Bitcoin CME futures open interest - a proxy for institutional interest - hit consecutive all-time highs recently, meanwhile, Ether futures open interest on the CME remains relatively low at 7.3K contracts ($970mn). This suggests a less mature market and much lower institutional interest in ETH futures.

Bitcoin's first-mover advantage within large trading platforms and wealth advisors' networks has also contributed to its relative outperformance. Many advisors began pitching BTC ETFs to their clients in August 2023, after months of due diligence. Moreover, the lack of ETH staking capabilities in ETFs has made the newly launched ETH ETFs relatively less attractive to both retail and institutional traders.

The stronger interest of US investors in Bitcoin is evident when looking at the share of BTC traded during US hours, which hit an all-time high between January and early October 2023. In contrast, this share has declined for ETH.

This year, meme tokens have shown resilience to crypto market volatility with trade volumes averaging $16bn up from just $3bn in 2023. Year-to-date meme tokens have outperformed most other altcoins, including Ethereum (ETH). Their share in the top 50 altcoins by market capitalization has also grown, increasing from 7% in early 2023 to between 25%-30% in 2024. This share varies significantly across exchanges, with smaller, retail-driven platforms like BTCTurk seeing meme tokens approach 50% of top altcoin volume.

While many meme tokens are driven by speculative activity and exhibit significantly higher open interest to market cap ratio (an indicator of leverage) than other altcoins, their outperformance shows a strong user base.  

What, then, is driving the popularity of meme tokens? They are often perceived as fairer than VC-backed or "tech" tokens, which, in some cases, allocate over half of their supply to teams and investors. Many of these VC-backed tokens launch on centralized exchanges at inflated valuations, leading to sharp price declines as supply increases due to unlock schedules. In contrast, meme tokens usually have fully circulating supplies with no future unlocks, allowing for more organic price discovery. Overall, their potential for growth and the hype surrounding them have attracted retail communities in an increasingly competitive environment.

In 2024, altcoin liquidity has become increasingly concentrated in a smaller number of tokens, leaving many assets to fall into illiquidity, often referred to as "zombie coins." While overall altcoin market depth has increased as a percentage of Bitcoin’s this year compared to 2023, this growth has primarily been focused on the top ten altcoins by market cap. In contrast, the top 30 to 40 altcoins have seen a decline in relative liquidity. This trend is likely to continue, with over $155 billion in token unlocks expected to flood the market in the next few years. 

On October 9, 2024, three market makers—ZM Quant, CLS Global, and MyTrade—and their employees were charged with wash trading and conspiracy on behalf of NexFundAI, a cryptocurrency company and token. In total, eighteen individuals and entities face charges based on FBI-led evidence.

In our deep dive last week, we analyzed Kaiko’s on-chain data for the NexFundAI cryptocurrency (Kaiko ticker NEXF) to identify wash trading patterns. Our findings reinforce information uncovered by the FBI through its undercover 'sting' operation. The accused firms used multiple bots and hundreds of wallets to engage in wash trading without alerting unsuspecting investors seeking early opportunities. We also looked at the market data on the only secondary market that existed for NEXF on Uniswap.

By aggregating the daily volume executed on this Uniswap market and comparing the bought and sold volumes, we found a surprising symmetry between the two. This symmetry suggests that market-making companies were offsetting a total amount across all wallets engaged in wash trading on this market each day. For more insights on wash trading tactics in DeFi and how to spot illicit activity on centralized platforms, read our full analysis here.

Donald Trump's latest venture, a crypto project called World Liberty Financial, had a sluggish start last week. Despite launching a range of high-priced watches, the project's token sale struggled. Out of the 10 billion WLFI tokens created on Ethereum, only 650 million were sold, valued at just over $10 million. This left around $290 million worth of tokens unsold, indicating a lackluster response despite Trump's recent efforts to engage with the crypto community ahead of his presidential bid.

The number of crypto-related exchange-traded fund applications continues to rise as asset managers file for increasingly ambitious products. The latest filing comes from Grayscale, which applied to convert its Digital Large Cap (GDLC) trust into an ETF.

GLDC's holdings include five assets: BTC, ETH, SOL, XRP, and AVAX. Together, BTC and ETH account for nearly 94% of the total assets under management in the trust.

Grayscale's filing to convert comes hot on the heels of two others this month. Bitwise filed to launch a spot XRP ETF, shortly afterwards Nashville-based Canary Capital joined them. 

The Tennessee firm was launched by Valkyrie co-founder and former chief investment officer, Steven McClurg. Last week, the firm followed up its XRP filing with an application to launch a Litecoin ETF. So far in 2024, US asset managers have filed for SOL, XRP, LTC, and mixed basket ETFs. Most of these applications are seen as a bet on the US presidency, which could likely lead to a change of leadership at the US Securities and Exchange Commission and, therefore, a new regulatory approach to crypto ETFs.