This monthly report covers the state of Bitcoin and Ethereum and market-sensitive news before previewing the month ahead. We also share our short-term market outlook. (For coverage of altcoins, see our Monthly Altcoin Reports.)
Key Takeaways
- BTC steadily rose in November, recording four consecutive weekly gains in the month.
- ETH continued lagging behind large-cap cryptocurrencies. Promisingly, though, this isn’t stopping more exchanges and projects from launching their own L2 solutions that settle back to Ethereum.
- The world’s largest crypto company, Binance, settled with multiple U.S. regulators, removing what was arguably the most potent source of market uncertainty that had been troubling the market in 2023.
- This settlement news, combined with an increased likelihood of the SEC approving a spot ETF, were the main factors driving prices higher in November.
- While the bull market has undeniably started, it is only in its early phases given that new money has yet to meaningfully arrive.
Content
Market Overview
Analyst take: There’s no denying that the bull market has started, with November having picked up where October left off. While the recent price action is exciting for those who have been accumulating throughout this year, there is still a long way to go until the market becomes irrationally exuberant.
| Metric | Significance | MoM (%) | YTD (%) | 01/01/20 | 01/01/17 |
|---|---|---|---|---|---|
| Total crypto market cap | Size of the market | $1.39T (+10.7%) | $756B (+84%) | $185B (+650%) | $16.4B (+8,407%) |
| Total stablecoin supply | Value in the ecosystem | $129B (+3.5%) | $139B (-7.5%) | $5.8B (+2,100%) | $10M (+1.3M%) |
| Altcoin dominance | Market cap of altcoins relative to overall market cap | 29.2% (+1.5%) | 38.6% (-24.3%) | 22.4% (+30.5%) | 8.7% (+235%) |
Gaming, real-world assets (RWAs) and artificial intelligence (AI) notably outperformed the market in November. Additionally, Solana-based tokens generally outperformed. Among the month’s best-performing altcoins were BONK (+481%), SUPER (+336%), ORDI (+314%) and POKT (+142%).
Bitcoin (BTC)
Analyst take: Bitcoin continued to climb steadily throughout November, posting a gain in every week of the month. Several key metrics (e.g. miner revenue, number of transactions) soared after activity related to Ordinals returned with vigour. After posting seven consecutive weekly gains, it would appear that BTC is due for a breather. However, with so many de-risking events having taken place, not to mention the various tailwinds that BTC is enjoying, it’d take a brave long-term investor to sell now.
| Metric | Significance | MoM (%) | YTD (%) | 01/01/20 (%) | 01/01/17 (%) |
|---|---|---|---|---|---|
| Price | Price performance over time | $37,732 (+8.9%) | $16,528 (+128%) | $7,168 (+426%) | $966 (+3,806%) |
| Dominance | BTC market cap relative to overall market | 53.0% (-1.5%) | 42.1% (+26%) | 70.0% (-24%) | 95.7% (-45%) |
| Active addresses (30DMA) | Legitimate user activity | 1,006,738 (+6.1%) | 901,342 (+11.7%) | 701,295 (+43.6%) | 638,752 (+57.6%) |
| Long-term holder supply | Level of holder conviction and relatively illiquid supply | 15.0M (+0.5%) | 14.1M (+6.0%) | 12.0M (+24.7%) | 11.4M (+31.2%) |
Resurgence In Demand For Ordinals
November saw a resurgence in demand to inscribe data into the Bitcoin blockchain. This was reminiscent of May when Ordinals truly arrived after several months of early progress. (Checkmate recently covered the growth of Ordinals and BRC-20 tokens.)
Unsurprisingly, therefore, throughout November, each of the following metrics hit their highest levels since May:
- daily miner revenue (7DMA);
- percentage of miner revenue from transaction fees (7DMA);
- average transaction fee (7DMA); and
- daily transactions.
If demand for Ordinals keeps growing into next year, it will likely help alleviate persistent concerns over the sustainability of Bitcoin’s economic security model. (Around the time of each halving—where the block subsidy (i.e. one of two components of block rewards) decreases by 50%—conversations about Bitcoin’s longevity tend to resurface.)
Ethereum (ETH)
Analyst take: Ethereum continues to lag Bitcoin and other large-cap cryptocurrencies in the latest rally. Despite Ethereum lagging, ETH supply continues to decrease, and more value is moving to Ethereum layer 2 solutions (L2s). This year, a common theme for Ethereum has been the adoption of L2s, with more exchanges and projects either deploying, announcing or looking into applications built on Ethereum’s L2 network.
| Metric | Significance | MoM (%) | YTD (%) | 01/01/20 (%) | 01/01/17 (%) |
|---|---|---|---|---|---|
| Price | Price performance over time | $2,053 (+13.1%) | $1,195 (+71.8%) | $128.6 (+1,496%) | $8.03 (+25,467%) |
| Supply | The number of ETH that exists | 120.21M (-0.02%) | 120.53M (-0.27%) | 107.98M (+11%) | 86,301 (+39K%) |
| ETH staked | Level of economic security | $75.3B (+29.8%) | $18.9B (+298.4%) | N/A | N/A |
| Active addresses (30DMA) | Legitimate user activity | 388.407K (+2.4%) | 449.33K (-13.6%) | 210.32K (+85%) | 15.84K (+2,352%) |
| TVL | Value inside Ethereum | $27.71B (+22.3%) | $22.29B (+24.3%) | $601M (+4,511%) | <$50M (+∞%) |
| TVL in L2s | Capital deposited into L2s | $14.2B (+18.7%) | $4.13B (+243.8%) | $26.15K (+∞%) | $0 (+∞%) |
| L2 profitability | Profitability of L2s | $3.6M (-9.1%) | $899K (+300%) | N/A | N/A |
ETH Continues Lagging, But For How Long?
ETH has barely featured in this latest market rally, leading many to wonder when it will return to the spotlight again. As per CoinShare’s latest report on crypto investment product flows, ETH accounted for less than 10% of flows in the final week of November. Year to date, ETH has actually had net outflows of $21M, compared to $1.55B in net inflows for BTC products. This has started to improve recently, with ETH posting nearly $100M of net inflows in November.
More Teams Opting to Build on Ethereum
In previous reports, we noted how some blockchains were returning to Ethereum (e.g. Celo, Canto). Expect more of this in 2024.
In November, major exchanges reportedly followed Coinbase’s move to launch an Ethereum L2. For example, OKX announced X1, which is being built on the Polygon tech stack. Also, Kraken was reported to be preparing to launch an L2 on Polygon, zkSync, or =nil;.
November also saw the team behind Blur announce an L2 called ‘Blast’ as well as a deposit-only contract address for users to send ETH and stablecoins. Differentiating it from other L2s, Blast will have an in-built yield mechanism where users’ token balances automatically compound.
Despite the controversy surrounding Blast’s announcement, the address has already attracted nearly $640M in deposits. If it went live today, Blast would be the third-largest L2 by total value locked, narrowly exceeding Base ($625M) and zkSync ($538M).
November’s Market-Sensitive News
Analyst take: Arguably the largest market overhang was all but eliminated in November as Binance settled with U.S. authorities for $4.3 billion and pleaded guilty to violating federal crimes. Markets responded positively because the settlement was not overly harsh, did not result in the loss of user funds, and significantly de-risked Binance. Notably, not involved in the settlement deal was the SEC, which reportedly continues to press for evidence of potential fraud at Binance.US.
Binance, CZ Plead Guilty In Landmark Settlement
The years-long investigation by the U.S. Department of Justice (DoJ) into Binance finally ended last month, with the DoJ and other U.S. regulators announcing that Binance had pleaded guilty to various financial crimes in a settlement deal that included $4.3B in penalties and other terms. Binance’s co-founder and CEO, Changpeng Zhao (CZ), also pleaded guilty to certain crimes and stood down.
In simple terms, Binance admitted to running its exchange with insufficient internal controls and without the necessary licences to operate compliantly in the U.S.
The market’s reaction to the news was mostly positive. For all of this year, the DoJ’s reported investigation into Binance had been one of the largest sources of market uncertainty. This has now been removed.
Since the announcement, Binance has experienced slight net outflows. However, with nearly $70B worth of cryptocurrencies in various known addresses, there have been no concerns over Binance being the next FTX.
Notably, the SEC did not feature in the deal, and its lawsuit against Binance remains ongoing. Last week, The Wall Street Journal reported that the SEC continues to investigate whether Binance executives had unauthorised access to user funds. (For context, the DoJ’s case did not include allegations of Binance misusing user funds.)
December Preview: A Typically Quiet Month
In terms of known upcoming price-sensitive events, December looks very quiet—which is typical for this time of year. Arguably, the lack of any short-term uncertainty is helping extend this latest rally.
ETF Developments Still The Most Important Story (By Far)
The market has become extremely confident that the SEC will finally approve a bitcoin spot ETF in early January. As per the below X post by ETF analyst James Seyffart, the most likely dates for an ETF approval are January 8–10.
Given how confident the market is of an ETF approval in early January, it will be critical to monitor ETF developments in December. Over the coming weeks, if any signs emerge that suggest the SEC may deny the ARK 21Shares Bitcoin ETF application, prices will likely fall.
Potential For Further Enforcement Action
As noted above, the SEC vs Binance case is ongoing, as are reported investigations by the SEC into whether Binance executives had unauthorised access to user funds. Any serious allegations of fraud may cause a short-term market sell-off. While other cases remain ongoing (e.g. SEC vs Coinbase, SEC vs Kraken, Gemini vs Genesis), they are unlikely to spark a material market movement any time soon.
Further, in the DoJ’s recent settlement announcement, various U.S. regulators again called upon DeFi projects to comply with U.S. laws. It would not be surprising to see regulators step up their pursuit of these DeFi projects. Should this occur, this could weigh on the market, particularly the DeFi sector.
Today’s charges and guilty pleas – combined with a more than $4 billion financial penalty – sends an unmistakable message to crypto and DeFi companies: if you serve U.S. customers, you must obey U.S. law.
Lisa O. Monaco (Deputy Attorney General of the U.S.)
(Speaking of looking ahead, stay tuned for 2024 outlooks from the team in December and January!)