As a seasoned crypto enthusiast who has witnessed the highs and lows of this dynamic digital landscape, I must say that Q3 2024 was a rollercoaster ride. The declining formiveness of holding DAI, coupled with the downward trend in the play-to-earn sector, made for a challenging quarter. Yet, even in these uncertain times, there were glimmers of hope.
What are the main takeaways from CoinGecko’s Q3 2024 report about the crypto market’s highs and lows? How did market cap, trading volumes, and investor sentiment shift this quarter?
The third quarter of 2024, as outlined in the Q3 2024 Crypto Industry Report from CoinGecko, saw the crypto market ride a series of ups and downs. This period was characterized by significant changes in market control, unexpected price fluctuations, and a shift in investor preferences.
Here’s a simpler and more conversational way to phrase it: “Let’s delve into the main points, discussing the past performance of various industries within cryptocurrency and predicting what might lie ahead in this exciting field.
Table of Contents
Crypto market cap shrinks
2024’s third quarter didn’t offer calm waters for the cryptocurrency market. Although it started off promisingly, events unfolded differently as global economic factors started influencing market trends.
In the beginning of the third quarter of 2024, on July 22nd, the overall value of the cryptocurrency market hit a robust $2.61 trillion, primarily due to optimistic investor attitudes.
However, that optimism was short-lived. By the end of Q3, the market had contracted by 1.0%, shedding $95.8 billion to close at $2.33 trillion. In addition to the dip in market cap, average daily trading volume also fell by 3.6% to $88 billion for the quarter.
The drop we saw wasn’t limited to the cryptocurrency market; instead, it was influenced by wider economic factors. A significant event affecting global financial systems was the unraveling of the yen carry trade, which occurred following the Bank of Japan’s announcement of an increase in interest rates in August.
For context, the yen carry trade involves borrowing money in Japan, where interest rates have historically been low, and investing in assets elsewhere that offer higher returns.
This method is quite handy for earning funds, but it becomes less effective when interest rates go up. In 2024, when Japan increased its rates for the second time, this approach started to falter.
The increase in interest rates by Japan led investors to find borrowing yen less appealing, which prompted them to unwind their carry trades. This sudden shift caused a stir in the market, with noticeable effects on August 5, spilling over into various asset classes such as cryptocurrencies. On that same day, the crypto market cap saw significant volatility, oscillating between $2.00 trillion and $2.20 trillion following the initial shock.
Additionally, the already tense situations in the Middle East, involving multiple nations and armed groups in ongoing conflicts, have further deteriorated, causing widespread anxiety and a surge in stock market sell-offs.
Despite a rocky market in Q3 2024, some specific cryptocurrencies displayed impressive progress.
Among the blockchain platforms, SUI, a layer-1 platform, significantly rose in popularity and moved up from the 50th spot to the 22nd position on the rankings. Additionally, Bittensor (TAO), a network specializing in machine learning, experienced a significant surge as well, climbing from the 57th position to the 25th.
Conversely, Ethereum Classic (ETC) and Monero (XMR) experienced a decline in their positions, dropping completely from the top 30 list.
Near the close of the quarter, the market began to rebound. This improvement was largely due to a 0.5% reduction in interest rates in the U.S. and economic stimulus measures announced in China. These actions contributed to the market’s rise to approximately $2.33 trillion, but it remains significantly lower than its Q2 high points.
BTC gains market share but trails behind traditional assets
In Q3 2024, Bitcoin (BTC) may not have experienced a significant price surge, but it significantly strengthened its position within the cryptocurrency market as its dominance increased by approximately 2.7%. This dominance refers to Bitcoin’s share of the overall crypto market, which reached 53.6% during this period.
To put it simply, the last instance where Bitcoin held such a prominent position was back in April 2021. This was during a period when Bitcoin was surging due to increased interest from institutions and wider acceptance among the public.
It’s important to point out that the recent increase in influence isn’t primarily due to Bitcoin experiencing significant growth, but rather because coins such as Ethereum (ETH) and Binance Coin (BNB) have suffered larger losses comparatively.
Specifically, Ethereum witnessed a significant decrease in its dominance, falling by about 3.6%, resulting in a 13.4% share at the end of the quarter. Similarly, BNB underwent a drop in dominance due to ongoing regulatory scrutiny on centralized platforms like Binance, which has been affecting investor confidence.
During the third quarter of 2024, even though Bitcoin increased its market share, it trailed behind established traditional asset classes when it came to price growth.
Gold, commonly perceived as a reliable safe-harbor investment, experienced a significant surge of approximately 13.8%, driven by increasing concerns over a potential U.S. economic downturn and escalating instability in the Middle East. This shift in investor behavior reflects a preference for secure assets during uncertain times.
In August, the Japanese yen showed remarkable strength, increasing by 12.0% unexpectedly due to an interest rate hike. This increase, along with the Federal Reserve’s rate reductions, attracted traders towards the yen, as they anticipated higher yields.
In Q3, it was traditional currencies like the yen that shone brightly compared to more muted gains in Bitcoin, underscoring their dominant role.
Conversely, Bitcoin outperformed both Crude Oil and the U.S. Dollar Index (DXY). The price of oil faltered because of decreased demand expectations, whereas the DXY dipped due to the impact of U.S. interest rate reductions on the value of the dollar.
Regardless of other main fiat currencies strengthening relative to the U.S. dollar, Bitcoin managed to rise consistently and surpass their performance, as these traditional assets struggled due to broader economic changes.
2024 Q3 crypto price returns
2024’s third quarter didn’t offer much excitement for the majority of the cryptocurrency market. Despite the market as a whole staying stable, certain tokens performed well, whereas others experienced significant losses.
In a landscape dominated by moderate or poor performance, a select group of tokens managed to shine. Outstanding among them was Aave (AAVE), which surged impressively by 61%.
The outstanding performance of Aave can be linked to the “switching fee” proposition, which enabled AAVE token owners to generate returns just by keeping their tokens. This decision sparked curiosity among yield hunters, thereby increasing Aave’s income by enhancing liquidations throughout the quarter due to increased activity.
One significant upward move was experienced by Ripple (XRP), surging by 29%. This surge can primarily be attributed to its legal triumph in August. The court decision substantially lowered the fines that Ripple Labs had to pay, from the initially sought $2 billion by the SEC, down to a more manageable $125 million.
In summary, Thorchain (RUNE) saw a strong 22% increase, largely due to its announced fusion with the Cosmos Layer 1 project, Kujira. This merger implies that Kujira’s DeFi products and revenue channels will now be routed through Thorchain, generating renewed interest in RUNE’s potential future performance.
Contrarily, Q3 saw a challenging period for Ethereum, as its value decreased by 24%. This might come as a shock to some, given the recent introduction of spot Ethereum ETFs in July, an event that was expected to boost its price.
Nevertheless, while this milestone has been reached, there appears to be a decrease in overall excitement towards ETH, as indicated by fewer individuals participating in Decentralized Finance (DeFi) initiatives that are based on Ethereum.
As a crypto investor, I’ve witnessed a significant plunge in the value of Maker (MKR), with a staggering 36% drop. This sharp decline can be largely attributed to the U.S. Federal Reserve’s decision to lower interest rates. The reduction in these rates caused a decrease in the DAI savings rate, which in turn affected Maker. You see, Maker’s digital dollar (DAI) is heavily dependent on yields from U.S. Treasuries. When those yields dropped, the allure of holding DAI lessened, and this diminished interest in DAI seems to have had a domino effect, pulling down the price of MKR.
As an analyst, I observed that the play-to-earn sector maintained a descending trajectory in the recent period, although the slump was less pronounced compared to the previous quarter. Notcoin (NOT), which experienced a remarkable surge during Q2, began to level off, experiencing a 42% decrease. However, even with this decline, NOT still holds a significant position within the top 3 play-to-earn tokens.
Moving forward, it’s worth noting that ImmutableX (IMX) experienced a slight rebound during Q3 following a challenging Q2, which enabled it to maintain its leading position within the Play-to-Earn sector.
Meme Coins, Solana, and AI lead the way as DeFi and NFTs struggle
Meme-based cryptocurrencies continue to maintain their popularity, as they accounted for a significant 17.05% of web traffic across CoinGecko’s categories in Q3 2024. Solana’s meme coins were not far behind with a strong showing of 11.41%, indicating that the playful and unconventional aspects of the crypto market remain intriguing for many.
In total, coins based on memes accounted for about 31.8% of the overall activity, indicating that despite a relatively stable market, these digital assets continue to generate substantial curiosity.
In the third quarter, Solana continued to be a significant force, as its network (which includes meme coins) garnered a 22.1% share of the market, making it one of the busiest and buzzworthy blockchain environments around.
In Q3, artificial intelligence (AI) continued to be a significant focus, capturing approximately 9.6% of the market share. The use of AI-powered platforms is on the rise, especially as businesses aim to utilize this technology for better decision-making, trading, and various other applications.
During that period, meme coins and Solana experienced a surge in popularity, yet the Decentralized Finance (DeFi) market faced some challenges. The total value of the DeFi market reached its lowest point for the year, at approximately $60.5 billion, on August 6. This dip corresponded with a broader market correction, during which Bitcoin fell to around $49,000.
As an analyst, I’ve observed that despite a minor recovery towards the end of Q3, pushing the DeFi sector to $78.1 billion, we’re still looking at a 15.2% decrease for the quarter. This translates to a loss of approximately $14 billion in market capitalization.
The decline in DeFi’s proportion within the broader market has sparked debate about its potential future trajectory. Previously regarded as a pillar of cryptocurrency advancement, this field is currently grappling with difficulties in drawing new participants and preserving its allure.
During the third quarter, the NFT market, which had experienced rapid expansion earlier, experienced a significant decline. The trading volume on major platforms such as Ethereum and Bitcoin decreased dramatically by 61.3%. This drop brought the total from $3.1 billion in the second quarter down to only $1.2 billion in the third quarter.
Over the past three months, Ethereum’s lead in the Non-Fungible Token (NFT) market has shrunk noticeably, falling from 45% to 35%. Similarly, Bitcoin-centric NFTs, primarily fueled by the Ordinals protocol, have experienced a setback as well. Even though the trading volume of Ordinals dropped a substantial 90% from its April high, it still surpasses Solana’s NFT trading activity. As a result, Bitcoin currently controls approximately 25.2% of the NFT market share, compared to Solana’s 16.0%.
2-tier networks such as Base and Blast experienced some Non-Fungible Token (NFT) transactions; however, they were not immune to the overall market slump. The monthly trade volume dropped to approximately $3 million during the third quarter.
The road ahead
Currently, we’re 15 days into the last quarter of 2024, and Bitcoin is on an upward trend, with its influence reaching 57%. The anticipation for “Uptober” is strong – a month that has traditionally been Bitcoin’s most lucrative.
In the realm of cryptocurrencies, what’s predictable is the volatility. The excitement of Uptober might set us up for a robust finish in 2024, or it could serve as a lesson on the market’s inherent unpredictability.
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2024-10-15 20:45