Research Summary
The report provides a comprehensive analysis of the cryptocurrency market in February 2024, highlighting the performance of Bitcoin and Ethereum, the impact of new U.S. Bitcoin ETFs, and the growing adoption of cryptocurrencies by major financial institutions and companies. It also discusses the rise of Smart Contract Platforms, the trend of airdrops, and the expansion of Bitcoin’s utility. The report further explores the performance and developments of various blockchain networks and cryptocurrencies.
Key Takeaways
Performance of Bitcoin and Ethereum
- Bitcoin’s Rally: Bitcoin experienced a 45% gain in February 2024, marking its best monthly performance since December 2020. This surge was significantly influenced by the launch of new U.S. spot Bitcoin ETFs, which purchased over 5 times the new Bitcoin supply since their launch on January 10th.
- Ethereum’s Outperformance: Ethereum outperformed Bitcoin with a 48% rally in February 2024. Ethereum’s revenue for February was $284M, and it captured a 65.1% market share of the Smart Contract Platforms (SCPs) market, excluding Starknet’s revenue surges.
Adoption of Cryptocurrencies
- Adoption by Financial Institutions: Major financial institutions like Merrill Lynch and Wells Fargo have started offering access to Bitcoin ETFs to select wealth management clients, indicating growing mainstream financial adoption.
- Adoption by Companies: Reddit’s IPO filing disclosed the company’s investment in Bitcoin and Ethereum, adding to the trend of companies incorporating cryptocurrencies into their balance sheets.
Smart Contract Platforms (SCPs)
- Market Capitalization and Revenue: SCPs saw a 33% increase in market capitalization from $1.27T to $1.72T in February, with total revenues reaching $829M. Starknet, with its newly launched STRK token, contributed an atypical 47% of February’s SCP revenue, surpassing Ethereum’s revenue by $100M.
- Daily Active Users: Daily active users (DAUs) for SCPs hit a new record high in February 2024, averaging 7.5 million, indicating growing user engagement across smart contract platforms.
Airdrops Trend
- Prevalence of Airdrops: Airdrops have become a prevalent marketing strategy in the crypto space, with applications distributing tokens to users based on qualifying on-chain activities. Starknet, Dymension, and AltLayer conducted significant airdrops in February, with Starknet’s STRK tokens valued at approximately $1.281 billion, Dymension’s DYM tokens at $389.2 million, and AltLayer’s ALT tokens at $144.3 million.
Expansion of Bitcoin’s Utility
- Emergence of Ordinals: Bitcoin’s utility is expanding beyond a payments-only application chain due to the emergence of ordinals and the efforts of Taproot Wizards, who have begun uploading NFTs and creating token standards for NFTs on Bitcoin.
- Bitcoin’s Value on Other Blockchains: Various protocols, such as WBTC on Ethereum and BTC.B on Avalanche, enable Bitcoin’s value to be bridged to other blockchains, each with different levels of trust and tradeoffs in safety, convenience, and functionality.
Actionable Insights
- Monitor the Impact of ETFs: The launch of new U.S. spot Bitcoin ETFs has significantly impacted Bitcoin’s supply and price. Investors should monitor the impact of these ETFs on the cryptocurrency market.
- Research the Potential of Ethereum: With Ethereum outperforming Bitcoin and capturing a significant market share of the SCP market, it may be worthwhile to research the potential of Ethereum in the cryptocurrency market.
- Consider the Adoption Trend: The growing adoption of cryptocurrencies by major financial institutions and companies indicates a shift towards mainstream financial adoption. Investors should consider this trend when making investment decisions.
- Understand the Role of SCPs: The rise of SCPs and their increasing market capitalization and revenue highlight their growing importance in the cryptocurrency market. Understanding the role and potential of SCPs could be beneficial for investors.
- Assess the Impact of Airdrops: The prevalence of airdrops as a marketing strategy in the crypto space could impact the value and distribution of tokens. Investors should assess the impact of these airdrops on their investment strategies.
