Research Summary
The report discusses the performance of various cryptocurrencies in November, with Bitcoin and Ethereum leading the pack. It also highlights the growth of DeFi tokens and layer 1 smart contract platforms like Solana and Avalanche. The report further delves into the performance of various indices, the rise of layer 1 blockchain tokens, and the impact of Ethereum’s fee market share. It also discusses the growth of L2 solutions and the performance of various tokens in the DeFi and metaverse sectors.
Key Takeaways
Bitcoin and Ethereum’s Performance
- Bitcoin’s Continued Dominance: Bitcoin outperformed the S&P 500 for the third consecutive month in November, with a 9% increase. This growth was driven by investor interest and anticipation of US Bitcoin ETFs.
- Ethereum’s Growth: Ethereum’s growth exceeded Bitcoin’s, with a 12% rise. This marked the first time since July that Ethereum outpaced Bitcoin.
Performance of DeFi Tokens and Layer 1 Platforms
- DeFi Tokens’ Growth: DeFi tokens saw a significant increase of 41% in November. Notable performers included Coinbase equity, which rose by 62%.
- Layer 1 Platforms’ Performance: Layer 1 smart contract platforms like Solana and Avalanche also performed well, with increases of 54% and 89% respectively.
Layer 1 Blockchain Tokens and Ethereum’s Fee Market Share
- Layer 1 Blockchain Tokens’ Rise: Layer 1 blockchain tokens rose 28% in November, with increased activity leading to higher fees. Bitcoin’s daily fee share jumped from 12.5% to 27.5%, averaging around $4.5 million per day.
- Ethereum’s Fee Market Share: Ethereum maintained its fee market share, averaging around $7.6 million per day. It became deflationary in November with approximately 46k ETH burned, valued at $93 million at the time of writing.
Growth of L2 Solutions
- Starknet’s Performance: Starknet led Ethereum L2s in November with an average of $199k in daily fees, slightly ahead of Arbitrum and ZKSync. Its fee surge is attributed to speculation about a potential $STARK token airdrop, which would reward users proportionally.
- Exploration of L2 Solutions by OKX and Kraken: OKX and Kraken are exploring their own L2 solutions, with OKX using Polygon CDK and Kraken looking to follow Coinbase’s Base model.
Performance of Various Tokens in DeFi and Metaverse Sectors
- Performance of DeFi Tokens: The MarketVector Decentralized Finance Leaders index (MVDFLE) outperformed Ethereum by 41% in November, indicating investor interest in tokens benefiting from increased on-chain trading. Thorchain ($RUNE) saw a notable 122% increase in performance due to new yearly highs in protocol volume for the second consecutive month.
- Performance of Metaverse Tokens: The MarketVector Media and Entertainment Leaders index (MVMELE) yielded a 19% return, slightly outperforming Ethereum but not matching DeFi returns, possibly due to low metaverse usage and token value accrual. Top metaverse tokens $APE, $MANA, and $SAND returned between 19.3% and 20%.
Actionable Insights
- Monitor the Performance of Bitcoin and Ethereum: Given their continued dominance and growth, investors should keep a close eye on the performance of Bitcoin and Ethereum.
- Consider the Potential of DeFi Tokens and Layer 1 Platforms: The significant growth of DeFi tokens and layer 1 platforms like Solana and Avalanche suggests potential for further growth. Investors should consider these assets when diversifying their portfolios.
- Understand the Impact of Layer 1 Blockchain Tokens and Ethereum’s Fee Market Share: The rise of layer 1 blockchain tokens and Ethereum’s maintained fee market share have significant implications for the overall crypto market. Investors should understand these dynamics to make informed decisions.
- Explore the Growth of L2 Solutions: The growth of L2 solutions like Starknet and the exploration of L2 solutions by OKX and Kraken indicate a trend towards scalability and efficiency in the crypto market. Investors should explore these developments for potential opportunities.
- Assess the Performance of Various Tokens in DeFi and Metaverse Sectors: The performance of various tokens in the DeFi and metaverse sectors provides insights into potential high-growth assets. Investors should assess these tokens for potential inclusion in their portfolios.
