Bitwise Report: Crypto Market Leaders and Narratives in Q3

Analysts at Bitwise have released a global report on the crypto market for the third quarter of 2024, examining the performance of major blockchains, key trends, and significant events.

“[During the reporting period] cryptocurrency prices remained unchanged. The Bitwise 10 Large Cap Crypto Index ended the quarter down 3.5%, marking one of the smallest price fluctuations in the history of cryptocurrencies. However, this external calm concealed significant progress,” the document states.

Key and Upcoming Events

The top 10 narratives from July to September according to analysts:

• political support for cryptocurrencies. Republican candidate Donald Trump spoke at the Bitcoin 2024 conference in Nashville, while his Democratic rival Kamala Harris endorsed digital assets;
• entry of banks. The US Securities and Exchange Commission (SEC) approved BNY Mellon’s decision to begin custody of crypto assets;
• approval of spot Ethereum-ETFs. The launch of the instrument occurred against market expectations;
• institutional dominance. About 60% of the world’s largest hedge funds hold crypto assets;
• Morgan Stanley opens doors to Bitcoin. The firm will allow its brokers to recommend cryptocurrency-based exchange-traded funds to clients;
• Polymarket crosses the ‘chasm’. Prediction markets are becoming mainstream, as indicated by trading volumes exceeding $1 billion;
• Tether prints money (in a good way). The USDT issuer earned more profit than BlackRock — $6.2 billion versus $5.5 billion;
• Mt.Gox distributed most of the funds. After nearly a decade of legal battles and paperwork, the story came to a close.
• Bitcoin-ETF options. The SEC gave the green light to exchange-traded fund-based instruments;
• vehicle registration on blockchain. The California Department of Motor Vehicles included 42 million vehicle ownership rights on the Avalanche blockchain to expedite their transfer upon ownership change.

Bitwise also identified several future catalysts for the market:

• US elections and regulatory progress. Uncertainty of outcomes affects investor sentiment, but analysts expect cryptocurrency to “reach the White House,” regardless of the presidential race results;
• interest rate cuts and economic stimulus. The world has entered a global cycle of monetary policy easing. Low rates, easy money, and government support create an attractive environment for cryptocurrencies;
• resumption of inflows into ETFs. Since their launch, Bitcoin funds have attracted $18.9 billion, making them the most successful launch in the segment ever. The launch of products on major trading platforms will renew the inflow wave, lifting the underlying asset to new highs;
• “killer apps” and project launches. Cryptocurrency thrives on the emergence of trendy applications and new blockchains. In the coming months, numerous solutions will begin to scale simultaneously, from stablecoins to DePIN and prediction markets.

Quarter in Numbers

Since the beginning of the year, the Bitwise index of the top 10 cryptocurrencies has gained 35%, outperforming gold (27.7%) and US Treasury bonds (22%).

However, on a quarterly basis, the index lagged behind almost all other asset classes.

The largest increase over the past three months was demonstrated by XRP — 31.5%. Polkadot (DOT) gained 27%, and Ethereum increased by 24.2%.

As of the end of September, 56.8% of Bitcoin’s issuance is concentrated in personal wallets, 17.6% are inactive, 5.2% are held by funds, 4.8% are on Satoshi Nakamoto’s addresses, 3.3% belong to businesses, 2.4% to governments. The remaining 6.2% are yet to be mined.

Trading volume on centralized exchanges continued to decline, falling to approximately $240 billion.

Ethereum remains the leading blockchain by revenue, with $1.92 billion since the beginning of the year. It is followed by the Bitcoin network ($797 million) and Solana ($358 million).

Meanwhile, the number of developers across all ecosystems continues to decline since the second quarter of 2022.

The average number of active addresses per day in the network of the first cryptocurrency slightly decreased from the previous reporting period, to approximately 700,000.

A similar metric for Ethereum and L2 solutions exceeded 2 million.

Ethereum also leads in average transaction cost, surpassing digital gold by more than twice.

The volume of venture financing in the crypto industry remained at the level of the previous quarter — around $3 billion.

Earlier, Bitwise outlined conditions for Bitcoin’s rise above $80,000 by the end of the year. Among them, analysts highlighted a Trump victory in the elections, a 50 basis point cut in the Fed rate with new Chinese stimuli, and the absence of major surprises in the industry.