Looking ahead, the consolidation of flows into IBIT could lead to increased market efficiency but may also raise concerns about concentration risk in the Bitcoin ETF space.
  • Political developments may continue influencing institutional appetite for crypto exposure, particularly as increasing regulatory clarity remains a key consideration for traditional investors.

Jito on Top

• Jito Labs recorded $78.92 million in monthly fees for October, doubling its previous record of $39.45 million set in May 2024. This surge has positioned Jito ahead of traditional DeFi fee leaders like Lido and Uniswap.
  • The protocol saw particularly strong performance on October 24th, generating $6.14 million in tips alone, highlighting the growing demand for MEV extraction services on Solana.
  • This achievement marks a potential shift in DeFi fee generation as Jito becomes the first MEV-focused protocol to lead monthly fee rankings.
• Jito's success can be attributed to several key factors:
  • The protocol's specialized MEV infrastructure, including the Jito-Solana validator client and Block Engine, has proven effective at capturing value from increased on-chain activity.
  • Through its liquid staking token JitoSOL, the protocol has created a dual revenue stream, combining traditional staking rewards with MEV extraction benefits.
• The recent surge in activity has strengthened Solana’s position as a hub for retail trading, particularly in emerging token categories such as memecoins and AI coins, contributing to higher transaction volumes and MEV opportunities.
  • The sustainability of these fee levels, however, may depend on this continued high-volume trading activity on Solana, particularly with memecoins, which have been a major driver of MEV opportunities.
  • Jito's emergence as a leading fee generator could signal a broader shift in DeFi, where MEV optimization becomes increasingly central to protocol revenue models.

Animals and Autonomous AI agents

• Pump.fun, the infamous platform where anyone can create and launch a token on Solana, has recorded a new monthly all-time high in revenue generated with $30.5 million.
  • This figure represents a 111% increase over the previous month’s total , while also surpassing the previous monthly all-time high of $28.64 million set in July 2024.
  • October’s figure also broke a two-month downtrend in the revenues generated by the platform, where it previously saw two consecutive months of diminishing revenue, falling by an average of 29% per month.
• The sudden resurgence of Pump.fun came as memecoins of viral memes, with MOODENG being the prime example, went on an impressive price-appreciating run.
  • This was not the sole reason though, as the on-chain market was flooded with a new “AI meta”, where multiple Pump.fun tokens seemingly “endorsed” by various autonomous AI agents posting on X (previously Twitter) came to light
  • Of this, the GOAT token, “endorsed” by AI agent @truth_terminal on X, became the highest ever valued token that originated from pump.fun, with a peak market capitalization of $920 million set on October 24, 2024.
  • Multiple similar “AI-related” tokens and memecoins also reached 8-figure and 7-figure market caps at their respective peaks, such as GNON with $190 million, fartcoin with $83 million and ACT with $74 million, to name a few.
  • However, these memecoins have since fallen far from its peaks as the hype and attention surrounding them have faltered, with most down over 50% from their respective all-time highs.
• The downturn in this recent “AI meta” has not stopped memecoins from blowing up on Pump.fun though.
  • Most recently, a memecoin named PNUT, inspired by the P’nut the squirrel, a pet squirrel that went viral after it was euthanized by New York authorities, reached a peak market cap of nearly $130M, following the mentions (of the incident, not the memecoin) by Elon Musk and Donald Trump.

Bitcoin Stealing the Show

• The Ethereum to Bitcoin market capitalization ratio has declined to 24.52%, its lowest level since April 2021 and a significant drop from 32.7% at the start of 2024. This metric serves as an indicator of relative market sentiment and capital flows between crypto's two largest assets.
  • This decline reflects Bitcoin's growing dominance in both price performance and institutional interest, particularly as investors continue to embrace crypto through ETF products.
  • The sub-25% level marks a critical threshold not seen in over two years, highlighting a sustained shift in market dynamics and investor preferences.
• Traditional finance firms have shown a clear preference for Bitcoin exposure, with IBIT and other Bitcoin ETFs attracting substantial inflows while Ethereum ETF products see comparatively modest interest.
  • Bitcoin's simpler value proposition as a digital store of value may resonate more clearly with institutional investors compared to Ethereum's more complex role in decentralized computing and finance.
  • Mainstream media coverage has predominantly focused on Bitcoin's institutional adoption and price performance, potentially reinforcing this preference among traditional investors.
• The trend reflects broader shifts in market dynamics as Bitcoin's positioning as "digital gold" aligns more closely with traditional investment frameworks, making it an easier first step for institutions entering the crypto space.
  • While Ethereum's technological capabilities and ecosystem are more diverse, this complexity may actually hinder its appeal to traditional investors who prefer clearly defined investment narratives.
  • Looking forward, it's possible that successful Bitcoin adoption by traditional finance could eventually lead to greater institutional interest in understanding and investing in Ethereum's ecosystem too.