Coinbase Midyear Review: 10 Charts Explaining Crypto Market Fundamentals and Technical Trends

·

As we pass the midpoint of 2025, the crypto market continues to evolve with shifting fundamentals, evolving on-chain dynamics, and increasing institutional participation. Drawing insights from Coinbase’s institutional research, this midyear review breaks down 10 key charts that reveal critical trends across Layer 1 and Layer 2 networks, ETF flows, on-chain activity, and market liquidity.

These visualizations go beyond surface-level metrics, offering a deeper understanding of how value is being created, where user activity is concentrated, and what macro forces are shaping investor behavior.

🔍 Key Takeaways

📈 Adjusted TVL Growth Across Major Networks

Rather than comparing raw Total Value Locked (TVL) across blockchains, a more insightful approach adjusts TVL growth by the price performance of each network’s native gas token. This method helps distinguish whether growth stems from genuine ecosystem expansion or simply token price appreciation.

Since native tokens often serve as collateral or liquidity within their ecosystems, this adjustment provides a clearer picture of real value creation.

In the past year, adjusted TVL has grown 24%, outpacing the broader crypto market’s total market cap growth. Notably, newer chains like TON, Aptos, Sui, and Base are leading the charge—benefiting from early-stage network effects and aggressive ecosystem incentives.

👉 Discover how emerging blockchain platforms are reshaping decentralized finance in 2025.

🧭 On-Chain Activity: Fees vs. User Engagement

To assess network health, we compare two key metrics: average daily active addresses and daily transaction fees or revenue, both measured in standard deviations from January to April averages.

In May:

This divergence highlights a crucial trend: lower fees are driving higher adoption, particularly on scalable L2 solutions.

💸 What’s Driving Ethereum Transaction Fees?

An analysis of the top 50 Ethereum smart contracts reveals they account for over 55% of year-to-date gas consumption. After categorizing their fee contributions, we observe significant shifts:

While Ethereum turned mildly inflationary in mid-April due to lower burn rates, rising market volatility and high-value transaction demand could offset this trend in the second half of 2025.

🚀 Ethereum Layer 2 Momentum

Ethereum’s L2 ecosystem has seen explosive growth:

The Dencun upgrade on March 13 was a game-changer—blob storage slashed data costs for rollups, leading to a steep drop in transaction fees despite record-high TVL and transaction volumes across most L2s.

This combination of lower costs and higher throughput is fueling a new wave of dApp innovation and user onboarding.

👉 See how Ethereum's scaling upgrades are accelerating mainstream adoption.

🔄 Bitcoin’s Active Supply Dips

"Active supply" refers to bitcoins that have moved within the last three months. Historically, peaks in active supply precede local price tops, reflecting heightened trading activity.

In early April, active BTC supply hit a local high of 4 million BTC—the highest since H1 2021. By early June, it had fallen to 3.1 million BTC, indicating reduced short-term turnover.

Meanwhile, dormant supply (BTC not moved in over a year) has remained stable year-to-date. This suggests:

🔗 Market Correlations: Crypto Meets Macro

Using a 90-day rolling window, Bitcoin returns show moderate correlation with major macro indicators:

However, correlation with gold remains weak, reinforcing Bitcoin’s evolving role—not quite digital gold, not quite tech stock.

Notably:

Cross-crypto pairs still trade with high co-movement:

This reflects growing maturity—crypto is increasingly influenced by both internal innovation and external financial conditions.

💹 Liquidity Trends in Spot and Futures Markets

Total daily trading volume (spot + futures) for BTC and ETH peaked at $111.5 billion on March 11 but has since declined by **34% to $74.6 billion in May**.

Still, May’s volume exceeds all months since September 2022 except March 2023—indicating resilient demand.

Key developments:

📊 CME Bitcoin Futures: Basis Trade Impact

CME Bitcoin futures open interest (OI):

Much of this growth followed the January approval of spot Bitcoin ETFs, enabling traditional brokers to execute basis trades—buying ETF shares while shorting CME futures for arbitrage.

By isolating CME futures exposure from ETF flows:

This suggests the initial surge was largely hedged via CME, and unhedged institutional demand has slowed.

📉 CME Ethereum Futures: Still Niche

While CME ETH futures OI is near all-time highs, they remain dwarfed by perpetual contracts:

Fixed-term centralized exchange futures hold comparable OI to CME contracts, indicating strong retail and pro-trader demand outside regulated venues.

Notably:

These reactions highlight how on-chain upgrades and regulatory clarity act as powerful catalysts.

❓ Frequently Asked Questions (FAQ)

Q: Why adjust TVL by native token price?

A: Because native tokens often back protocol collateral or liquidity, raw TVL can be inflated by price rallies. Adjusting for token appreciation isolates real ecosystem growth from speculative gains.

Q: What is a basis trade in crypto?

A: A basis trade involves buying an asset (e.g., BTC via ETF) and shorting its futures contract (e.g., CME BTC futures) to lock in risk-free profit if the spread is wide enough. It’s common when new ETFs launch.

Q: How did Dencun impact Ethereum L2s?

A: The Dencun upgrade introduced blob storage, slashing data costs for rollups. This led to lower transaction fees and boosted user adoption across Arbitrum, Base, and other L2s.

Q: Is declining active Bitcoin supply bullish or bearish?

A: It’s context-dependent. A drop after a peak often signals reduced speculation—bearish short-term but potentially bullish long-term if holders are accumulating for future price moves.

Q: Why does CME market share matter?

A: Higher CME OI indicates growing participation from regulated U.S. institutions. Its rise from 16% in early 2023 to ~30% today reflects deeper crypto integration into traditional finance.

Q: Can ETH become deflationary again?

A: Yes—if network activity increases and transaction fees rise, the EIP-1559 burn mechanism could outpace new ETH issuance, reversing current mild inflation.

🔑 Core Keywords

👉 Explore real-time data on ETF flows, futures markets, and on-chain metrics shaping crypto in 2025.