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The latest rally has all cryptocurrencies wondering if it’s too early to the party yet.

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Did we come early?

This is a question that cryptocurrency market participants ponder during each cycle, as each cycle brings its own indicators of the end. The biggest sign for me personally was when I was in a barbershop in Los Angeles. A barber was explaining why he was moving all his coins from Coinbase to an exchange I had never heard of.

In fact, in the general world, cryptocurrency buzz always seems like a good sign of a market bubble. Cryptocurrency seems great right now. As my friend Jim Greco said in a recent piece, this rally has made very little noise so far.

“If you weren’t in the cryptocurrency industry, you wouldn’t have known that Bitcoin had reached $41,000.”

Retail still doesn’t seem to get as much attention as it did during its last peak. And the data points to this. Coinbase’s ranking on the App Store, The Block’s Steven Zheng’s favorite top metric, has been essentially flat since September.

Rallies fueled by institutional players

Of course, you could argue that volume has increased, but only slightly. The 7-day moving average of daily trading volume on December 4 was $27 billion, below this year’s high of $47 billion. Meanwhile, Bitcoin rose 153%.

Much of this rally appears to have been driven by institutional investors, as evidenced by the recent highs in open interest held by major stakeholders in CME Bitcoin futures during the week of November 11th. Additionally, both October and November reached record highs. This year’s trading volume in the CME Bitcoin options market.

Even within the institutional realm, I think it is still too early.

Cryptocurrency market structures have become fragmented, primarily due to the credit crisis of 2021, which resulted in the downfall of numerous lending and trading market participants. Even the largest hedge funds, which manage tens of billions of dollars of capital, lack the counterparties they can comfortably trade with. Once stronger market structures are in place, it is likely that real institutional intervention will actually begin to take off.

This piece first appeared in Frank Chaparro’s biweekly The Scoop Newsletter. Register now.


Disclaimer: The Block is an independent media outlet delivering news, research and data. As of November 2023, Foresight Ventures is a majority investor in The Block. Foresight Ventures invests in other companies in the cryptocurrency space. Cryptocurrency exchange Bitget is an anchor LP of Foresight Ventures. The Block continues to operate independently to provide objective, impactful and timely information about the cryptocurrency industry. Below are our current financial disclosures.

© 2023 The Block. All rights reserved. This article is provided for informational purposes only. It is not provided or intended to be used as legal, tax, investment, financial or other advice.

About the author

Frank Chaparro is the editor of The Block. Chaparro began his career at Business Insider, specializing in the intersection of digital assets and Wall Street, market structure, and financial technology. Shortly after joining Business Insider from Fordham University, Chaparro interviewed top financial and technology executives, including billionaire Mark Cuban, “Flash Boys” star Brad Katsuyama, Cboe Global Markets CEO Ed Tilly and New York Stock Exchange President Tom Farley. In 2018, he became a sought-after reporter in the cryptocurrency world, interviewing high-profile figures such as Gemini co-founder Tyler Winklevoss, Circle CEO Jeremy Allaire, and Fundstrat CEO Tom Lee. He runs his own podcast, The Scoop, and writes a biweekly newsletter of the same name. He leads special projects, including The Block’s flagship podcast, The Scoop. Before The Block, she worked at Business Insider, NPR, and Nasdaq. If you have any questions or need any tips, please email me (email protected).

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