Circle and SocGen Comply with MiCA
Last week, Circle announced its compliance with the European Markets in Crypto-assets Regulation (MiCA). This was followed by SocGen’s Forge, the issuer of Euro Convertible. MiCA, effective from June 30 in Europe, imposes various requirements on stablecoin issuers. These include whitepaper publication, governance, reserves management, and prudential standards.
Surge in Trading Volumes for Circle’s Stablecoins
Since June 30, Circle’s EURC and USDC saw the strongest increase in daily trading volume. SocGen’s EURCV, which lifted its whitelisting restrictions, also experienced increased volume. However, it remained modest at just $4K, possibly due to its availability solely on one exchange, Bitstamp.
Market Shift Towards Compliant Stablecoins
Currently, non-compliant stablecoins dominate the market, accounting for 88% of the total stablecoin volume. MiCA could shift this balance. Exchanges and market makers may favor compliant stablecoins over non-compliant alternatives. Major crypto exchanges like Binance, Bitstamp, Kraken, and OKX have already implemented restrictions, delisting non-compliant stablecoins for their European customers.
Increasing Demand for Transparent and Regulated Alternatives
Over the past year, the share of compliant stablecoins has increased, suggesting rising demand for transparency. This trend has mostly benefited USDC. In 2024, USDC saw its weekly trading volume surge to $23 billion, up from $9 billion in 2023 and $5 billion in 2022. Consequently, USDC’s market share reached a record high, nearing FDUSD’s 14%.
Centralized Exchanges Drive USDC’s Volume Growth
Analyzing USDC’s surge between decentralized exchanges (DEXs) and centralized exchanges (CEXs), it appears that CEXs have played a crucial role. USDC’s market share on CEXs rose significantly after Binance re-listed it in March 2023, increasing from an average of 60% to more than 90% across all exchanges. Volumes also rose on Bybit, which offered zero-fee USDC trading since February 2023.
Increased Usage of USDC for Perpetual Futures Settlement
Another factor contributing to this trend is the increased usage of USDC for perpetual futures settlement. The share of BTC perpetuals denominated in USDC, traded on Binance and Bybit, rose to 3.6% from 0.3% in January. USDC’s usage in ETH perpetuals trading was even higher, with ETH-USDC trade volume rising to over 6.8% from 1% at the beginning of the year. While USDC’s market share in these perpetual markets is just a fraction of USDT’s, its growing usage for perpetual settlement speaks to investors’ changing preferences as stablecoin regulations come into effect.
BCH Faces Strong Selling Pressure as Mt. Gox Starts Repayments
Mt. Gox Begins Repayments
On July 5, the Japanese exchange Mt. Gox trustee announced the beginning of repayments to creditors in BTC and BCH after ten years. While it is unclear how many investors will sell their holdings and on what venues, BCH has seen significant selling pressures.
Accelerated Selling on Major Exchanges
Interestingly, selling accelerated on Binance and OKX prior to the announcement at the end of Asian opening hours on July 4. Several sell orders were executed on Binance around 9 am UTC. BCH price slippage for a simulated $100k sell order reached its highest level in over a month on most exchanges. This indicated worsening liquidity due to insufficient order book depth for large market orders. The highest slippage increase was observed on Itbit and Bybit. On July 5, BCH slippage rose from 0.2% to 2.8% on Bybit and from 0.3% to 3.5% on Itbit.
ETF Flows Plummet Alongside Volatility
Decline in Spot BTC ETF Inflows
Despite recording the longest consecutive days of inflows between May and June, spot BTC ETF inflows significantly declined quarter-on-quarter. Net inflows into spot BTC ETFs in the US took a hit in the second quarter. Most ETFs experienced outflows for the first time, including BlackRock’s IBIT. Trading typically slows over the summer months, and liquidity tends to dry up. However, issuers remain confident, noting that flows could pick up in the fourth quarter as more registered investment advisors in the US are onboarded.
BTC Realized Volatility Falls
BTC’s realized volatility fell at the same time as inflows subsided and prices trended lower. Volatility reached its lowest point of 2024 on June 23, but has since climbed over 6 percentage points to around 42%, according to Kaiko‘s Data+ dashboard. BTC volatility often spikes after extended downtrends. For example, in February, it rose by 8 percentage points in one week, soaring from 45% to over 74% in March. Similar spikes occurred in January and previously in October and August of last year. With lower liquidity during the summer months and potential selling from Mt. Gox creditors and BTC miners, volatility could react similarly in the coming weeks.
TON Outperforms Amid Telegram’s Growing Use Cases
TON Reaches New Record High
TON reached a new record high above $8.20 in mid-June, a feat most altcoins haven’t achieved since the 2021 bull run. Much of TON’s interest over the past year has been driven by use cases related to the social messaging app Telegram and its success with its 1 billion users.
Increased Trading Volumes and Liquidity
TON’s trade volumes have also risen over the past year. Volumes increased in both dollar and asset terms, suggesting that the increase is not simply due to higher prices, but more demand for TON tokens. TON’s liquidity has increased at the same time, with 1% market depth up from $2.5 million in January to over $8 million by July.
Strong Capital Inflows
TON’s open interest reached a record high of $287 million in early July, indicating strong capital inflows. Funding rates have fluctuated between positive and negative this year, reflecting a balance between long and short positions. Both bullish and bearish traders have been active in recent months, with funding rates turning heavily negative in May, signaling a bearish sentiment.
Quarterly Market Overview
The past few months have been challenging, with Mt. Gox repayments putting pressure on the market and ETFs losing traction despite ETH ETF approvals. In our latest quarterly report, we breakdown the decline in volumes relative to Q1, ETF flows, tokenization trends, emerging markets growth, and much more.
