The latest CoinGecko Q3 Crypto Industry Report reveals that the overall cryptocurrency market has contracted by 1.0%. Despite this slight decline, Bitcoin has reached a three-year high in market dominance, while Ethereum is experiencing challenges across several metrics.
According to the report, Bitcoin continues to perform robustly, commanding over 53% of the total crypto market. As of now, its dominance stands at over 58%, marking the highest level since its bull run in April 2021. This surge in dominance reflects Bitcoin's relative strength compared to other cryptocurrencies.
However, the report also highlights some less optimistic trends. Although Bitcoin has increased its market share, the total market capitalization for all cryptocurrencies has seen a slight decline. Furthermore, Bitcoin has underperformed compared to traditional assets such as gold and various treasury bonds since early August. In particular, British, Japanese, and US treasury bonds have outpaced Bitcoin’s growth.
Global economic policies have significantly impacted Bitcoin's performance this quarter. US rate cuts have been beneficial for Bitcoin, as have potential tax reductions in Japan. Additionally, stimulus announcements in China have provided a boost to the overall crypto market. Analyst Eric Balchunas noted impressive inflows into Chinese ETFs, stating, “YEAR OF THE BULL: China ETFs’ October inflow total is now up to $11 billion. What a chart. $90 billion of asset purchases by the government will do that…”
While Bitcoin is gaining an advantage in the cryptocurrency market, this success is nuanced. The broader market continues to struggle, with world economic policies playing a critical role in Bitcoin's recent wins. CoinGecko reported that although Bitcoin's price remained relatively flat in Q3, US Spot Bitcoin ETFs experienced a significant increase in net inflows, boosting assets under management (AUM) by 13.2% compared to Q2.
Ethereum (ETH) has seen a decline in its market share relative to Bitcoin, but that isn’t the only challenge highlighted in the CoinGecko report. Ethereum’s Layer-2 (L2) transactions increased by 17.2% this quarter; however, nearly half of this growth was driven by the success of the Base protocol, which accounted for 42% of ETH L2 transactions.
Base’s emergence is contributing to Ethereum's diminishing control over decentralized exchange (DEX) trading. Additionally, Solana has begun to chip away at Ethereum’s share, leveraging its technical advantages to capture more of the market.
The report notes, “In Q3 2024, Ethereum was the dominant chain for DEX trading, but its market share has consistently dropped below 40%. DEX trading activity continued to thrive on Solana, buoyed by the multitude of meme coins. Meanwhile, Base continued to grow its market share in Q3, despite the overall sluggishness of the crypto market.”
In summary, neither Bitcoin nor Ethereum can fully claim success for Q3 2024. While Bitcoin has increased its dominance and captured significant market share, the overall crypto market remains in decline, presenting a concerning outlook. Bitcoin's performance appears closely tied to broader economic factors, while Ethereum faces increasing competition from emerging platforms.
As the cryptocurrency landscape continues to evolve, traders and investors will need to monitor these trends closely to navigate the complexities of the market.
October 2024, Cryptoniteuae