Research Summary
The report provides a comprehensive analysis of the cryptocurrency market in Q3 2023. It highlights key trends such as the growth of real-world assets (RWAs), the success of Base and other leading L2s, and the stronger implementation examples of SocialFi. The report also discusses the decrease in trade volume, the thin liquidity in the market, and the sectors that have experienced the most positive market cap growth in Q3.
Key Takeaways
Total Crypto Market Cap
- Market Cap Decline: The total crypto market cap at the end of Q3 is at $1.07 trillion USD, representing a drop of 8.56% in Q3, but is still up 34.95% YTD.
- Market Growth Factors: Factors leading to market growth this quarter include the emergence of onchain Real World Assets (RWAs), the successful implementation of Base and other leading Layer 2 solutions, and notable examples of SocialFi gaining stronger traction.
- Traditional Finance Participation: There has been notable participation from traditional finance (TradFi) in the crypto space, with applications for BTC Spot ETFs and ETH Futures & Spot ETFs, and major banks and trading houses establishing their own crypto desks.
Market Sentiment and Liquidity
- Market Sentiment: Market sentiment has trended towards Fear in Q3, and the CMC Crypto Fear and Greed Index has dropped from 60 to 42.
- Liquidity and Trade Volume: The liquidity in the market has continuously decreased this quarter and the total spot trade volume of the top 15 centralized exchanges has dropped by another 30.59% in Q3.
Growing Sectors
- Positive Market Cap Growth: Sectors that have experienced positive market cap growth in Q3 include RWA, Generative AI, Oracles, Media, and Lending/Borrowing.
- Trending Sectors: Trending sectors in Q3 such as Telegram Bots and Base Ecosystem have also grown significantly.
Most Viewed Sectors in Q3
- Memes Sector: Memes remains the most popular sector, continuing the trend from Q2 2023. However, its dominance fell 53% on average, as the memecoin hype faded.
- Smart Contracts Sector: Smart Contracts ascended to be the second most viewed sector, with increasing interest towards the end of Q3.
- DeFi Sector: DeFi rounded up the top three, dropping one position from Q2.
Top Gainers in Q3 2023
- Top Gainers: Top gainers for Q3 2023 span across a wide range of categories. The highest gainer, Tellor (TRB), is a decentralized oracle protocol. Loom Network (LOOM) is a multi-chain developer platform and experienced a rally after listing on centralized exchange Gate.io. Rounding up the top three is Maker (MKR), behind decentralized stablecoin DAI.
Actionable Insights
- Investigate the Potential of RWAs: Real World Assets (RWAs) have experienced significant growth in Q3, suggesting potential for further development and investment in this sector.
- Monitor the Impact of Traditional Finance: The increasing participation of traditional finance in the crypto space could have significant implications for the market. It’s important to monitor these developments closely.
- Consider the Impact of Market Sentiment: The shift in market sentiment towards fear in Q3 could have implications for investment strategies and market trends.
- Explore Growing Sectors: Sectors such as Generative AI, Oracles, Media, and Lending/Borrowing have experienced positive market cap growth in Q3, suggesting potential for further growth.
- Assess the Impact of Meme Coins: The continued popularity of meme coins, despite a decrease in dominance, suggests that these assets still have a significant impact on the market.
