According to CMC 2024 Q3

Chapter 1: Market Overview

Q3 Sentiment Remains Bearish; BTC Dominance Raised to Highest Since April 2021

Stablecoin Market Cap Hits ATH, Signaling Massive Sideline Liquidity

Stablecoin Market Cap hits an All-Time High at $160billion, representing a huge amount of liquid capital waiting on the sidelines to deploy; April 2021 Stablecoin Market Cap was only $62billion - current size 2.5x’d similar market sentiment

Where are we in the halving cycle

Bull Market Progress: 40.66% – Are We Breaking the Cycle?

We're currently ahead of historical trends, signaling a potential shift in traditional market cycles. Historically, Bitcoin bull markets tend to peak between 518 and 546 days after the halving event. However, this time around, Bitcoin is accelerating by approximately 100 days, suggesting the next peak could arrive sooner than expected — potentially between mid-May and mid-June 2025.

Despite this early acceleration, there are signs of slowing eco/infrastructure growth, which could indicate that broader market dynamics are evolving. Whether this is an anomaly or the start of a longer-term change in market behavior remains to be seen. Will Bitcoin continue to follow historical patterns, or are we witnessing a fundamental shift in the crypto cycle?

Proof that there may no longer be a four-year Halving Cycle for Bitcoin?

Multiple factors suggest Bitcoin may be breaking its traditional four-year cycle, potentially entering a "super cycle" driven by institutional adoption, ETFs, and changing market dynamics. One of the indicators is the Correlation with Traditional Assets. Bitcoin's price movements are increasingly correlated with gold and tech stocks, suggesting its integration into broader financial markets. This correlation indicates that Bitcoin is being treated more like a traditional financial asset, potentially breaking its isolated four-year cycle. Secondly, Changing Market Participants means that the profile of Bitcoin investors has shifted dramatically: Companies like MicroStrategy and Semler Scientific have added Bitcoin to their treasuries, signaling growing institutional adoption; Hedge funds are increasingly viewing Bitcoin as a performance differentiator in their portfolios; and the debates about Bitcoin's potential role as a strategic reserve asset could further cement its "Digital Gold" status driven by the political considerations.

Q3 Sees Bear Market Trends, But Q4 Set for Stronger Performance

Bitcoin's performance in Q3 2024 was mixed, with negative returns in August (-8.6%) sandwiched between modest gains in July (+2.95%) and September (+11.39%). This bearish trend aligns with historical Q3 patterns, which often show volatility and negative returns.

However, historical data suggests Q4 could bring a reversal:

- October has averaged 22.90% returns over the past decade.

- November and December typically show positive returns (46.81% and 5.45% averages respectively).

- 2024 has already seen strong performances in earlier quarters (February +43.55%, March +16.81%).

While past performance doesn't guarantee future results, the combination of historical Q4 strength and 2024's overall bullish trend suggests Bitcoin may be poised for a robust finish to the year, despite Q3's bearish indicators.

Sector Performance in Q3

19 out of 52 sectors experienced positive growth in market cap in Q3, TRON ecosystem, Media sector and Stablecoins have been the most prominent sectors for growth. AI sector has seen significant recovery in Q3.

Despite the market pump towards the end of Q3, there are still 16 sectors that posted more than 10% market cap losses in Q3, dropping up to 40%. These sectors have struggled in the Q3 bearish market, namely DeFi and Infrastructure related sectors, such as Lending & Borrowing: -36.51%; Yield Aggregator: -12.73%; Storage: -39.21%; Interoperability: -26.05%; Privacy: -30.75%; and Governance: -17.61% (decrease)

There seems to be a shift from DeFi and infrastructure projects towards more speculative and consumer-focused sectors like AI, media, and memes in the past quarter.

Top Gainers This Month (from CMC 100 projects)

Chapter 2  Market Sentiment: Unwrapping CMC's Unique Data

CoinMarketCap is the world’s most trafficked crypto website and the number one source of crypto data, insights, and community. By analyzing the viewing behavior of our millions of users, we can detect emerging trends and changing priorities within the global crypto community.

In this section, we unwrap our exclusive CMC data to cover:

• Most popular CMC categories
• Top coins per category
• CMC users around the world
• Most Popular Coins per Region

Most popular CMC categories

SOL Declines, ETH Rises; NFTs Show Signs of a Modest Comeback

Top coins per category

CMC users around the world

India has become the 2nd largest country for crypto users.

Most Popular Coins per Region

Chapter 3 Market Pulse

Bitcoin

Bitcoin Long-Term Holders Growth Outpace Short-Term Holders

From Dec 2023 to April 2024, as BTC rallied from ~$38K to ~$71K, Bitcoin ST holder base increased over 45% as new buyers entered the market

However, since BTC started downtrending in April, LT holders growth have been outpacing ST holders, as coins shifted to stronger hands

Hash rate vs Miner’s block revenue

Bitcoin miners’ revenue continue to trend downwards following the April halving event, as inscriptions-related trading activities have declined

Despite the lower revenues, Bitcoin’s hash rate — which measures the computing power in the network and is a key security metric — increased 14.7% in Q3

It reached a record 692.28 exahash per second (EH/s) on Sept. 8, showing the resilience and strength of Bitcoin miners

BTC exchange balance vs BTC price

Bitcoin exchange balance reached a high on July 30, a level last reached in Nov 2022

An increase in balance on exchange typically suggests that users are sending their BTC holdings to exchanges to sell

This suggests that holders were taking advantage of the end-July rally to $68K to offload their holdings

This coincides with the decline in ST Bitcoin holder base highlighted above

Layer-1s

Ethereum Price Breakeven YTD, Despite Spot ETFs

Price Performance Across Top 5 L1s

Meanwhile, ETH erased all its gain YTD at the beginning of September with the recent FUD and the continuous outflows of Ethereum spot ETFs. ETH has recently bounced back to have a positive performance of 14.61% YTD later in September, The weakness in ETH has sparked debates over Ethereum revenue accrual following EIP-4844 and the sustainability of Ethereum DeFi. The next major upgrade, Pectra, is scheduled for Q4 2024/Q1 2025.

Meanwhile, all other L1s had negative returns, with TON suffering the largest drawdown. Despite the arrest of Durov and regulatory uncertainty surrounding the Telegram app, numerous high profile TON projects launched their tokens, including Hamster Kombat, Catizen, ​​Rocky Rabbit and more

Daily Active Addresses Across Major  L1s

Despite challenging market conditions and slower summer months in Q3, daily active users across selected L1s have picked up, especially towards the end of Q3

BNB Chain saw a notable spike on August 12. The chain launched its Meme Innovation Battle Round 3 in mid-August, and launch platforms like Four.meme are gaining traction

Daily Transactions Across Top 5 L1s

In Q3, Solana saw a 9.25% fall in daily transactions, as meme coin trading activity fell amidst a downtrending market.

Notably, Ton Network saw the highest surge in transactions, increasing 275% from 1.2M to 3.3M. This comes as Ton mini-apps are gaining traction, although it may be partly related to airdrop farming activities.

Layer-2s

Only Scroll Saw Gain in TVL in Q3

In Q3, all the top 10 layer-2s by TVL suffered drawdowns, except for Scroll Network

Daily Active Addresses for Top 5 L2s by TVL vs Ethereum (YTD)

Base overtook Arbitrum in terms of daily active addresses, after Arbitrum led in Q2. This is likely due to the ‘Onchain Summer’ campaign

Arbitrum and Base surpassed Ethereum in terms of daily active users since June, showing increased adoption following the Dencun upgrade which lowered L2 tx fees

Daily Transactions for Top 5 L2s by TVL vs Ethereum (YTD)

In terms of daily txs, Base has convincingly taken the lead since June, likely due to the launch of its ‘Onchain Summer’ campaign. There are now over 200 projects building on Base

Meanwhile, L2s have continued to scale Ethereum, with Base and Arbitrum now consistently seeing greater daily transactions than mainnet

DeFi

DeFi TVL YTD

DeFi TVL is down 21.4% from its yearly high amidst a challenging Q3. However, YTD, total DeFi total value locked (TVL) gained over 42%

DeFi TVL market share by chain

In Q3, Ethereum’s DeFi TVL market share fell by 5.74%

Tron saw notable growth, gaining 0.84%, likely due to growth of USDT on Tron

TVL by sector

Lending remains the leading DeFi sector by TVL, however TVL has fallen by 9% in Q3

While most sectors saw drawdowns, Bridges, RWA and Derivatives saw gains in TVL

Top 10 DeFi App by TVL

Lido, the Etheruem liquid staking protocol, remains the leading DeFi Dapp in terms of TVL. In Q3, it announced several developments, including ​​an institutional-grade liquid staking solution and partnership with Aave DAO.

However, in Q3, Lido’s market share has fallen from 31.9% to 28.4% as more competitors enter the market

WBTC (market cap) vs other competitors

WBTC remain the leading wrapped Bitcoin solution on Ethereum with 96.7% market share

However, its market cap declined 7.6% in Q3 amidst controversies surrounding custodian BitGo’s new joint venture and ties with Justin Sun. Sky (previously Maker) is proposing to drop WBTC from supported collateral assets. It currently has $200M in WBTC exposure

This comes as Coinbase is preparing to launch its own wrapped Bitcoin product, cbBTC

Cross chain

Bridge volumes

In Q3, the Arbitrum Bridge has surpassed Circle’s CCTP to take the leading position in terms of bridge volume

RWA

Stablecoins Market Cap Gain 5.4%

Stablecoin inflows continued throughout Q3, despite a 11% drop in total crypto market cap

Notably, Paypal USD (PYUSD) gained 86% in Q3, making it the 6th largest stablecoin by market cap

Ethena’s USDe saw a 26% drop in market cap, after a strong start since launch

Sector is maturing as new projects expand options beyond USD, Tether diversifies investments to AI, agriculture, etc.

Adjusted Stablecoin Transfer Volumes Reaches All-time High

According to Artemis, after adjusting for MEV activity and CEX transfers, stablecoin volume is at an ATH of over $1.3T, showing the strong growth of stablecoin user activity

Ethereum is still the leading chain with a robust DeFi ecosystem

Tron is the second-highest chain, due to the strong adoption of Tron’s USDT particularly in emerging markets

BlackRock’s BUIDL Fund Extends Lead

BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL) surpassed the half a billion milestone, gaining 14.5% in Q3

This is mainly driven by adoption from DeFi RWA protocols like Ondo Finance and Mountain Protocol, which uses BUIDL as collateral. BUIDL only has 21 holders.

NFT/Gaming

Ethereum Sees Resurgence in NFT Volumes, Solana Leads the Rest

In Q3, Ethereum reclaimed the lead for the top chain by NFT trading volumes, with around 41% market share

However, NFT volumes have been on a year-long downtrend, falling by over 77% since the start of the year

While Ethereum leads in volumes, Solana leads in other user activity metrics, due to the low-cost, high speed it offers compared to Ethereum

GameFi

Pixels Continues to Lead in Daily Active Users

Ronin-based virtual farming world Pixels continues to see upwards of 5M active users, maintaining its lead as the most-played blockchain game

Notably, TON-based swipe-to-earn minigame Catizen saw an explosive growth in DAU, growing from over 100K at the start of Q3 to over 2.9M. The CATI token launched on September 20 at a market cap of $293million.

Meme coins

Meme Coins Still Top Performing Sector YTD Despite Large Drawdown

Q3 was a tough quarter particularly for meme coins, with top 10 meme coins by market cap suffering drawdown of 70% and more

However, meme coins is still the top performing sector — according to Murad, out of 42 tokens that outperformed BTC, meme coins dominate

Solana-based POPCAT is the leading performer, gaining over 10,670% YTD

Pump.Fun Is a Revenue Generating Machine

Despite the challenging market conditions, Pump.fun remains one of the top revenue-generating Dapps, hitting over $300K in fees daily

Dilution and Low Probability of Success of Pump.Fun Tokens

Pump.fun hit a peak of over 20.4K tokens launched on Aug 13

However, the influx of new meme coins launched have caused a debate on the dilution of attention and capital

Chapter 4: CMC Listing/Research Insight

Post-FED Market Macro

The yield-seeking, dollar-bearish trend that has prevailed since early July was confirmed by the 50-basis-point cut and the dot plot. However, the surprise factor is limited, as the market had been discussing it for weeks. As we saw, BTC bounced from 59.5k to 61k in the hour following the announcement, reclaiming the price level reached earlier in the week in anticipation of the rate cut. In Q4, we are likely to see increased inflows into BTC ETFs, and possibly ETH ETFs as well, as market dynamics continue to drive more capital into riskier assets like crypto. Historically, Q4 has often been a strong period for Bitcoin, with an average price increase of 90.33% in Q4 over the past 10 years. Notably, this year, we’re entering Q4 from a relatively low price level. With these factors in mind, there’s a significant chance we could see a price surge during the remainder of the year, potentially even pushing Bitcoin towards another all-time high.

Q3 has been Bear Market

Throughout Q3, we witnessed a bearish trend across the crypto market. Factors like governmental wallet sell offs, post FTX liquidations, the memecoin market crash, and the Fed rate decision with other macro economic factors, created downward pressure. BTC has been testing new lows in the low $50k range, and the CMC Crypto Fear and Greed Index has been moving around 30-40 reflecting Fear in the market.

Q4 should bring more stability

However, Q4 could bring a shift toward more stability. What the market really craves right now is predictability, and upcoming events like the U.S. election in November are likely to settle some of the uncertainty regardless of the outcome. Historically, Q4 has often been a strong period for Bitcoin, and on average BTC has yielded 90.33% price increase in Q4 for the past 10 years. Especially, this year we’re entering Q4 from a relatively low price level. With these factors in mind, there’s a significant chance that we could see a price pump during the remainder of the year, potentially even pushing Bitcoin towards another all-time high.

Key Factors That Will Drive Price Performance