have you been scratching your head wondering what comes next for crypto well you’re not alone Bitcoin may have everyone feeling bullish but many other cryptos have us wondering if Al season even has a pulse thankfully a recent report helps us make sense of all these mixed messages and provides some clarity my name is Nick and by the end of today’s video you’ll not only know where we’re at in this cycle but also where we could be headed next stay tuned the report we’ll be summarizing today is titled quote guide to crypto markets q1 2025 it was co-authored by coinbase which really needs no introduction and glass node a leading onchain data aggregator we leave a link to the full report in the description but we’ll give you some of the key highlights right here in this video now the report starts off with a few insights from a handful of partner companies specifically a a6z grayscale tefra and coin fund starting with a16z they note that the mobile wallet usage hit an all-time high in Q4 of last year with 36 million active wallets this suggests we’re seeing retail investors return to the crypto Market finally next up is grayscale which notes that a good chunk of the demand for Bitcoin comes from investors worried about excessive government debt they explain that according to projections from the Congressional budget office the US debt to GDP ratio is set to rise sharply which will lead many to use Bitcoin as a hedge this suggests that many Americans will turn to using BTC to preserve their wealth as the country’s debt piles up and the government starts trying to inflate It Away by printing because it can’t be paid back well I mean that is assuming Elon musk’s Doge doesn’t succeed on its ambitious plan to wipe more than one trillion dollar from the national debt pile anyway the next partner is tefra a digital assets Investment Company which notes that quote the supply of BTC held by short-term holders is nearing the level seen at the 2021 cycle Peak but is still well below prior cycle Peaks translation more people are huddling their BTC stack for the long term and that’s likely because btc’s volatility is diminishing over time while its price has remained high for most people it’s more sensible to huddle BTC than to trade it for quick profits the next partner is coin fund which says that spot trading volume on decentralized exchanges or dexes has been growing alongside a broader Resurgence in Defi and this makes sense when you consider that a lot of the recent activity in crypto has been in mem coins which are primarily traded on dexes oh and by the way guys if you enjoying this video let us know by Smashing that like button and don’t forget to subscribe and ping the notification Bell as well to make 100% sure you don’t miss our upcoming videos okay the next part of the report takes a look at what’s been going on in the crypto Market starting with dominance the report notes that altcoin share of the market quote Rose in Q4 while Bitcoin dominance stayed relatively steady the report notes that this shows that investors are slowly moving down the risk curve or at least they were what this suggests is that crypto sentiment is or rather was improving and this is backed up by the next part of the report which shows the Perpetual funding rates for Bitcoin ethereum and salana the report notes that Perpetual funding rates spiked in Q4 which basically means that investors were feeling bullish to the point that they were willing to take on lots of Leverage on the long side it’s safe to assume that most of that leverage was washed out with the recent tariff scare in any case the report then examines the inflows for the spot Bitcoin and ethereum ETFs which both saw significant Traction in Q4 the spot Bitcoin ETFs which have seen consistent inflows since launching in January last year saw $6.6 billion of inflows in Q4 alone which is close to the 18.9 billion seen in all three previous quarters it’s crazy stuff conversely spot ethereum ETFs haven’t enjoyed nearly the same level of adoption generally seen more outflows than inflows however that seemed to change in a big way in Q4 which ended with $3.1 billion of inflows not only that but the spot ethereum ETFs actually saw significant inflows when the crypto Market was uh puking recently sure it’s not nearly as much as the spot Bitcoin ETFs but the chart provided in the report clearly shows a sharp and sudden Trend reversal and this has likely been fueled by Trump’s election Victory and the pro crypto regul ations his administration will likely introduce of course we’re finding out right now that these will take a bit longer to implement than anticipated next the report looks at the annualized 3-month volatility of Bitcoin ethereum and salana stretching back to January 20120 what’s clear right away is that the volatility of all these assets has declined over time and this is especially true for Q4 of last year where volatility seems to have remained relatively stable salana was by by far the most volatile of all three Assets in this time frame which makes perfect sense Soul was only launched in March 2020 rallied to over $250 in 2021 then took a devastating blow when FTX collapsed in November 2022 and this brought Soul’s price crashing down to around a low of $9 obviously Soul’s price looks very different today quite the roller coaster ride anyway the report then explains that crypto has been fairly uncorrelated with other asset classes with the correlation even being negative in a lot of cases and this includes the SNP which ended Q4 with a correlation of roughly 0.5 and gold which ended Q4 with a near zero correlation oh sorry I just had to take video now the next part of the report is the spotlight section which shines the light on a few key metrics in the crypto Market that not everyone will be paying attention to so uh listen closely first the report looks at the liquid supplier of BTC and eth which reveals something interesting about investor Behavior the report notes that while everyone was watching eagerly in Q4 as btc’s price reached that $100,000 Milestone something else was happening below the surface and that’s because the active supply of BTC that is the supply that’s been actively moved around increased by nearly 70% in Q4 with nearly 1.8 million BTC circulating on chain the reason for this is simple psychological resistance as you all know investors look for round numbers to take profits which means they can be key levels of resistance and let’s be honest it doesn’t get much more round than $100,000 meanwhile eth may have slightly underperformed to put it politely but a similar thing happened there too and that’s because E’s active Supply Rose by around 30% as E’s price hit the $4,000 mark which suggests that skeptical long-term e holders could have taken profits while they could however the lower uptic in active Supply suggests this was mainly long-term holders rather than New Market participants aping into the fomo next up in the spotlight section is stable coins of which the report labels as crypto’s killer app to be fair if payi becomes as successful as we believe it will then it could be on to something and more about payi right over here anywh who the report then denotes that the supply of stable coins Rose by 18% to hit a new record in Q4 which not only shows an increase in crypto liquidity but it also shows that stable coins are actively being used more to build robust Payment Systems what’s more is that stable coin volumes in Q4 actually tripled to a mindboggling $30 trillion with a record $5 trillion in December alone the report adds that quote behind this growth lies a simple but powerful fact stable coins can make it faster and cheaper for both businesses and individuals to move money around the globe well said indeed however the report also notes that the true adoption of stable coins will rely heavily on clear crypto regulations that don’t stifle Innovation moving on and next up in the spotlight is layer twos which saw some serious adoption throughout 2024 obviously led by the ethereum ecosystem the number of daily active layer 2 addresses increased by almost 150% last year with base leading this charge daily transactions also saw a big move to the upside having increased by 41% in Q4 notably the number of daily transactions significantly increased after ethereum’s denune upgrade in March last year for those unaware denune introduced something called Proto dank sharding which basically aimed to reduce layer 2 transaction fees by creating a more efficient way to store and process data what’s great is that Denon successfully brought transaction fees down in a big way and although they ramped up slightly as the Chain Saw increased activity towards the end of the year they’re still much lower than pre denune levels now the next part of the report takes a more in-depth look at the star of the show in 2024 which was undeniably Bitcoin looking at where we are in the current cycle relative to previous bull markets it’s clear that BTC is closely following the 2015 to 2018 cycle and if this correlation plays out BTC could still have plenty of room to run in fact zooming in on btc’s price after previous Haring events shows that price action after bitcoin’s fourth Haring last year almost perfectly mirrors that following the second har in in 2016 and the report points out that btc’s price moved sideways for a few months before moving sharply higher well we all know the saying folks history doesn’t repeat but it does Rhyme the report then points out that the spot Bitcoin ETFs gathered more than $15 billion in assets under management or AUM and this not only set the stage for btc’s massive rally but it also broke multiple records along along the way they’re literally the fastest adopted ETFs of any asset class in history the report then points out a powerful little fact that many people seem to forget despite almost every person holding BTC being in profit btc’s price is still in a strong uptrend and what this shows is that most people are hodling strong suggesting that many believe it’s too early to jump off this rocket ship just yet btc’s monthly trading volumes across both spot and derivative markets also hit more than $3 trillion for the first time ever in Q4 coming close to the 3.5 trillion in December alone in fact open interest in BTC derivatives grew by almost $100 billion in Q4 an increase of 60% and this relates to the next part of the report which looks at long and short liquidations both of which saw huge spikes in Q4 as BTC flirted with that $100,000 Mark again it all comes down to key psychological levels in case you didn’t know short liquidations happen when Futures Traders bet that the crypto’s price will drop and then they’re forced to buy back when the crypto price actually increases instead and the same happens in Reverse with long liquidations and this has often been the cause for btc’s price to rise or fall by multiple percentage points in one move now the next part of the report switches Focus from Bitcoin to ethereum since ethereum is the second largest crypto by market cap and is generally used as a proxy for gauging the altcoin market safe to say this section is a bit of a mixed bag notably eth’s price action was closely track in the price action of the 2018 to 2022 cycle but this isn’t the case anymore it’s no secret that eth has been underperforming most of the crypto Market but it also turns out that it’s been underperforming its own price action ction from previous Cycles yikes the next part of the report is a bit more hopeful though and that’s because spot ethereum ETF saw a massive 70% increase in AUM throughout Q4 to more than12 billion and this suggests that institutional investors are now starting to adopt ethereum which as we noted earlier is most likely due to the regulatory changes we’re expecting to see from the Trump Administration the report then looks at the percentage of e holders in profit and how that has affected eth’s price unlike Bitcoin where people are happy to huddle despite BTC hitting new all-time highs ethereum holders haven’t had the same patience eth flirting with $4,000 put around 90% of eth holders in profit and the subsequent selling suppressed eth’s price next the report looks at monthly eth trading volumes across spot and derivative markets which averaged more than $1 trillion in Q4 there was a huge uptick in November when volumes hit well over 1.5 trillion and hit nearly 2 trillion in December alone pretty impressive considering all the sentiment around ethereum right now on top of that the amount of short and long liquidations on E Perpetual Futures products has steadied out significantly in Q4 although there were notably much bigger spikes in Long liquidations than short liquidations again this forced selling will have suppressed E’s price the report then looks at E’s Supply since the historical merge event which has remained inflationary overall and this is despite transaction fees increasing in recent months as the ethereum blockchain sees more traffic for context the higher the transaction fees are the more e Supply is burned with every transaction on ethereum so while the extra activity is a good thing there hasn’t been enough demand to burn enough eth to combat the increase in Supply next the report Zooms in on the amount of eth being EST staked now the chart provided shows that almost 35 million eth were staked by Q4 the highest amount to date however this amount took a slight dip right at the end of the year as the value of that eth increased and this was when eth hit that 4K Mark so presumably this eth was unstaked to be sold however the amount of eth locked into D5 protocols actually grew by a modest 6% in Q4 and Rose by an impressive 58% throughout the entire year and this suggests that rather than selling this eth could have been unstaked to be used for things like collateralized defi loans so then that wraps up this report and brings us to the all important question what does all of this mean for the crypto Market in 2025 well we reckon this report gives undeniable proof that things are looking much more positive than many people would have you believe while many of us are wondering when out season or if a theum is dying a slow death the various data points in this report suggest Q4 of last year was a pivotal moment and with the regulatory backdrop forming in the US this momentum is only going to continue assuming the Trump Administration will deliver on its promises that is and what’s more is that we can also see that retail investors start into return which can be seen across various metrics like the number of active wallet addresses or the increased activity on decentralized exchanges this is bullish for the broader crypto Market because new retail users are likely going to want to find the next big opportunity put simply anyone looking at bitcoin’s price chart would assume that there’s not much juice left in that rally so they’ll start looking elsewhere logically the next in line to this investment would be ethereum which has yet to perform as well as Bitcoin or any other altcoin for that matter if this rotation into ethereum does happen then make no mistake eth’s price would rally hard to catch up this is made even more likely when you consider that Trump seems to be a huge fan of ethereum for context Trump’s own defi platform World Liberty Financial seems to be moving more into ethereum ecosystem than any other chain which suggests that Trump’s policies will work in eth’s favor not only that but ethereum just announced something called etherealized which self-describes as quote an Institutional marketing and product arm for the ethereum ecosystem what this means is that ethereum will be integrated more into the traditional financial sector given ethereum massive exposure on Wall Street and then there’s ethereum’s upcoming pectra upgrade which is scheduled to take place in March this year a pectra aims to enhance the network security and scalability while bringing a number of ux improvements like account abstraction improved staking and much more besides and you can learn more about pectra in this video right over here anyway if ethereum pumps then a number of other altcoins should eventually pump too as historically the rotation has always been from BTC to eth to other altcoins it’s easy to forget that the rotation to eth hasn’t happened yet and as more investors Venture further down the risk curve we could see several alts heading for Valhalla but what do you think let me know down below and if you enjoyed this video you can check out our latest one right over here or if you’re not subscribed to the channel yet you can do that right over here that’s me for now I’ll see you next time [Music]
