Introducing: The State of LATAM Crypto Markets

Clock Ticks Down on ETH ETFs.





Welcome to the Data Debrief!

Welcome to the Data Debrief! Crypto and equity markets are surging following a reassuring inflation report. In other news, CME is reportedly planning to launch crypto trading, the Senate voted to kill a controversial crypto accounting policy, and 400+ financial institutions have invested in Blackrock’s BTC ETF. This week we explore:

  • ETH market structure ahead of the ETF decision

  • The resilience of meme tokens

  • Surging crypto activity in the US

  • Altcoin liquidity is improving

Trend of the Week

ETH ETF hopes fade as deadline looms.

It’s another big week for crypto ETFs, and this time, Ethereum takes center stage.

The US Securities and Exchange Commission is set to respond to VanEck’s spot Ether ETF application by May 23. Similar to the spot Bitcoin ETF decision in January, this has been earmarked as the de facto deadline for all live applications from BlackRock, Fidelity, ARK Invest and others.

Market participants expect the SEC to deny or approve all applications at the same time to avoid creating disparities between issuers.

While the regulator has already issued several delay orders up to now, ETH has largely been unaffected by the news. A rejection has likely been priced in as expectations of approval waned over the past few months.

Options traders have crowded around calls and puts that suggest ETH could see some volatility before the end of May.

Another sign that traders are pricing in a denial comes in the form of the ETH to BTC ratio, which measures the relative performance of the two assets. The ratio has trended downwards since March, currently trading around 0.046.

ETH briefly outperformed BTC following the launch of spot Bitcoin ETFs in the US, which led to increased volatility as BTC dropped to $42,600 from $48,700. However, anticipation has since dwindled, reversing the trend.

Trade volumes have also slumped over the past few months, whereas Bitcoin’s daily trade volume increased in the lead up to its ETF approval deadline in January.

Furthermore, spot ETH ETFs appear to garner less attention than BTC products in practice. ETH ETFs, which launched alongside BTC ETFs in Hong Kong last month, have seen significantly less trade volume since inception.

ETH volumes accounted for 23% of trade volume on day one, but this figure has since fallen to just 7%. The substantially lower share of trade volume suggests that traders are less interested in ETH ETFs in practice.

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Data Points

Meme token volumes remain resilient.

Historically, during market downturns, traders have tended to flee into quality assets, leading to a significant underperformance of meme tokens under negative market conditions.

This time is different. Despite the recent market correction, meme tokens have remained among the year’s top performers, with year-to-date (YTD) returns ranging from 80% to 1800%. Trade volume has also stayed robust, with the weekly volume for meme tokens still up by more than 200% YTD, reaching approximately $11 billion.

One possible explanation for their enduring popularity is their accessibility and ability to adapt to market trends, thereby attracting substantial community interest.

However, it is important to note that meme coins tend to have higher leveragecompared to most altcoins and are more driven by speculative appetite.

Interestingly, the correlation between meme tokens and other retail-driven speculative assets, such as meme stocks, has been relatively weak and highly volatile. For instance, the 60-day rolling correlation between the largest meme token, DOGE, and the video game retailer GameStop (GME) has mostly remained below 0.3 over the past year.

Last week, meme stocks experienced a surprise boost, with GME and the cinema chain AMC Entertainment (AMC) witnessing a surge on May 13-14. This caused the correlation between DOGE and GME to hit its highest level in more than a year.

The share of BTC traded during US hours hits ATH.

The share of Bitcoin traded during US hours (13H-20H UTC time) reached an all-time high in 2024, accounting for 46% of the cumulative volume in April. The data suggests this could be linked to the launch of the spot ETFs in January.

Looking at the breakdown by hour of day, BTC volume increased at the beginning of US hours, 14H UTC, and around the US close, 20H UTC.

The new ETFs calculate their net asset value (NAV) against dedicated benchmarks at the US close each weekday, thereby boosting arbitrage and price discovery.

Interestingly, Thursday was the day of the week with the highest share of trading during these hours, nearing 15% of the cumulative daily volume. Overall, while BTC trade volume during US hours has mostly recovered to their 2022 levels, volume during APAC trading hours remains significantly less, suggesting this year’s rally was US-led.

Altcoin liquidity is improving.

Crypto liquidity is not only fragmented between exchanges, but also between assets, with BTC and ETH possessing the vast majority of liquidity. In 2024, Bitcoin’s average daily 1% market depth was over $270 million, which is more than ten times the daily liquidity of most top altcoins. The second most liquid crypto asset, ETH, had an average market depth of $190 million, which is still 30% less than Bitcoin’s.

However, there is evidence that liquidity distribution is improving. Altcoin liquidity, as a percentage of Bitcoin’s daily market depth, has mostly increased over the past two years. This positive trend appears to coincide with a decline in ETH’s liquidity as a share of Bitcoin’s (not charted). As of 2024, the average ETH market depth was 72%, down from 83% in 2022.

Macro data sparks volatility.

After three months of sticky price data, last week US inflation figures came within expectations, triggering a relief rally in risk assets. BTC surged by more than $600 within minutes of the data release, marking its most substantial move since April 13. The core CPI, which excludes volatile food and energy costs, rose 0.3% month-over-month marking the first slowdown in months.

As a result, markets have pushed their expectations to two rate cuts this year. Bitcoin’s 30-day historical volatility has significantly decreased since March, dropping from a multi-year high of 83% to 54%. As we transition into the typically quieter summer months, macroeconomic data could continue to be a source of volatility. Uncertainty around the US monetary policy path is rising following mixed economic data.

Data Used In This Analysis

  • Trade Data

    Price and transaction volume for centralized exchanges.

  • Market Depth

    All bids and asks on an order book

  • Wallet Data

    All users, all transactions, and all history for blockchain wallets.

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