Welcome to the Crypto.com Monthly Research Roundup Newsletter!

1. Market Index

All indices fell in June. The price, volume and volatility indices were negative at -9.26%, -20.07% and -10.43%, respectively.

2. Charts of the Month

Bitcoin monthly active addresses dropped to their lowest since 2019, recording 11.7 million monthly active addresses in June 2024, representing a 6% month-on-month and 34% year-on-year drop. A decline in active addresses generally indicates a lack of trading activities among Bitcoin holders, which potentially coincides with a phase of market consolidation. 

Stablecoin issuers are now the 18th largest holders of US debt. Collectively, they hold over $120 billion in US Treasury notes. This makes stablecoin issuers larger holders of US debt than some major current account surplus nations like South Korea, Mexico, and Germany.

The largest stablecoin issuers holding US debt are Tether (USDT), with around $91 billion in Treasuries, and Circle (USDC), with $29 billion in short-dated US debt, according to the data from Tagus Capital.

The NFT market saw a 44% decline in sales volume in Q2 2024, dropping from $4.1 billion in Q1 to $2.3 billion. This downturn marks the lowest quarterly volume since Q3 2023. Despite the decline, Solana and Bitcoin-based NFTs achieved significant milestones, with Solana reaching $5.62 billion in sales volume and Bitcoin NFTs hitting $4.32 billion in all-time sales. They have both surpassed the Ronin blockchain – known for the popular blockchain game Axie Infinity. They now hold the second and third spots, respectively, behind Ethereum for the highest all-time NFT sales volume.

3. Monthly Feature Articles

Monthly Feature Report | Spot Ethereum ETFs

The US Securities and Exchange Commission (SEC) approved spot Bitcoin exchange-traded funds (ETFs) in early 2024, strengthening crypto assets’ legitimacy as an emerging asset class. In May 2024, the SEC approved eight spot Ether ETFs, which could launch in July 2024.

Spot Bitcoin and Ether ETFs track spot prices of the corresponding assets without direct holding of the assets. Although Ether ETFs offer potential staking rewards, new Ether ETFs have removed staking features to align with SEC regulations. The SEC’s approval of spot Ether ETFs is expected to significantly impact the Ethereum market. Ethereum’s upgrades, such as the Dencun upgrade, enhance its scalability and efficiency, making Ether ETFs more attractive for investment.

This report discusses US spot Ether ETFs and makes projections on some key metrics when they begin trading. Read it now: Spot Ethereum ETFs.

Key takeaways:

• The US Securities and Exchange Commission (SEC) approved spot Bitcoin ETFs in early 2024. This approval has strengthened the legitimacy of cryptocurrency assets as an emerging asset class.
  • US spot Bitcoin ETFs accumulated $27.2 billion in AUM within a week after launching in January 2024. Total net inflow and cumulative volume amounted to $14.4 billion and $309 billion, respectively, as of 25 June.
  • Over 600 firms disclosed billions in US spot Bitcoin ETFs in Q1 2024.
• In May 2024, the SEC approved eight spot Ethereum ETFs, which could launch in July 2024. But they still require S-1 form approvals for market entry.
  • Though current futures-based ETH ETPs offer ways to invest in ETH, spot ETFs are often preferred due to their direct exposure to the underlying assets, reduced complexity, lower risk profile, and broader market acceptance.
  • With the comparative significance in market size, liquidity, and fee structure, US spot ETH ETFs are believed to drive much larger traction than HK spot ETH ETFs.
• Following the news of the SEC’s approval of spot Ether ETFs, existing Ether exchange-traded products (ETPs) like Grayscale Ethereum Trust (ETHE) saw significant rallies. The discount between the trading price of ETHE and its underlying Net Asset Value (NAV) reached its narrowest point since 2021.
• Ethereum distinguishes itself from Bitcoin in a few ways, which also impact its ETFs.
  • Bitcoin is often described as ‘digital gold’ and primarily seen as a store of value. Ethereum is positioned as a ‘global computer’ with more functional capabilities, enabling smart contracts and decentralised applications (dapps).
  • Spot Ether ETFs could offer dividend potential from staking rewards, which is not a feature of Bitcoin ETFs. But new Ethereum ETFs have removed staking features to align with SEC regulations.
• Projections on some key metrics for the potential ETH ETFs:
  • Price Performance: The approval of S-1s is expected to positively impact Ether’s price, potentially reaching $6,000 level within 60 days post launch assuming ETH’s performance follows BTC’s performance after the spot BTC ETFs launch.
  • Inflow: Community estimates that ETH ETFs could see around 10%–30% of the total inflows in BTC ETFs, meaning $1.4–$4.5 billion in the first six months. In comparison, BTC ETFs saw $14.4 billion in inflows during the same period.
  • Trading Volume: ETH ETFs’ trading volume could reach between $700 million to $2.4 billion after five months. In comparison, BTC ETFs saw $7 billion in trading volume during the same period.
• The SEC’s approval of spot Ethereum ETFs is expected to significantly impact the Ethereum market. Ethereum’s upgrades, such as the Dencun upgrade, have enhanced its scalability and efficiency, making it more attractive for investment.

Monthly Feature Report | New Developments in GameFi

Play-to-airdrop and prediction markets are two trends that have recently dominated GameFi’s narrative. Both leverage social elements to gain significant traction and influence.

One popular form of play-to-airdrop is tap-to-earn, which is when players tap or click in the game to earn in-game currencies that can be redeemed in a future airdrop. Tap-to-earn games are a great way to drive crypto adoption, as they’re easy to play, hooking both newbies and crypto enthusiasts seeking rewards. Notcoin and Hamster Kombat are two examples of popular tap-to-earn games.

Prediction markets allow users to speculate on the results of diverse topics ranging from sports, business, and macro events. They contain the element of relevancy, as topics often reflect what’s top on the audience’s mind.

These two trends have blurred the boundaries between Web2 and Web3, and enhanced crypto adoption. Our latest report delves deeper into these two trends to examine new developments in GameFi. Read it now: New Developments in GameFi: Play-to-Airdrop and Prediction Markets.

Key takeaways:

• Play-to-airdrop and prediction markets are the two trends that have recently led the cryptocurrency narrative. Both leverage social elements to gain significant traction and influence.
• One popular form of play-to-airdrop is tap-to-earn, which is when players tap or click in the game to earn in-game currencies that can be redeemed in a future airdrop. Notcoin and Hamster Kombat are two examples of popular tap-to-earn games. 
• Tap-to-earn’s success can be attributed to simple user onboarding and gameplay, potential attractive rewards, and integration with popular platforms.
• Tap-to-earn games are a great way to drive crypto adoption, as they’re easy to play, hooking both newbies and crypto enthusiasts seeking rewards. The focus is on quickly onboarding many users with simple, direct gameplay — different from complex AAA titles. The ‘dumbed-down’ design and airdrops help these games spread quickly, but the long-term sustainability after airdrops end is unclear.  
• Prediction markets allow users to speculate on the results of diverse topics ranging from sports, business, and macro events. Typical features of prediction markets on blockchain include decentralisation, lower fees, and automated payouts. 
• Polymarket is one of the largest crypto-based, decentralised prediction platforms. Its weekly trading volume has seen a spike in 2024, showing an 830% year-over-year increase comparing January-May 2023 to January-May 2024. 
• Prediction markets contain the element of relevancy, as topics capture popular narratives and often reflect what’s top on the audience’s mind. In addition, they are social and potentially reflective of market sentiment if the topics reach critical mass. 
• Both play-to-airdrop and prediction markets have blurred the boundaries between Web2 and Web3. 

Monthly Feature Report | New Layer-2s

Ethereum Layer-2 (L2) networks have surged in activity, now accounting for approximately 90% of all transactions on the Ethereum network, up from 77% before the Dencun upgrade.

The emergence of new L2 solutions brings innovative approaches to tackle common challenges faced in traditional Ethereum L2s, including centralisation, cross-chain interoperability, and complexities in security and trust. Common trends for these L2s are enhanced security, decentralisation, modularity, native yield generation, and improved liquidity. Overall, emerging L2 solutions like Cronos zkEVM not only enhance Ethereum’s scalability but also improve user and developer experiences, which can potentially boost the Ethereum ecosystem in the near future.

This report explores the new Ethereum L2 landscape by examining the following projects: Cronos zkEVM, Taiko, Morph, Blast, Reya and MegaETH. Read it now: New Ethereum Layer-2s.

Key takeaways:

• Ethereum Layer-2 networks (L2s) have surged in activity, now accounting for approximately 90% of all transactions on the Ethereum network, up from 77% before the Dencun upgrade.
• L2s face several challenges while scaling Ethereum, including:
  • Centralisation: Centralised sequencers risk censorship and fraud.
  • Security and Trust: Economic incentives and cryptographic create complexities.
  • Interoperability: Difficulty ensuring secure cross-chain transactions.
  • Finality: Long challenge periods delay transaction finalisation.
  • Complexity: High computational load and Ethereum Virtual Machine (EVM) compatibility issues.
  • User Experience and Accessibility: Barriers in learning new interfaces, managing multiple wallets, or navigating complex security measures.
• The emergence of new L2 solutions brings innovative approaches to tackle the above challenges. Common trends on the L2’s design are enhanced security, decentralisation, modularity, native yield generation, and improved liquidity. 
  • Cronos zkEVM: A Zero-Knowledge (ZK) rollup solution offering shared liquidity, yield-bearing assets, and native account abstraction that integrates with Ethereum, Hyperchains, and the Cronos ecosystem.
  • Taiko: A type-1 zkEVM with complete Ethereum compatibility, decentralised sequencers, and multi-proof mechanisms.
  • Morph: Utilises a modular blockchain architecture and decentralised sequencer network, and combines optimistic rollups with ZK proofs for efficient and secure transactions.
  • Blast: An optimistic (OP) rollup with native yields for ETH and stablecoins.
  • Reya: A custom L2 on Arbitrum Orbit focused on DeFi trading, and enhancing liquidity and capital efficiency with a high-performance infrastructure.
  • MegaETH: A L2 that delivers real-time performance comparable to traditional web applications by leveraging Ethereum’s security, Optimism’s fault-proofs, and an optimised sequencer.
• Overall, L2 solutions like Cronos zkEVM not only enhance Ethereum’s scalability but also improve user and developer experiences, which can potentially boost the Ethereum ecosystem in the near future.

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4. Alpha Navigator

This institutional-focused report dives into macro trends, market-neutral pairs, style-factor screens, and events. Read the full Alpha Navigator report here.

• Equities and Fixed Income were up in June, while Cryptocurrencies dropped.

• BTC correlations with other assets were mostly positive.

5. Crypto Conference & Economic Calendar from Market Pulse

Crypto Conferences Calendar

Economic Calendar

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