This is our Q1 2024 crypto market sector snapshot, a report from our Sygnum investment research.
Over the past few months, the crypto market experienced substantial growth, catalysed by rumours and the SEC’s long-awaited approval of BlackRock’s Bitcoin spot ETF. The exciting pace of Bitcoin’s protocol innovations led to increased activity, but Solana took the L1 spotlight, with the market favouring its scalability advantages, driving explosive growth to its ecosystem and token despite the FTX bankruptcy estate liquidating a sizeable stake. The L2 sector was the best-performing sector, reversing 6 months of underperformance, with TVL doubling and the introduction of inscriptions on L2 networks driving transaction volumes to new highs. Newcomer Metis launched the market’s first decentralised sequencer and saw its token increase sevenhold. TVL in DeFi increased nearly 50 percent as market sentiment turned bullish and token prices increased, while the popularity of liquid staking and the newly emerged Etheruem re-staking market segment drew considerable interest to the sector. Solana’s DeFi market share tripled, with Solana-based DEX Jupiter briefly flipping market leader Uniswap in daily transactions. The Web3 sector also stood out as the market rewarded interoperability and projects showing fast user growth, with the proliferation of AI serving as a major driver for many protocols.
Meanwhile, the stablecoin sector finally broke a 17-month decline, supported by increased regulatory clarity and TradFi launches. Despite higher traded volumes, CeFi was the worst performing sector due to ongoing lawsuits, though Binance managed to recapture some of its market share. The gaming and metaverse sectors continued to lag, but AI and scalability improvements could help drive growth, while Apple Vision Pro’s crypto metaverse hints at the potential of multisensory technology in the metaverse sector.
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