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Ethereum Soars to New Highs
May 3, 2021
  • Price Movements: Ethereum reached a historic new all time high above $3,000 early Monday morning.  
  • Volume Dynamics: 80% of all Tether volume occurs on just four exchanges. 
  • Order Book Liquidity: The quantity of asks on Ethereum order books has nearly doubled over the past week, which suggests profit taking amidst record highs. 
  • Volatility and Correlations: Bitcoin's correlation with equities dropped to its lowest level since early January.
A Quick Announcement From Kaiko Research

We are pleased to release the newest version of our weekly Factsheet! Kaiko's Factsheet is a PDF market report attached at the bottom of this weekly research newsletter. The Factsheet serves as a go-to reference for the past week's market trends, while this newsletter provides data-driven commentary and original charts.

Our newest Factsheet consists of 10 sections covering different aspects of cryptocurrency markets that update every week with the latest Kaiko trade and order book data:

We have added a bunch of new charts on stablecoins, fiat premiums, DeFi tokens, Tether markets, aggregated order books, average trade size, historical volatility, market depth ratios, and much much more.

You can always find the report at the bottom of this newsletter and on the reports section of our website. All Kaiko research reports are also redistributed through Dow Jones Factiva, Refinitiv, S&P Global Market Intelligence, and Coindesk's Research Hub. Do not hesitate to share our reports or include our charts in your own data-driven analysis.  


- The Kaiko Research Team
Download Factsheet
Price Movements
Ethereum breaks $3,000. Early Monday morning, Ethereum reached a historic new all time high above $3,000, with the crypto asset now up a whopping 325% year-to-date. The milestone comes as Bitcoin stagnates below $60k, up for the year a (relatively) measly 95%. The rally can be partially attributed to the growing number of regulated ETH investment products and DeFi's continued popularity. In April, the world's first Ethereum ETF began trading on the Toronto Stock Exchange and ETH volumes and open interest on CME recently reached all time highs. Ethereum spot volume as a percentage of Bitcoin volume reached one of its highest daily levels yet at more than 48%, which suggests traders are shifting funds out of Bitcoin and into Ethereum markets. 

DeFi isn't slowing down. Ethereum's bull run has overflowed into DeFi markets, which at the start of 2021 seemed poised for a downturn, but since then have come roaring back with YTD returns ranging from +100% to +700%. Uniswap's UNI token is up more than 737% YTD and Maker Dao's MAKER token is up 728%, the best performers of the bunch. The bullishness comes in anticipation of the May 5th launch of Uniswap V3, the latest version of the largest decentralized exchange which promises to make the provision of liquidity more efficient. MAKER soared on news that Maker DAO will enable financing for real estate, one of the first tests of DeFi's potential in the real world. You can view DeFi YTD Returns every week in our Factsheet.

Tokenized equities continue to gain traction. Coinbase's public debut on Nasdaq and Binance's subsequent listing of a tokenized version of COIN propelled tokenized equities into the crypto mainstream. However, tokenized equities have existed on cryptocurrency exchanges since 2019, although most have experienced relatively low trading volumes and liquidity. Tokenized equities require regulatory approval and partnerships with traditional issuers, and since 2019 only four exchanges have launched these products. was the first exchange to launch tokenized securities, and since then FTX, Bittrex, and Binance have followed suit. Tokenized equities could very well be the next frontier of crypto and in the near future we could expect higher trade volumes and increasingly diversified offerings as crypto and traditional markets continue to overlap. 
Volume Dynamics

Binance.US suffers from low volumes. Binance.US has a very long way to go to match the level of trade volume that Coinbase processes daily. Monthly Bitcoin volume on Binance.US ranges from $3-$4 billion, while volumes on Coinbase range from $40-$48 billion throughout the first four months of 2021. However, volume on Binance Global far surpasses Coinbase, which suggests Binance.US would be able to catch up quickly with the right business plan. Total Bitcoin volume on Binance ranged from $223-$229 billion in 2021, the most out of any exchange in the cryptocurrency industry. We use Bitcoin volume in this calculation rather than total exchange volume to minimize the effect of outliers. For example, DOGE-USD has been the highest volume pair on Binance.US for the past week, a clear anomaly. 

The majority of Tether volume occurs on loosely regulated exchanges. In this newsletter, we rarely leverage Kaiko's full coverage (100+ exchanges), opting to focus on ~20 exchanges that have strong reputations in the industry. Aggregated volume is complicated to measure and prone to inflation throughout the industry. Over the past couple of years wash trading has become less of a problem on the top exchanges; however, these improvements have not extended down to all of the loosely regulated exchanges out there.

As Coinbase prepares to list Tether (which was delayed), we wanted to explore the breakdown in Tether volume across the spectrum of exchanges. We took the sum of volume for all currency pairs of which Tether is either the base or quote asset and converted these amounts to USD. The results are quite striking in that most of the top 15 exchanges are either loosely regulated or completely unregulated. Tether trades on a number of regulated exchanges (Kraken, Bitfinex, Poloniex), but none of these exchanges falls within the top 15 by volume.  

The second most striking observation is the sheer amount of Tether volume that Binance has processed (more than $3 trillion dollars worth over the past year). When looking at the percentage share of Tether volume traded over time, we can observe that the majority occurs on just the top four exchanges (Binance, Huobi, Bit-Z, and Okex). 

It has only been over the past year that Binance's Tether market share has grown to be approximately 50% of total Tether volume. While Tether may be systemically important to crypto when considering total aggregated volume, a more accurate phrase based on the data would be "Binance is systemically important to crypto." 

In our April market report, we explore Coinbase's momentous IPO, Binance.US's growing ambitions, Tether's volatility, Ethereum's all time highs, and much more. 

You can download the report here or view the report on Coindesk's Research Hub

Download Market Report
Order Book Liquidity
With new all time highs, Ethereum ask depth soars. The quantity of asks (limit orders to sell) on ETH-USD order books has nearly doubled over the past week as Ethereum breaks new all time highs. The quantity of asks within 10% of the midprice now significantly outnumbers the quantity of bids. This suggests that traders are taking profits and expect future price rises in the short term. Market buying pressure is currently strong enough to support these price levels, but if buying pressure weakens a pullback could occur. Price discovery is a complex process involving price takers and market makers. Both market depth and the proportion of buy/sell trades can reveal market dynamics, thus order book liquidity is only one side of the story. You can view ETH-USD Market Depth every week in our Factsheet.

Coinbase has narrowest spreads out of fiat exchanges. Where is it easiest to trade Ethereum? We rank each exchange that offers a fiat (USD) Ethereum trading pair, taking the average bid-ask spread over the past year. Coinbase, Kraken, and Bitfinex are the top ranking exchanges for ETH liquidity, with spreads on average less than two basis points. 

When looking at average spread for ETH-USDT pairs, we find that spreads on Huobi, Okex, and Binance are less than spreads on Coinbase. This suggests that Ethereum-Tether markets are more liquid than Ethereum-Fiat markets, similar to what we found when comparing BTC-USD and BTC-USDT markets. 

Several exchanges offer both a USD and a Tether pair, including Binance.US, Kraken, Bittrex, and Bitfinex. Exchanges that offer both pairs have lower average spreads for their fiat pairs. This suggests that market makers prefer providing liquidity to fiat pairs as opposed to Tether pairs when given the option. 
Volatility and Correlations
Bitcoin's correlation with equities drops to lowest level in months. Bitcoin's correlation to the Nasdaq and S&P 500 equities indices hasn't been this low since early January. The correlation has dropped steadily to .0672 (S&P) and .178 (Nasdaq), barely positive. Gold has been hovering in negative territory since mid-March. The drop in correlation comes as crypto markets experience a new round of volatility that has seen a series of incredible drops and all time highs over the past month. You can view Historical 30D Correlations every week in our Factsheet.

Thanks for reading and see you next week!

-Clara Medalie,  (email me for any feedback or suggestions!)

Kaiko is the premier cryptocurrency market data provider for professional traders, fund managers, researchers, exchanges, and custodians. Our data services enable seamless connectivity to historical and live data feeds from 100+ spot and derivatives exchanges

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This Factsheet was written by Clara Medalie, with help from Anastasia Melachrinos and the Kaiko team. This is not financial advice. Any redistribution of charts appearing in this Factsheet must cite Kaiko as the sole provider and creator.
Copyright © 2021, All rights reserved.

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