Institutions, stablecoins and more L2 usage will shape crypto markets in Q1: Glassnode report

Several trends from the last year will shape the crypto market in Q1. With January almost over, the trends will set the pace for the winners during this bull cycle. 

A recent report by Glassnode and Coinbase Institutional points to the central trends that will shape the market in Q1. Institutional inflows, the growing influence of stablecoins, and more L2 usage will shape the space, with the addition of new bubbles modeled after meme coins and AI agents. 

In the Guide to Crypto Markets, Glassnode points to the latest data trends, measuring the latest engagement of concerned retail investors and institutions. 

Mobile wallet usage posts new all-time high

Users of mobile wallets show a shift in use cases for crypto. In the last quarter of 2024, mobile wallet users reached an all-time high. Crypto mobile wallet users reached 36M in January after a highly active Q4.

The shift to mobile wallets underscores the more active nature of crypto buying. Instead of cold wallets and long-term storage, market participants are becoming crypto users, engaging with projects instead of passively buying tokens. While the initial Web3 hype is gone, the underlying infrastructure remains and is improved. DEX activity, DeFi lending, and staking continue to drive active transactions. 

Decentralized exchanges also reflected the trend, increasing their share in comparison to centralized markets. DEXs now carry over 20% of centralized volumes and are one of the main retail use cases. Cheaper networks like Solana and Base have returned casual token swaps for newly launched memes and AI agent tokens. 

BTC and ETH move more actively

As a result of the increased economic activity, there is also a shift in ownership for Bitcoin (BTC) and Ethereum (ETH). 

The active supply of BTC increased by 70% in the last quarter of 2024, setting up the pace for a shift in ownership in Q1. Retail buyers are increasing their share, while for some older whales, the price of $100,000 per BTC looked like a watershed moment and a signal to take profits. 

Fewer BTC holders keep their coins over a year, as the leading coin sees more active turnover and trading. | Source: Macromicro

The active supply of BTC increased, while long-term holding decreased, as both whales and retail traded more actively. This time, BTC had smaller drawdowns, but traders locked in gains more frequently, wary of previous crashes that erased their profits. 

For ETH, this year’s rally was not as dramatic and did not lead to new price records. However, the active supply of ETH increased by 30%, reflecting both profit-taking and movement to DeFi apps. The Ethereum Foundation and older ETH whales also took profits. The ETH liquid supply increased more gradually but reflected the trend for BTC. 

2025 starts with strong stablecoin momentum

The new year started with a strong inflow of stablecoins. In Q4 alone, the supply of dollar-denominated tokens increased by 18%, led by USDT and USDC. The new year extended the trend, increasing the supply of stablecoins above 212B. The expansion arrives after predictions of the total supply reaching 400M by the end of the year. 

The expansion of stablecoins continued, led by USDC with almost daily new mints on Solana. In the first few weeks, over $5B in USDC flowed into Solana’s DEX and DeFi protocols, tracking a new meme token expansion cycle. 

Glassnode believes the true impact of stablecoins will also rely on regulations, to achieve better consumer protection. Until recently, it was only up to projects to ensure their token’s security and some stablecoin issuers are still exposed to much higher risk levels. 

Stablecoins achieved $5T volumes in December, with a total of $30T in the whole of 2024. Stablecoin turnover remains active in January, with a shift toward UDSC usage. 

L2 chains set up the pace for Q1

In the first quarter of 2025, the growing influence of Base may affect DeFi and DEX activity. There is no longer a rush to create new L2, but traffic is shifting to the top chains. Base emerged as one of the growth factors for L2 influence. 

L2 from the Ethereum ecosystem increased their active addresses by 150% in the past 12 months, showing a lasting shift in traffic from L1. The scalable L2 projects are the main source of transaction growth for the Ethereum ecosystem, as the L1 retains basic transaction activity and is mostly used to move stablecoins. 

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