Gain deep insights into the cryptocurrency market by leveraging CMC's market data and invaluable insights curated by our Research and Listings team.
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* Compared with Q2, the market in Q3 has experienced several strong growth narratives: real world assets (RWAs), the success of Base and other leading L2s, and the stronger implementation examples of SocialFi.
* Trade volume has decreased to a historical low level, and the liquidity is thin in the market.
* RWA, Generative AI, Oracles, Media, and Lending/Borrowing sectors have experienced the most positive market cap growth in Q3. Other trending sectors such as Telegram Bots and Base Ecosystem have also grown substantially.
* Meme, DeFi, and Smart Contracts remain the top 3 most popular sectors on CMC. The pageview number suggests that the communities are still actively engaging in the top coins in these sectors.
* Top gainers in Q3 are around oracles, RWA, telegram ecosystem, interoperability, cross-chain liquidity, and decentralized stablecoin.
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Chapter 1. TOTAL CRYPTO MARKET CAP
Source: https://coinmarketcap.com/charts/
The total crypto market cap at the end Q3 is at $1.07 trillion USD, representing a drop of 8.56% in Q3, but is still up 34.95% YTD. A few factors have led the market growth this quarter: In Q3 2023, the crypto market witnessed significant growth narratives compared to Q2. These included the emergence of onchain Real World Assets (RWAs), the successful implementation of Base and other leading Layer 2 solutions, and notable examples of SocialFi gaining stronger traction. Throughout this quarter, a common underlying theme has been the drive to onboard more Web2 users into Web3.
Moreover, there has been notable participation from traditional finance (TradFi) in the crypto space. The US market, in particular, has seen applications for BTC Spot ETFs and ETH Futures & Spot ETFs, signaling a clear desire from traditional financial institutions to invest in cryptocurrencies through regulated instruments. Additionally, major banks and trading houses have made announcements about establishing their own crypto desks, further demonstrating the growing interest and involvement of institutional players in the crypto market.
CMC CRYPTO FEAR AND GREED INDEX
Market sentiment has trended towards Fear in Q3, and the CMC Crypto Fear and Greed Index has dropped from 60 to 42. A few events have impacted the market sentiment, including BTC’s sideways price actions throughout Q3, the exploit on Curve Finance and its cascading effect in DeFi, FTX asset sell, and general macro uncertainties.
LIQUIDITY AND TRADE VOLUME
The liquidity in the market has continuously decreased this quarter and the total spot trade volume of the top 15 centralised exchanges has dropped by another 30.59% in Q3. Even though the BTC price is similar to May 2023 level, the liquidity in the current market is only a third of what it was.
GROWING SECTORS
These sectors have experienced positive market cap growth in Q3: RWA, Generative AI, Oracles, Media, and Lending/Borrowing.
Some trending sectors in Q3 such as Telegram Bots and Base Ecosystem have also grown significantly:
https://coinmarketcap.com/cryptocurrency-category/
We’ll deep dive into these trending narratives in Chapter 4.
Chapter 2. BITCOIN AND ETHEREUM KEY EVENTS
Chapter 3. UNDERSTANDING CRYPTO THROUGH CMC
Most Viewed Sectors in Q3
Memes remains the most popular sector, continuing the trend from Q2 2023. However, its dominance fell 53% on average, as the memecoin hype faded.
Smart Contracts ascended to be the second most viewed sector, with increasing interest towards the end of Q3. This could be likely due to the muted volatility of Bitcoin, which hit an all-time low, drawing attention to more volatile altcoins.
DeFi rounded up the top three, dropping one position from Q2. Numerous events in Q3 involved established DeFi protocols, most notably the $61M Curve hack which left founder Egorov’s CRV loans at risk. Maker also recorded a two-year high in revenues, and unveiled the final phase of the “Endgame” roadmap designed by co-founder Rune Christensen.
Top Coins in Most Viewed Sectors
Within the Memes sector, Pepe (PEPE) lost its dominance after price fell over 51% in Q3. The leading memecoin of 2023 crashed following rug pull allegations. Shiba Inu (SHIB), on the other hand, led the sector after launching its Ethereum layer-2 network Shibarium on August 16. Despite having to relaunch due to network issues and a faulty bridge, almost 3 million transactions were completed less than two months after going live.
Ethereum (ETH) continues to dominate in the Smart Contracts sector, following the launch of the first Ethereum Futures exchange-traded funds (ETF) on October 2. However, the highly anticipated Ethereum Cancun-Deneb (DenCun) upgrade, which includes EIP-4844, could be postponed to next year.
Within the web3 sector, Chainlink (LINK) leads after launching the Cross-Chain Interoperability Protocol (CCIP). Chainlink partnered with Swift and traditional financial institutions like BNY Mellon, Citi and BNP Paribas to test CCIP, which could lead to increased institutional adoption. CyberConnect (CYBER), a web3 social network, is a new entrant in this sector. It launched on August 15.
Most Added to Watchlist in Q3 2023
Crypto assets that were most added to the watchlist by CMC users remain largely unchanged from Q2, with blue-chip cryptocurrencies like Bitcoin, Ethereum and XRP retaining top spots. XRP surged over 90% after its partial victory over the SEC on July 13.
PEPE dropped out of the top ten following a dismal Q3, while ChainGPT (CGPT) is a new entrant to the list. CGPT is an AI model designed specifically for blockchain and crypto, and offers AI features such as blockchain analytics and smart contracts generation. It has been awarded grants by Google and BNB Chain.
Most Engaged Communities in Q3 2023
The memes sector increased in dominance with the most engagement (account likes, posts, comments) on CMC Community, despite its declining lead as the most viewed sector. This could suggest that memecoin communities and holders are still active, even as prices and trading volumes dip.
Top Gainers in Q3 2023
Top gainers for Q3 2023 span across a wide range of categories. The highest gainer, Tellor (TRB), is a decentralized oracle protocol, although its rally could be attributed to market maker and venture fund DWF Labs. Loom Network (LOOM) is a multi-chain developer platform and experienced a rally after listing on centralized exchange Gate.io. Rounding up the top three is Maker (MKR), behind decentralized stablecoin DAI. Maker introduced several initiatives as part of its “Endgame” roadmap, including allocating reserves to US T-Bills and other real world assets (RWA) and introducing the Dai Savings Rate (DSR) of 8%. Cumulative DSR deposits are almost $1.4 billion.
Chapter 4. KEY THEMES IN Q3 2023
Rise of Telegram Bots and Ton Ecosystem
Source: https://dune.com/tk-research/telegram-bots
Telegram bots sector is one of the main trending narrative in Q3 2023, mainly led by trading-focused Unibot (UNIBOT)
Unibot is a trading bot which offers buy, sell, limit orders, copy trading and sniper features natively on the Telegram messaging app. It surged in popularity following the memecoin season.
The bot offers on-chain traders a smoother mobile experience. However, there were security concerns about the way private keys were stored on Telegram directly. Although keys are now stored on Unibot Cloud, there are still concerns about third-party exposure.
Other bots/applications flooded the market, ranging from airdrop farming bots to AI bots. Total fully diluted value (FDV) of this sector rose to $232M.
Source: https://dune.com/whale_hunter/unibot-revenue
One of the main reasons for the token rally is revenue share to token holders. UNIBOT holders get 40% of all transaction fees and 2% of UNIBOT volume traded. At its peak, Unibot reached 337 ETH in revenue in one day, around $629K at ETH price on that day.
However, as on-chain DEX volumes and memecoin trading hype faded, revenues took a hit, falling as much as 95% from its peak. The sector’s FDV is currently $248 million, dropping as much as 53% from its highs.
Despite this, the Telegram bots sector is still in the early stages with potential to onboard mainstream users. Recent developments include Banana Gun bot, which launched a token pre-sale, albeit to some controversy. It is currently doing $2.27M in daily volume. Trading “sniper” bot Maestro, one of the earliest in the market, has generated $22.4M in lifetime fees and has yet to launch a token.
One thing to note is the Telegram bots sector is not built on the Toncoin ecosystem, which is a layer-one blockchain network on Telegram built by the TON Foundation. TON recently announced native wallet integration and web3 apps, bringing web3 services to Telegram’s 800 million users. Toncoin (TON) gained 56% in Q3 on the back of the announcement.
FTX Asset Sale
According to restructuring documents, FTX, FTX US and Alameda Research together still hold around $3.4 billion worth of crypto assets.
They also control over 1,300 smaller tokens categorized as “Category B” tokens with limited liquidity, such as Serum, MAPS and Oxygen.
On September 13, FTX received approval to sell $100 million of crypto assets per week to repay creditors, and up to $200 million if creditors approve.
While this has caused fears of downward pressure on the affected token prices, Messari noted that only SOL, APT and TRX have the highest selling pressure based on daily trading volume.
Source: https://twitter.com/apes_prologue/status/1702744692574560448
Moreover, for SOL and APT, 76% and 100% of the tokens are locked in staking contracts respectively. The tokens will be unlocked in phases over the next few years until 2028, making the short-term impact on the market muted.
The Evolving Stablecoin Market
In Q3, the trend continues: USDT remains the dominating stablecoin, gaining market share from USDC and BUSD. The stablecoins market transaction volume has already surpassed Mastercard and Paypal combined since 2022.
In Q2, Tether reported over $1 billion in operational profit, with $72.5 billion in US Treasuries in reserves, making it the 22nd largest holder of treasury bills.
Circle, the issuer of USDC, currently has $25.6 billion in reserves, with $1.8 billion in cash. The remaining 93% is in the BlackRock-managed Circle Reserve Fund, which holds mainly US Treasury repo agreements and short-dated US Treasuries, yielding 5.29%.
With the high volumes and revenues generated, major institutions are taking notice. In August, payments giant Paypal launched its own stablecoin, PYUSD.
So far, PYUSD struggled to gain adoption, with only 44 million PYUSD circulating.
However, PYUSD is now available on Venmo (70 million active users). Paypal itself has 435 million users. 1% of adoption by Paypal users would see an 84% growth in blockchain users and 432% growth in Ethereum users.
Visa, which has 4.2 billion cards globally, is also exploring stablecoin services. It expanded its stablecoin settlement capabilities, however choosing to use Circle’s USDC instead of issuing its own stablecoin.
Real World Asset On-Chain
Real-world assets (RWAs) are tangible and intangible assets like real estate, bonds, and commodities, which are traditionally located off the blockchain. In Q3, RWAs has become increasingly popular and began to gain the attention of some large institutional players: there have been a few projects developed to provide better infrastructure for institutional adoption with increased credibility and legitimacy. A quick summary on some highlighted developments below:
Source: Binance Research
Friend.Tech Leads the Growth in Socialfi
The trend sparked by Friend.tech's success has led to the emergence of similar platforms on various blockchains, suggesting a promising start for the SocialFi sector.
Launched in August and quickly gaining viral attention, Friend.tech allows users to purchase access keys to private chat rooms associated with specific profiles on the platform. The prices of these keys increase as more are bought, following a bonding curve. When these keys are resold on the secondary market, both Friend.tech and the owner of the tokenized profile receive a 5% residual.
When it regained another wave of popularity in late September, its TVL had increased dramatically and the highest Daily Revenue reached $1.14 million on September 14th, whereas the total revenue on Ethereum was only around $3.4 million on that day.
Chapter 5. CRYPTO USERS AROUND THE WORLD
Top Viewed Coins By Region
Compared with last quarter, XRP has made it into the top viewed coins in Q3. This is largely driven by the price surges as Ripple scored a major win against the SEC. In addition to the coins listed, we’ve also identified material traffic increase on CyberConnect (CYBER) and Ordinals (ORDI).
Top Countries By Users On CMC
While the United States and India maintained their respective top positions, Germany has overtaken Turkey to round up the top three. Europe’s largest economy is currently facing a recession, facing high energy costs and manufacturing challenges. The weakening of the German economy could drag down the Euro, and potentially benefit cryptocurrencies. Furthermore, the Markets in Crypto-Assets (MiCA) regulations, set to take effect in December 2024, will provide clear rules for crypto providers in Europe. Meanwhile, the United Kingdom moved up to 6th place. The UK is also pushing to be a global crypto hub, attracting moves from a16z, Coinbase and other firms to expand in the UK.
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