Bitcoin and Ethereum take center stage, according to Coinbase’s Q2 Cryptocurrency Market Guide

On-chain analytics company glass nodein cooperation with coinbase international (NASDAQ:COIN). Bitcoin (Crypto: BTC) and Ethereum (CRYPTO: ETH) is featured in the quarterly Cryptocurrency Market Guide research report.

what happened: The report highlights performance to date. Bitcoinhas been the best performing asset in eight of the past 11 years, returning 124% annually from 2013 to 2023.

Despite its impressive returns, Bitcoin has also experienced significant volatility, with an average annual decline of 47%. The current market cycle, which began in November 2022, has seen prices rise nearly 4x from their lows, closely resembling the 2018-2022 cycle.

The overall market capitalization of cryptocurrencies increased by 63% in the first quarter of this year.

The report points to several factors.

• Approval of Spot Bitcoin ETF by SEC in January 2024.
• The introduction of these ETFs led to record inflows, with assets under management reaching nearly $60 billion by the end of March 2024.
• The surge in demand far exceeds the new supply of Bitcoin issued by miners, creating an imbalance between supply and demand.

Also read: Bitcoin, Ethereum, Dogecoin plummets, $878 million liquidated: 'Set alerts for $60,000 and $74,000 and walk away,' says crypto expert

Ethereum, the second largest cryptocurrency by market capitalization, is also experiencing significant growth and development. Ethereum’s price performance has been impressive, with the current cycle closely resembling the 2018-2022 cycle, which ended with Ethereum up 1,000% 24 months after its lows.

Factors contributing to it:

• Successfully implemented Dencun and Shapella upgrades to enhance network scalability and security.
• A rapidly expanding DeFi (decentralized finance) ecosystem built on the Ethereum network.
• Total Value Locked (TVL) in Ethereum DeFi protocols increased by 85% in Q1 2024, indicating a surge in financial activity and liquidity.
• The number of ETH staked and the total amount staked increased in Q1 2024 as more participants were attracted to the yield offered through staking.

Both Bitcoin and Ethereum derivatives markets have experienced significant growth, with trading volume and open interest reaching record highs. The upcoming Bitcoin halving and possible approval of the Ether ETF by the SEC are expected to further increase market activity and investor interest.

Glassnode also highlights the impact of adding cryptocurrencies to its 60% MSCI ACWI and 40% US Agg portfolios. The increase in crypto assets in the portfolio increases the return from 33.3% (no crypto allocation) to 67.03% (5% allocation).

what's next: The impact of Ethereum and Bitcoin as institutional asset classes is a topic expected to be thoroughly explored at Benzinga's upcoming Future of Digital Assets event on November 19th.

Read next: Peter Schiff predicts Bitcoin ETF will lead to 'biggest crash in history'

Image: Shutterstock