Market Trips on LSDs
Carnage Gives Way to Indifference
There are few cohorts of people more excited to turn the page to a new year than crypto investors. After nearly 12 months of unwinding leverage, we have finally reached a point in the cycle where indifference has crept into the market, as demonstrated by the continued decline in volumes and realized volatilities.
Aggregated ETH volume is the best proxy for trading activity in crypto. It is the second largest cryptoasset by market cap, and the data is not skewed by wash trading on Binance. Spot volumes continue to decline, now at the lowest level in over two years.
We did see some interesting price action among several lower-cap altcoins, which we will discuss further below, but the tight range in which ETH and BTC continue to trade is substantiated by persistently subdued on-chain activity.
Below we see that bitcoin wallet activity has remained in a sideways pattern since the start of this ongoing bear market. The activity started to perk up in Q4, but this was primarily due to on-chain transfers in the wake of the FTX collapse. We can see in the chart below that activity has since continued its descent.
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