Data & Insights: Ethereum Activity Climbs, Bitcoin Miners Thrive, and Exchanges Surge

It's 2021 in Exchange Land

• The combined monthly volume of all centralized exchanges (CEXs) in November 2024 has reached $2.71 trillion.
  • This represents the highest combined monthly CEX volume in over three years, since May 2021’s 4.16 trillion.
  • It has even surpassed the combined monthly CEX volume seen in November 2021 and March 2024, where Bitcoin recorded new all-time highs at the time.
• Binance recorded $986 billion in trading volume for November 2024, contributing the lion's share of the total.
  • This is reminiscent of the exchange's performance during the 2021 bull run, underscoring its continued leadership in the industry.
  • However, it is worth noting that Binance’s total volume in November 2024 was still 12% lower than in March 2024, the last time Bitcoin reached new all-time highs.
  • On the other hand, Bybit, Coinbase and Upbit recorded volumes in November 2024 compared to March, highlighting the difference compared to Binance.
  • Upbit and Coinbase recorded $234 billion and $175 billion in volumes, respectively, in November, up by 6% and 11.7% compared to March 2024.
  • This reinforces their dominance as their respective region’s largest CEX, with Upbit in the South Korean market and Coinbase in the United States.
  • Interestingly, Bybit saw the largest jump in its monthly volume, with $213.9 billion in volume in November 2024 being 14.6% higher than in March 2024.
• While the $2.71 trillion total volume still lags behind May 2021’s record high, it signals increasing participation from both retail and institutional players as crypto regains mainstream attention as Bitcoin’s price stabilizes near $95,000 at the time of writing.

Meet Me Onchain (on Ethereum)

• Ethereum's on-chain volume in November 2024 reached $183.74 Billion, marking its highest monthly volume recorded year-to-date (YTD)
  • This represents the highest on-chain volume on Ethereum in nearly three years, since December 2021’s $241 Billion.
  • While this figure remains a far cry from its all-time high of $404.93 billion in May 2021, November's performance demonstrates a return to solid activity levels
  • It is a solid 9% increase over the previous yearly highs seen in March 2024 and nearly doubles the year's lowest on-chain volume of $107.93 Billion in January.
  • This increase is likely driven by capital rotation, as market participants move down the risk curve, reallocating funds from centralized exchanges (CEXs) to on-chain activities.
  • One example worth highlighting of this capital rotation is the rotation into NFTs, which has caused a slight resurgence in the NFT market.
• November 2024 saw Ethereum-based NFT marketplaces record its highest combined monthly volume since June 2024.
  • This comes as NFT trade volume on Ethereum has been averaging $55 Million per week over the past 3 weeks, which is nearly double the weekly average during the previous few months.
  • This is further supported by the increase in the floor prices of several notable NFT projects this month, including CryptoPunks, Pudgy Penguins and Milady Maker.
  • These NFT projects have seen their floor prices rise by 55%, 46.5% and 36.7%, respectively, in the month of November 2024.
• Interestingly, the 7DMA of the average transaction fee on Ethereum has been relatively low despite record yearly on-chain volumes, being just 1/5th of the cost seen during the previous yearly highs in March 2024.
  • This discrepancy is likely due to the composition of on-chain transactions on Ethereum having shifted, where March 2024 saw high-fee speculative trades such as token trades and launches, November's activity likely included more stable and high-value transfers, which typically consume less gas.
  • The high-volume, high-velocity, high-speculation on-chain trading may also have shifted to Solana, with platforms such as pump.fun leading the charge.

YouTubers Feeling the Bull 

• YouTube views of crypto influencer content reached 4.72 million for the week of November 25th, marking a 12-month high while suggesting renewed retail interest in the digital asset space.
  • Coin Bureau and Crypto Banter led the surge, each generating over 1 million weekly views, contributing significantly to the overall metric.
  • Current weekly views remain below the all-time high of 9.3 million, indicating potential room for growth in retail engagement.
• The uptick in crypto content consumption coincides with broader indicators of retail participation:
  • Both Phantom Wallet and Coinbase have broken into the top 100 rankings on app stores, suggesting increased interest from new market participants.
  • Bitcoin's sustained trading around $90,000 since November 11th may be drawing additional retail mindshare as the market eyes the $100,000 milestone.
• However, several factors warrant consideration when interpreting these metrics:
  • YouTube views alone do not guarantee sustained retail participation or predict market direction.
  • Previous cycles have shown that social media engagement can be a lagging indicator of market interest.
  • The current view count of 4.72 million represents about 50% of the all-time high, suggesting retail participation may still be in the early stages compared to previous cycles.
• This trend emerges as part of a broader shift in market dynamics:
  • Traditional finance continues to establish stronger footholds in the crypto space through ETFs and other investment vehicles, attracting a more diverse group of retail users to the crypto space.
  • The combination of increasing social media engagement and app download rankings may indicate a gradual return of retail interest rather than sudden surges.

All Your Base Are Belong To Us

• Base has reached another all-time high with 8.8 million daily transactions on its network, leading the optimistic rollup ecosystem while maintaining strong growth metrics across multiple indicators.
  • Transaction volume on competing networks also showed upward momentum, with Arbitrum and Optimism recording 2.5 million and 900,000 transactions, respectively.
  • Base's Total Value Locked (TVL) stands at $3.6 billion, supported by net inflows of $227 million over the past seven days, outpacing Solana's $71 million during the same period.
  • Network fees hit a three-month high of $766,000 on November 28th, reflecting increased demand for block space.
• The surge in activity appears largely driven by growing interest in AI agent protocols, particularly the Virtuals platform:
  • Virtuals Protocol is a decentralized platform that enables the creation, co-ownership, and monetization of AI agents across various digital environments, including gaming, entertainment, and social media. 
  • Some major projects in the Virutals ecosystem include AIXBT and LUNA, both AI-driven agents that users can interact with. 
• Base's growth reflects broader trends in layer-2 innovation:
  • The combination of rising transaction counts and TVL indicates sustained ecosystem development beyond speculative activity.
  • Integration of AI functionality may represent a new narrative for layer-2 differentiation and user engagement.
• Another notable example emerged with Freysa AI, an agent that is programmed never to hand money to the user. However, a user successfully completed the challenge, extracting $47,000 worth of crypto. 
  • The Freysa AI challenge attracted 195 players who made 482 attempts, demonstrating significant engagement with AI agent mechanics.
  • The platform implemented incremental query fees during the challenge, introducing a new revenue model for AI-crypto interactions.
  • The Freysa AI incident highlights potential security challenges in AI-driven protocols, as similar methods can be used to hijack or influence other AI agents.

Miners Be Mining

• Bitcoin's hashprice index has trended upward over the past three months, rising from September lows of $0.04 to reach $0.06 per TH/s on November 18th, marking a three-month high.
  • Despite the recent increase, current levels remain below January's $0.09 per TH/s, indicating room for potential growth in mining profitability. 
  • The Bitcoin network experienced a halving in April, slashing mining rewards in half, which also caused the hashprice to drop 50%.
  • Miners are generating approximately $40 million in daily revenue, primarily derived from block subsidies rather than transaction fees.
  • The surge in non-rune transactions, accounting for 97% of network activity on November 28th, has contributed to the improved mining economics.
• The hashprice metric, developed by Luxor, provides insight into mining profitability by combining several key factors:
  • Network difficulty adjustments directly impact the amount of Bitcoin earned per unit of hashrate.
  • Bitcoin's price movements affect the USD value of mining rewards.
  • Transaction fee volumes can supplement basic block rewards.
  • The index uses a 144-block moving average to smooth out transaction fee volatility.
• Current market conditions have created a supportive environment for mining operations:
  • Bitcoin's sustained trading of around $90,000 has provided stability to mining revenue calculations.
  • Increased network activity has generated additional fee revenue, though block subsidies remain the primary income source.
  • The combination of price stability and transaction growth suggests organic network usage.
• The relationship between network activity and fee revenue may evolve as transaction patterns change.
  • As people are exploring Bitcoin ecosystems like ordinals and runes, the fee mix for Bitcoin may evolve. 
  • Mining profitability remains sensitive to Bitcoin price movements and network difficulty adjustments.