Market Liquidity Brief: December 2023

Key Insights

• Bitcoin massively outperforms Gold: Bitcoin’s year-to-date performance of 151% exceeds the S&P (19.5%) and Gold (11.09%).
• Monthly trading volumes approach $1 trillion: Total exchange trading volumes experienced a significant increase of 17% month-over-month, approaching nearly $1 trillion. Spot DEXs contributed notably to this growth, with their volumes rising from $61 billion to $96 billion.
• Perp DEXs volume nearing all-time highs: Volumes reached $81 billion this month, the highest since the peak of November 2021.

With a year-to-date (YTD) increase of 151%, Bitcoin ranks as one of the highest-returning assets. This week’s pump to $44,000 has propelled BTC’s market cap above Meta's, making it the ninth-largest asset globally. El Salvador, which has been dollar-cost averaging into Bitcoin since October 2021 and holds approximately $130 million, has now seen its investment turn profitable. The next decision deadline for Blackrock’s spot Bitcoin ETF is January 10, and leading ETF analysts are projecting a high likelihood of approval, estimating the odds at 90%. Additionally, in November, Blackrock filed for a spot Ethereum ETF. Coinbase, designated as the custodian for both these ETFs, has demonstrated remarkable performance over the past year, with a 319% increase. This YTD growth significantly surpasses that of Nvidia (216%), the highest-returning asset in the S&P 500.

However, common sentiment broadcasts a starkly different picture. Over the past year, technologists and major publications declared crypto "dead," urged a pivot towards AI, and continued to misconstrue or belittle the industry (more examples here). Additionally, Google search trends indicate retail interest in Bitcoin and crypto remains significantly below its peak.