What are the main takeaways from CoinGecko’s Q3 2024 report on crypto market highs and lows? How have market capitalization, trading volume, and investor sentiment changed this quarter?
According to CoinGecko’s Q3 2024 Crypto Industry Report, Q3 2024 was a roller coaster ride for the crypto markets, marked by key shifts in market dominance, surprising price moves, and investor interest.
Let’s break down the main highlights and explore how different sectors are performing and what the future holds for cryptocurrencies.
Table of contents
Cryptocurrency market value shrinks
BTC gains market share but lags behind traditional assets
Cryptocurrency price returns in Q3 2024
Meme Coins, Solana, and AI Lead the Way as DeFi and NFTs Struggle
The road ahead
Cryptocurrency market value shrinks
It hasn’t been all plain sailing for the crypto markets in the third quarter of 2024. Despite early highs, things took a turn when global economic forces began to impact the market.
At the beginning of the third quarter of 2024, boosted by positive investor sentiment, the total cryptocurrency market capitalization reached $2.61 trillion on July 22.
However, this optimism was short-lived. By the end of the third quarter, the market had contracted by 1.0%, or $95.8 billion, to close at $2.33 trillion. In addition to the decline in market capitalization, average daily trading volume also fell by 3.6% to $88 billion during the quarter.
The decline isn’t just a cryptocurrency-specific problem — it’s the result of broader economic forces. Global financial markets were hit by the unwinding of yen carry trades triggered by the Bank of Japan’s decision to raise interest rates in August.
For context, the yen carry trade involves borrowing in Japan, where interest rates are historically low, and investing in other assets with higher returns.
It was a nice way to make money — until interest rates rose. When Japan raised rates for a second time in 2024, the strategy went haywire.
Japan’s rate hikes made borrowing yen less attractive, and investors began unwinding carry trades. This led to market volatility, especially on August 5, which affected various asset classes, including cryptocurrencies. After the shock on August 5, the total cryptocurrency market capitalization fluctuated between $2.00 trillion and $2.20 trillion.
In addition, rising tensions in the Middle East, with multiple countries and militant groups involved in the conflict, have exacerbated the situation, leading to increased panic and selling.
While the entire market faced turbulence, some individual cryptocurrencies made notable moves in Q3 2024.
Sui, a layer 1 blockchain platform, was a standout performer, soaring from 50th to 22nd. Another notable mover was Bittensor, a machine learning network, which jumped from 57th to 25th.
Sui -0.86% Sui
Tao-1.87% Bittensor
On the other hand, Ethereum Classic and Monero slipped down the rankings and fell out of the top 30 entirely.
0.44% Ethereum Classic
XMR0.94%Monero
Towards the end of the quarter, the market saw some recovery due to a 50 basis point (bps) rate cut in the U.S. and stimulus announcements in China. These moves helped the market recover to $2.33 trillion, but it is still well below the second quarter peak.
BTC gains market share but lags behind traditional assets
Bitcoin may not have seen a massive price increase in the third quarter of 2024, but it certainly made its presence felt in the market. BTC’s dominance, a measure of its market share in the crypto world, rose to 53.6%, up 2.7% from the previous quarter.
BTC0.89%Bitcoin
In fact, the last time BTC saw such dominance was in April 2021, when Bitcoin was riding the excitement of institutional investment and wider adoption.
It’s worth noting that this surge in dominance isn’t so much a result of a strong rally in Bitcoin as it is a bigger hit to altcoins like Ethereum and Binance Coin.
FEH 0.41% Ethereum
BNB 0.23% Binance Coin
Ethereum, in particular, saw a sharp decline in dominance, falling 3.6% to end the quarter with a share of 13.4%. BNB’s dominance also declined as regulatory scrutiny of centralized exchanges like Binance continued to dampen investor sentiment.
However, while Bitcoin managed to increase its market share, its price performance in the third quarter of 2024 lagged behind major traditional asset classes.
Gold, often seen as the ultimate safe-haven asset, rose 13.8%. Meanwhile, concerns about a slowing U.S. economy and growing instability in the Middle East have prompted investors to turn to safer assets.
Another strong performer was the Japanese yen, which surged 12.0% following a surprise rate hike in August. That hike, along with the Fed’s rate cuts, boosted the yen as traders flocked to the currency in anticipation of better returns.
The sharp rise in the yen contrasted with the smaller gains in bitcoin, highlighting that traditional currencies were the stars of the third quarter.
On the other hand, crude oil and the U.S. Dollar Index (DXY) underperformed Bitcoin. Oil prices struggled due to weak demand forecasts, while the U.S. Dollar Index fell as U.S. interest rate cuts took a toll on the greenback.
While all major fiat currencies gained against the dollar, Bitcoin’s steady price gains were enough to outperform both assets, which suffered in the wake of the macroeconomic shifts.
Cryptocurrency price returns in Q3 2024
It hasn’t been an exciting ride for most of the crypto market in the third quarter of 2024. While the overall market remained flat, some tokens managed to shine while others got hammered.
Amid a sea of neutral or negative returns, some tokens stood out. Aave was the big winner, surging an impressive 61%.
AAVE-0.57%
Aave’s strong performance can be attributed to the “fee switching” proposal, which allows AAVE token holders to earn yield simply by holding their tokens. This move attracted more interest from yield seekers and boosted AAVE’s revenue through increased liquidations this quarter.
Another notable gainer was Ripple, which gained 29%. Ripple’s gains were largely due to its legal victory in August. The court ruling significantly reduced the fine that Ripple Labs had to pay, from the $2 billion that the SEC had originally sought to just $125 million.
XRP (Xtreme) - 0.96% Ripple
Finally, Thorchain posted a solid 22% return, helped by its announcement of a merger with Cosmos Layer 1 project Kujira. The merger means Kujira’s DeFi products and revenue streams will now flow through Thorchain, adding new excitement to RUNE’s prospects.
Rune - 2.84% THORChain
Ethereum, on the other hand, has had a poor quarter, with prices down 24%. This may come as a surprise to some, especially given the launch of a spot Ethereum ETF in July, which many believed would drive prices higher.
However, despite this milestone, overall enthusiasm for ETH appears to have cooled, with fewer investors and traders participating in Ethereum-based DeFi projects.
Meanwhile, Maker saw the biggest drop, falling 36%. This decline was largely due to the Federal Reserve’s rate cuts, which caused the DAI savings rate to fall. Maker’s DAI relies heavily on the yields of U.S. Treasuries, so when those yields fall, it becomes less attractive to hold DAI, dragging down the price of MKR.
MKR - 5.16%Maker
The Play and Earn sector continues its downward trend, although the decline is not as severe as in Q2. Notcoin, which rose rapidly last quarter, cooled off, falling 42%. Despite the decline, NOT still ranks among the top 3 P2E tokens.
NOT2.84%Notcoin tokens
On a more positive note, ImmutableX saw a modest recovery in the third quarter after a difficult second quarter, helping it maintain its leading position in the P2E space.
IMX0.22%
Meme Coins, Solana, and AI Lead the Way as DeFi and NFTs Struggle
Memecoins have proven once again that their appeal is far from fading. In Q3 2024, memecoins accounted for an impressive 17.05% of web traffic in the CoinGecko category. Solana’s memecoin followed closely behind at 11.41%, showing that the quirky and often unpredictable side of the crypto world continues to attract attention.
SOL0.57%Solana
Overall, meme-related tokens accounted for 31.8% of traffic, reinforcing that even in a relatively flat market, these tokens are still attracting a lot of interest.
Solana remained a key player in Q3, with its ecosystem (including meme coins) accounting for 22.1% of the market share, making it one of the most active and watched blockchain ecosystems.
Artificial intelligence (AI) has also been in the spotlight, accounting for 9.6% of the market share in the third quarter. AI-driven platforms are becoming increasingly popular, especially as industries look to leverage the technology to enhance decision-making, trading, and more.
While meme coins and Solana have seen a surge in interest, the DeFi market has had a rough time. On August 6, the total DeFi market cap fell to a yearly low of $60.5 billion, coinciding with the broader market correction when Bitcoin fell to $49,000.
Although DeFi rebounded slightly to $78.1 billion at the end of Q3, the sector still fell 15.2% during the quarter, losing $14 billion in market value.
DeFi’s shrinking share of the overall market has raised questions about its future. Once seen as a cornerstone of crypto innovation, the industry now faces challenges in attracting new users and maintaining its appeal.
Meanwhile, the once-explosive NFT market continued its sharp decline in Q3. Transaction volumes on major networks like Ethereum and Bitcoin dropped a staggering 61.3%, from $3.1 billion in Q2 to $1.2 billion in Q3.
Ethereum’s NFT dominance took a major hit, falling from 45% to 35% this quarter. Bitcoin-based NFTs, primarily driven by the Ordinals protocol, were also affected. Despite a 90% drop in transaction volume from its April peak, Ordinals still outperformed Solana NFTs, with Bitcoin accounting for 25.2% of the NFT market share, while Solana has 16.0%.
Layer 2 networks like Base and Blast have seen some NFT activity, but even these networks have not been able to escape the broader market downturn, with monthly volumes shrinking to around $3 million in the third quarter.
