Crypto Performance Analysis in Q3 2021

Cryptocurrency asset aggregation portal Coingecko has published a Q3 2021 crypto report covering several aspects of the crypto industry. Based on the study, the crypto economy has recovered remarkably from the market crash in May 2021. Market capitalization has dipped from an all-time high value of $2.5 trillion to nearly half of it in late July. The crypto market has restored its market cap by rising to as high as $2.3 trillion in September. 

Coingecko’s founders Bobby Ong and TM Lee published an in-detailed report and also mentioned “NFTs are redefining value and culture” in the founder’s note section. Their study delved into numerous subjects of the crypto industry including DeFi and different stable coins. According to the report, Bitcoin (BTC), gaming coins like Axie Infinity (AXS), and non-fungible tokens (NFTs) have dominated the industry in Q3 2021. 

Based on the report, the market cap of the top 30 cryptocurrencies experienced a 31% increase in market cap and a 47% decrease in trading volume compared to Q2 2021. The huge difference in the market cap and trading volume suggests that investors are accumulating and holding on. The average price returns of the top five cryptocurrencies, Bitcoin, Ether, Cardano, Binance Coin, and Ripple increased by 35% in Q3. Cardano is the leading cryptocurrency among these coins, having the highest price returns i.e., 53% and it is notable that Bitcoin is the weakest coin with only a 25% increase in its price returns. 

Altcoins performance 

Alternative chains ecosystem continues to thrive and outperform Bitcoin signifying that altcoins are dissociating the largest cryptocurrency. The only exceptions are Cardano and Tether and Tether has witnessed the biggest decline having a 15.7% drop. Solana has shown a significant increase i.e., 226.9%, and has occupied the top 8th position on the list by replacing Dogecoin. Another altcoin that performed relatively well is BNB with a 16.3% increase. It is clear that altcoins are growing strong in the industry including Ethereum whose price increased by 1.6% in Q3 2021. 

The market cap of stablecoins has increased steadily by 17% and managed to reach a $123 billion market cap by the end of Q3 2021. The trading volume of stablecoins has also increased by 14%. The top 5 stablecoins – Tether, USDC, BUSD, DAI, and UST have grown by more than 20% except for Tether which only increased by 11%. Tether continued to lose market signifying that investors are choosing alternative stablecoins as USDT is facing regulatory observation. 

Bitcoin performance

The price of Bitcoin has increased by more than 25% while it was moving downwards throughout Q2 and the beginning of Q3. Its downward trend was reversed and Bitcoin has crossed the $50,000 mark. Few events related to the largest cryptocurrency are notable as they played a major role in its price changes. They are, 

  • El Salvador started using Bitcoin as legal tender and BTC payments went live in the country.
  • Increase in institutional interest as most of the big players perceive Bitcoin as a hedge against inflation.
  • China prohibited crypto-related activities like mining and transactions.

Based on the report, the Bitcoin hash rate has increased tremendously by 54% in Q3 2021. When Chinese authorities banned mining on May 21, the hash rate dropped hugely to 85M TH/s. It has recovered to 145M TH/s by the end of Q3. The strong hash rate recovery may signify that miners from China are moving to favorable countries like the US where there is no regulatory crackdown and the electricity prices are beneficial. 

Bitcoin has outperformed other major asset classes like crude oil, gold, Nasdaq, S&P 500, etc by climbing 25% in Q3. Publicly traded companies like MicroStrategy Inc, Tesla, Galaxy Digital Holdings are the top 3 major companies holding a large amount of Bitcoin. All the public companies holding BTC are now controlling 1.11% of the total Bitcoin supply. 

DeFi analysis 

DeFi space has increased tremendously in Q3 2021 as the market cap rose from $67B to $128B which is around 91% growth. The market dominance has increased to 5.8% which was at 4.7% at the beginning of Q3. DeFi demand is likely to be increased due to the rise of DeFi native products on alternative chains like Solana, Avalanche, and Terra. Overall, DeFi has restored its all-time high value from May 2021. 

Solana and Avalanche are the new stars in the DeFi industry as both are drawing attention in terms of liquidity. The total value locked (TVL) dominance is 6% for Solana and 2% for Avalanche. On the other hand, TVL of Binance Smart Chain (BSC) is reached 11% by the end of Q3 but has not yet recovered from its all-time high in May 2021. Terra has witnessed a dominance increase of 5% despite having a few major protocols like Mirror and Anchor. 

Various DeFi sectors such as lending, DEXs, yield aggregators, insurance, oracles, and derivatives have also shown a significant increase. The market cap of each segment increased anywhere between 28% – 40% in Q3 2021 and the market cap of DEXs itself has increased by more than $10 billion. Gaming tokens have dominated the industry with AXS being the topmost token. AXS has shown an outstanding performance when compared to other cryptocurrencies as it has increased by 965% and its YTD gains are more than 13,700%. 

Non-fungible tokens (NFTs) performance

Art marketplaces have shown slow momentum at the beginning of Q3 2021 and quickly picked up in August 2021 as their growth increased by 325% in just a month. Both OpenSea and Rarible have reached a trading volume of $6.8 billion combined in Q3 2021. Based on the report, OpenSea is monopolizing the entire NFT market by contributing more than 99% of the total trading volume by the end of September. While Rarible only contributed $21 million in September which is less than 1%.

As per the aggregator sales volume, the top 5 collectibles are Axie Infinity, CryptoPunks, Art Blocks, NBA Top Shot, and Bored Ape Yacht Club. Additionally, JPEGs and texts have blown up the NFT market in Q3. Many new NFT projects are being launched from cutesy creatures to just plain old words. Examples are cool cats, pudgy penguins, 0N1 force, etc. 

Since Coingecko’s report, Bitcoin has continued to increase in value. Despite the market recovery in Q3 2021, the market is still needed to reach the activity levels that were before the market crash in May 2021. 

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