A brand new report from the institutional division of crypto alternate Coinbase, ready in partnership with crypto intelligence agency Glassnode, reveals that regardless of a interval of consolidation within the second quarter of 2024, the cryptocurrency market stays strong and continues to develop.

The second quarter mirrored price consolidation, throughout which the costs of main property remained in a comparatively tight price window, the report mentioned. Contrasted with the primary quarter’s meteoric rise, this means market indecision. Even so, the broader market indicators counsel sustained well being and potential for future development.

“The price correction within the second quarter is each wholesome and a pure half of the present market cycle,” the report notes. 

This view is supported by strong trading volumes across spot and derivatives markets, continued inflows of new investors, and notable progress on the regulatory front. 

“Wanting past easy price actions reveals a really wholesome crypto panorama,” the report provides.

The report additionally sheds gentle on the rising on-chain exercise, notably on the Ethereum community and its layer-2 options. 

Average daily active addresses across Ethereum and leading layer-2s have surged by 127% this year, the report said, driven by increased activity on these scalable solutions. The transaction tally across the Ethereum ecosystem grew 59% in Q2, though most of that growth came from layer-2 scaling networks.

This surge in activity highlights the expanding use cases for Ethereum, from decentralized finance (DeFi) to NFTs and beyond. The diversification of investor curiosity and the expansion in on-chain exercise are promising indicators of a wholesome market. 

“We’re nonetheless within the mid-growth cycle as consideration stays nicely diversified throughout the house,” Duong says.

A crucial aspect of understanding the market’s health is monitoring the market value to realized value (MVRV) ratio. The MVRV ratio helps gauge market sentiment by evaluating the market worth to the realized worth. 

“Intervals the place MVRV trades above its 365-day common are sometimes aligned with strong uptrends,” explains James Test, lead analyst at Glassnode. 

This metric is essential for identifying whether the market is overheated or undervalued, offering insights into investor profitability and potential market corrections. One of the report’s key highlights is the decline in correlations among crypto assets during the second quarter. The trend suggests that the crypto market is maturing, the report observes.

According to David Duong, head of institutional research at Coinbase, “This decoupling strengthens the case for proudly owning crypto as a method of diversifying one’s portfolio in a scientific manner.” 

Edited by Ryan Ozawa