Crypto market showing signs of maturity and sophistication in 2024

Crypto markets have shown signs of maturing and sophistication in 2024, as the approval of spot crypto exchange-traded funds (ETFs) records billions in inflows, according to a Coinbase Institutional and Glassnode’s report.

In the Oct. 16 joint report, David Duong, head of institutional research at crypto exchange Coinbase, said that despite the recent lack of strong price movements, the Crypto market isn’t “stuck in a holding pattern,” there have been “important developments,” unfolding behind the scenes.

Duong says the market is showing signs of stability and growth, with “ample signs that the market has matured dramatically this year.“

“From the runaway success of spot ETFs to the spike in on-chain activity to the upswing in trading volumes, it’s clear that markets have grown deeper, more liquid, more sophisticated, and more accessible,“ he said.

Less volatility and record spot ETF inflows

Spot BTC ETFs, which were listed in the United States in January, received $5 billion in inflows during the third quarter of 2024 and have seen strong growth throughout the year so far. 

On Oct. 14, the 11 approved spot Bitcoin exchange-traded funds (ETFs) saw their biggest one-day inflow in over four months, over $555.9 million, according to data from Farside Investors.

In the nine months since the launch of ETFs, the US spot BTC ETFs have ended the third quarter with nearly $60 billion total in assets under management.

Markets have also been less volatile. Bitcoins’ three-month spot price volatility has steadily risen to just under 60% since its all-time lows in January, but it’s still lower than a 2021 peak of nearly 130%.

According to the report, the current Bitcoin cycle closely tracks both the 2015-2018 and 2018-2022 cycles, which ended with bull runs. 

“BTC performance since the fourth Halving most closely resembles performance after the third Halving, when prices went sideways for several months before moving sharply higher within a year from the Halving,“ it said.

Growth of stablecoins and Ethereum L2’s a boon for market

At the same time, the growing adoption of stablecoins and a rapid increase of Ethereum layer-2 scaling solutions reflect the “maturation of the market and the broadening of the crypto economy.“

In the third quarter, stablecoins’ total market capitalization hit an all-time high of around $160 billion “as market participants continue to utilize them for a variety of new and existing use cases.”

New rules that came into force in the European Union under the Markets in Crypto-Assets Regulation (MiCA) and the integration of stablecoins into existing payment systems were also flagged as boons for the whole crypto market.

“Both events reflect the growing mainstream adoption of stablecoins and recognition of the advantages they can offer, including speed, cost, and security,“ the report authors wrote.

“Stablecoins are increasingly being used to construct robust payment systems on crypto rails, facilitating remittance payments and streamlining cross-border transactions.”

Ether’s price has returned to near where it was when the year began. On Jan. 1, it was around $2,200. As of Oct. 21, the price of Ether is just over $2,700, according to CoinMarketCap.

However, the Glassnode report says the price movement is only a small part of the picture. The Ethereum ecosystem is “rapidly growing,” led by the strength of new and innovative Layer 2s.

“While it remains to be seen how activity will shake out between the Ethereum L1 and the various L2s, one thing is clear: L2s are bringing more users, more activity, and more innovation to the world of Ethereum,” the report authors wrote.