According to CMC 2024 H1

Download PDF Report Here

Join us in showcasing the cryptocurrency revolution, one newsletter at a time. Subscribe now to get daily news and market updates right to your inbox, along with our millions of other subscribers (that’s right, millions love us!) — what are you waiting for?

Chapter 1: Market Overview

Global Crypto Market Cap: $2.3 trillion (-14.5% in Q2)

24hr trade volume: $79.4bn (+223% in Q2)

The CMC Crypto Fear and Greed Index, which measures market sentiment based on the price and trading activities of several large-cap coins, is at 49 (Neutral). Q2 Market sentiment has been trending towards Fear since Q1, within the 69 (May 21st) and 47 (May 2nd) range.

Bitcoin Dominance is at 53%, showing no sign of an altcoin season. Liquidity is down 18.5% in the past month. April and May market activity have calmed following the March price surge, exhibiting characteristics akin to a "bear phase" within the prevailing bull market trend. Despite sustained bullish macro sentiment driven by prospects such as the SEC’s approval of the Ethereum ETFs and the anticipation of a US interest rate cut, liquidity has declined to bearish levels reminiscent of the September 2023 bear market. This has been accompanied by a notable reduction in Ethereum gas fees (lowest two gweis) and minimal inflows into ETF assets.

Is History Repeating Itself?

Yes, repeating:

In the early stages of the bull run, Bitcoin has historically led the market, where Bitcoin Dominance (BTC.D), a measure of BTC’s market cap against total market cap, will gain. BTC.D gained from 38.4% in November 2022 to 54% in this cycle.
An increase in stablecoin supply, indicating an influx of capital into crypto markets, signals the onset of a bull market. Since the start of 2024, stablecoin supply has gone up 19.8%.
The decrease in BTC's supply on exchanges was reflected in the 2021 bull cycle, as investors transferred BTC to cold wallets for long-term storage. This trend is currently playing out.

No, not repeating:

The current bull cycle drawdown is less severe than previous cycles, with a max drawdown of 18% compared to over 50% in the 2021 bull, likely due to BTC as a maturing asset and ETF flows.
BTC reached an all-time high of $73,000 before the halving. In all previous cycles, BTC only reached ATH after the halving due to a supply shock. This unprecedented move was primarily due to institutional inflows from spot BTC ETFs.

We are in the middle of the bull market, but retail is yet to be here

So far, the bull market is driven by crypto natives and institutional investors.
Over $17.1B in total institutional inflows, with Bitcoin gaining the majority at $16.7B.
Meanwhile, retail user metrics like Google search trends, new crypto YouTube subscribers, and App Store rankings signal that most retail users still need to arrive.

Only Three Sectors Experienced Positive Growth in Q2

89% of the sectors experienced negative market cap change, with over 30 industries dropping 20%- 40% in value. Only three sectors experienced positive growth in Q2, again highlighting the challenging market conditions. So, what are some of the “unicorns” that continuously expand and grow their ecosystem/market cap despite such a harsh market environment? After the March and early April Memecoin season, the market has now focused back on Stablecoins (+8.6% market cap), AI, and Big Data (+2.5%). CMC data indicates strong growth in the Stablecoin sector, with the recent launch of Ethena and Lista, among a few other high-profile projects. Tether made over $4.52 billion profit in Q1 2024, a circa 50-person team that generated 80% of Goldman Sachs's revenue. Its success has created a strong incentive for new projects to enter this sector, where the high interest rate environment and the increasing institutional funds inflows into the crypto market provide one of the real opportunities.

When new projects are launched, they usually get their information listed and updated on CoinMarketCap.com as one of the initial steps. Therefore, by monitoring the number of listing changes, we can gain insight into which sectors or ecosystems are the most active. It acts as an indicator of the frontier of the market trend and where to invest for market alpha. For the past eight months, the Solana ecosystem (+20 new tokens in Q2) has been continuously topping the growth chart, followed by the Ethereum Ecosystem (+14 new tokens in Q2), Derivatives (+5), and Stablecoins (+4). Compared to March 2024, the Memecoins sector and AI & Big Data are showing signs of slowing down in Q2, with many projects delisting from the sectors.

Chapter 2: Market Sentiment - Unwrapping CMC’s Unique Data

CoinMarketCap is the world’s most trafficked crypto website and the number one source of crypto data, insights, and community. By analyzing the viewing behavior of our millions of users, we can detect emerging trends and changing priorities within the global crypto community.

Most Popular CMC Categories

From Jokes to Giants: Meme Coins Become Crypto’s Top Trend

For the first time, Meme Coins have become the most popular category in crypto, flipping the previously dominant Smart Contract, DeFi, and NFT narratives. Meme Coins accounted for ~23% of page views on CoinMarketCap, with over 25 million in June.

Surge in Solana's Popularity: Is SOL Challenging Ethereum's Dominance?

This month, the Solana ecosystem has garnered more attention than the Ethereum ecosystem. Although this doesn't directly reflect network activity, it signals a notable trend. Since October 2023, SOL and its meme coin ecosystem have gained significant momentum in both price performance and popularity. While Solana hasn't yet dethroned Ethereum, the surge in interest reveals its growing prominence in the crypto space.

AI Hype Declines from February Peak

In contrast, the popularity of AI as a trending topic has declined. After peaking in February, its popularity trended downwards, reaching only a 6.4% share in June.

Top Coins per Category

In the Solana (SOL) ecosystem, meme coins reign, symbolizing a rush into speculative assets. Retail investors are prioritizing quick gains over VC-backed high FDV projects, indicating an anti-establishment sentiment. The rapid influx of liquidity into meme coins creates a casino-like mood, where investors prefer to gamble on high-risk assets rather than rely on more value-oriented, traditional, slower-build projects.

In the broader meme coin space, we are also seeing new projects gather momentum at unprecedented speed compared to any previous cycle. Even in the AI category, the most popular projects for our users are mostly “meme-fied” AI concept tokens like Turbo.

This potentially marks a shift from the previous dichotomy of crypto versus traditional finance to a new split between establishment and anti-establishment forces within the crypto space.

Traditional Crypto Retreats to Basics: Ethereum Ecosystem Emphasizes RWA and AI

In the Ethereum ecosystem, away from the meme coin frenzy, the prevailing narratives center around Real World Assets (RWA) and AI distributed computing. These trends underscore Ethereum's efforts to bridge traditional finance with blockchain technology, a strategic move towards practical, real-world applications and pioneering innovations.

Meanwhile, the DeFi sector is returning to its foundational roots, with stablecoins now dominating interest. Previously, decentralized exchanges (DEXs) and derivatives captured the spotlight, driving much of the innovation and excitement within the sector. However, the current trend reflects a renewed focus on stability and reliability, with stablecoins offering a secure and predictable medium for transactions, savings, and lending.

CMC Users Around the World

Meme Momentum: CMC Data Reveals Rising Influence of Brazil, India, and Indonesia

This chart shows the breakdown of user traffic (over 200 million page views per month) on the CoinMarketCap webpage by country. We see a dramatic shift from Q1 to Q2, which aligns with the trend toward Meme Coins and away from more ‘traditional’ crypto.

Driven by the meme-centric market environment, Brazil has become the second largest country according to CMC crypto user traffic, with around 9% market share. It is followed by India (7.57%), Indonesia (6.5%), Germany (6.4%), and Russia (6.2%). Meanwhile, countries such as the USA, United Kingdom, and France, which have traditionally been more focused on BTC/ETH, DeFi, infrastructure, and institutional markets, have seen a decrease in crypto user market share.

Most Popular Coins per Region

Finally, this chart is a snapshot of the most popular coins per region in June 2024, again emphasizing the stunning surge in interest in meme coins across the global crypto community.

Chapter 3: Market Pulse - State of Each Sector

Layer-1 Smart Contracts: The Rise of SOL, TON and BNB

Market Share

The total market cap for Layer 1 Smart Contracts is $695.58 billion (-3.57% QnQ); Ethereum's Dominance (among major L1s) is 62.11%, the highest it’s been since 2024. The SEC’s approval of Ethereum Spot ETFs was the catalyst for this milestone.

BNB and Solana have been gaining momentum, adding another $42 billion and $18 billion YTD, respectively, and both expanded their market share among the L1s.

Network Activities

Solana is the No.1 chain by Active daily addresses with over 1.6 million active addresses, followed by BNB’s 1 million. Both SUI and TON ecosystems have seen increased activities on the network. (News linked to the recent grants & popular projects)

Transaction Revenue

Ethereum has seen record low gas fees in Q2, with only two gwei around the end of April. Ethereum hasn’t seen such gas fee levels since 2020, before the 2021 DeFi summer. A few reasons contributed to this: 1) the fast-growing adoption of L2s diverted most of the transactions; the recent Dencun upgrade also lowered the costs for L2s. 2) April and May saw the market excited with SOL-based meme coins, reducing the DeFi transactions on ETH mainnet.

In terms of Revenue, although Ethereum represents 62% of the market cap among the L1s, it currently accounts for 70% of the daily revenue among all major L1s, at $2.7million. SOL is ranked No.2 with around $900k daily revenue generated.

DeFi TVL

Although the DeFi sector has seen an overall reduction in TVLs since the beginning of this year, Ethereum is still the dominating chain in DeFi, with c.84.3% of TVL market share, primarily driven by DEX trading and staking. Meanwhile, SOL mainly consists of Meme-related transactions.

Price Performance

Toncoin (+221.5%) is the best-performing Smart Contract Platform YTD, followed by BNB (+83.6%) and Ethereum (+45.33%). Solana, on the other hand, only achieved a price performance of 17.4% YTD.

Layer-2s: Arbitrum Maintains Lead, Base Close Behind

In terms of absolute gain in TVL, Arbitrum ($8.2B) and Base ($6.8B) saw the largest increase in H1.

Coinbase’s Base Network is a notable outperformer in H1. Despite launching less than a year ago, in August 2023, it has climbed the ranks to become the third-largest L2 by TVL, behind incumbents like Arbitrum and Optimism. Base’s strong developer community (a record 22K contracts deployed daily) saw major consumer apps like Friend. Tech and Farcaster deployed on the network.

However, Mode Network saw the highest percentage gain, with TVL growing 26X since its mainnet launch in January 2024. Mode is a DeFi-focused L2 built on the OP stack and supported by Optimism ($6M grant), EigenLayer, Renzo, and EtherFi. The exponential growth in MODE’s TVL is largely due to its airdrop campaign.

In terms of user activity on L2s, Linea saw a massive spike at the start of April due to the launch of its “Linea Voyage: The Surge” campaign. Users were incentivized to interact with DeFi protocols and earn points for a potential airdrop.

Leading L2 network Arbitrum saw a surge in transactions in early May, likely due to an uptick in DeFi as total transaction volume on Uniswap (Arbitrum) surpassed $150 billion.

In June, Base overtook Arbitrum to become the network with the most user activity. This is likely due to the highly anticipated launch of Coinbase’s smart wallet. Coinbase users can transact on-chain on Base without incurring gas fees.

Following the launch of Bitcoin Ordinals, a new wave of innovation has hit the Bitcoin ecosystem. This includes layer-2s, which aim to introduce faster and cheaper transactions, enhancing Bitcoin's functionality and efficiency.

Many new and promising entrants, such as Merlin Chain, Botanix, and Citrea, are challenging leading Bitcoin L2s such as Lightning Network and Stacks.

Cross-Chain: Bridges Shows Diversity in Terms of Volume

Cross-chain bridge's market share is fairly distributed among the top 5, showing diversity and healthy competition

Since launching on January 22, Circle’s CCTP has become the top bridge by volume. This is likely due to its expansion to Solana in March and integration with top platforms like MetaMask, Chainlink’s CCIP, and other interoperability protocols like Wormhole, 0x, Axelar, and Across.

Circle’s CCTP accounts for 15.6% of the total market share, while the top 5 bridges account for 51.8% of the total bridge volume (as of June 11). This indicates no platform currently dominates the majority of cross-chain bridge volume. This is good for the market, as it demonstrates diversity and healthy competition amongst the protocols.

NFT: Ethereum Is No Longer the Main Chain For NFTs

Ethereum is no longer the main chain for NFTs, at least so far this cycle.

Ethereum is no longer the dominant chain for NFT trading, as it was last cycle, so far this year.

With the introduction of Bitcoin inscriptions and protocols like Ordinals and Runes, Bitcoin has a slight lead over Ethereum in terms of total volume traded.

Meanwhile, Solana leads by user activity metrics like unique wallets and number of transactions, likely due to the low fees and faster transaction speed.

Ethereum NFT trading volume and the number of traders are on a downtrend.

Ethereum NFT market’s total market capitalization and trading volume reflect the trend, showing a gradual decline. This is also reflected in a decrease in user activity.

Solana saw a surge in NFT trading from October 2023, but the volume has died off.

Solana saw a surge in NFT trading volume since October last year, likely due to Tensor’s airdrop campaign, which saw the protocol become the leading NFT marketplace in Solana.

However, after the TNSR airdrop, trading volume on Tensor tapered off, and there was a broader decline in Solana NFT trading volumes. This reflects a general downward trend in the overall NFT market.

Gaming: Pixels and Matr1xfire Lead

Ronin-based Pixels leads in DAU, Matr1x FIRE emerges as second

Pixels has seen a 270% increase in daily active users since the start of 2024. Despite its token launch and airdrop in February 2024, Pixels has managed to retain and even increase the active user base, demonstrating that players were not just farming the airdrop. The Ronin-based farming virtual world boasts over 5M players and just launched Chapter 2, introducing more features for the fast-growing community.

Apart from the games above, another notable development in the Gaming sector is the popularity of hyper-casual games like the TON-based Notcoin. Having launched this year, it grew to an astonishing 40M users, eight times more than Pixels, not factoring in bot activity. The clicker-based game launched its native token, NOT, to a market cap of $1.05B.

RWA: Fastest Emerging Sector; BlackRock's Tokenization Focus

Fiat-collateralized stablecoins make up 96.6% of the total real-world assets market cap, followed by Government Securities (1.65%), Commodities (1.21%), and others.

USDT continued its dominance, with its market cap continuing to make new highs and gaining 22.4% in H1. USDT remains the most traded token and is the base pair for almost 70% of spot trading volume on CEXs.

USDC saw a resurgence in H1 after last year’s downtrend, with its market cap increasing 32%. This is likely due to Circle’s push towards institutional clients and the launch of Coinbase International, which brought more volume to USDC in non-US markets.

Ethena’s USDe launched in February 2024 and already saw a 934% increase in market cap. USDe offers a relatively high yield of 33.5%, resulting in an inflow of capital. Despite the airdrop and launch of its native token, ENA, the market cap continues to grow.

BlackRock’s BUIDL fund leads by AUM, reaching half a billion dollars in less than three months.

The recent approval of Spot Ethereum ETF legitimizes ETH and opens up institutional access to it.

BlackRock’s BUIDL fund launched on Ethereum in March 2024. It leads tokenized funds in AUM and witnessed a $453M inflow in less than three months.

Ondo Finance is the largest contributor to BUIDL, responsible for $195M of its AUM. Ondo offers tokenized institutional-grade finance. Since its launch on Jan 18, ONDO has gained 634% and is the leading coin of the RWA sector.

However, TVL in RWA protocols, which currently stands at $4.39B, has yet to surpass the last cycle’s high of $6.37B, suggesting further room for growth ahead.

Meme Coins: SOL-Based VS ETH-Based Meme Analysis; Political Memes

On average, Solana-based meme coins outperformed Ethereum-based by almost 8X YTD

While there are meme coins on practically every L1 or L2 chains, most of the attention, activity, and trading volume have been fixated on Solana and Ethereum

ETH memes were more established, with many launched in 2023 or earlier, whereas most SOL memes were launched in late 2023 or 2024

SOL memes outperformed ETH memes significantly, returning an average of 8,469% vs 962% for Ethereum.

This is likely due to the rush of speculative capital from other chains, attracted by the explosive rallies of WIF and BONK, causing more memes to pump and attracting even more capital and attention.

Trump leads in political meme tokens rivalry

Political memes emerged as a popular subcategory, and the total market cap of this sector stands at $784M out of a total meme coin market cap of $57.7 billion.

Trump’s vocal support for crypto and acceptance of crypto for campaign donations caused the leading MAGA (TRUMP) meme coin to gain over 5100% so far this year.

Crypto is shaping up to be a significant topic for the November US elections, and many are speculating through these political meme coins.

Chapter 4: CMC Listing/Research Insight

Politics & Policies

Recent developments in U.S. politics have highlighted a significant shift regarding cryptocurrency.

Increased Political Influence: Despite declining overall crypto usage among Americans, the industry has won notable victories in Washington, illustrating its growing influence. This includes a significant increase in political spending, with more than $80 million planned for the 2024 elections.The crypto industry has significantly increased its political influence in Washington, primarily through substantial financial investments in key Congressional races. Crypto-focused PACs like Fairshake have raised around $85 million and spent millions to support crypto-friendly candidates, successfully shaping election outcomes. For instance, Fairshake spent $10 million to defeat crypto-critical Congresswoman Katie Porter and supported Republican Mark Messmer's nomination in Indiana with nearly $500,000 in media buys.

Bipartisan Support: Crypto-friendly legislation has garnered unexpected bipartisan support, with prominent Democrats like Chuck Schumer and Nancy Pelosi emerging as allies. This has resulted in a potential isolation of crypto skeptics, including Senator Elizabeth Warren. In addition, the House passed a significant crypto regulation bill with substantial Democratic support, indicating a legislative shift towards more crypto-friendly policies. The Senate passed a resolution to repeal SEC crypto guidance, defying a White House veto threat.
Changing Administration Stance: The Biden administration has shown a new willingness to engage with the crypto industry, stepping back from earlier positions and expressing a desire to work with Congress on crypto policy.
Republican Alignment: Republicans, including former President Donald Trump, are increasingly aligning with the crypto industry, with Trump accepting crypto donations and advocating for digital asset traders.

Worldwide Crypto Policies Update

Governments worldwide are developing new regulations for cryptocurrencies, with varying approaches and levels of strictness. The International Organization of Securities Commissions has recommended global standards, while the World Economic Forum's Digital Assets Regulatory (DAR) initiative analyzes national regulatory outcomes. The urgency for regulation increased following bank collapses linked to crypto activities.

ETFs

Over 1 million of Bitcoin are now held in ETFs

Since the approval of U.S. spot Bitcoin ETFs on the 10th Jan 2024, there are now over 70 spot Bitcoin ETFs globally, which attracted over $28billion additional inflows. Collectively, there are over $72billion worth of Bitcoin held in these ETFs and funds by institutions globally, which changes the dynamics in this market cycle. Institutions are often restricted by their asset allocation strategies, which means they would balance their portfolios as per the volatility appears in the market.

Over 1000 institutions hold Bitcoin ETFs in the U.S: the total investment scale exceeds 11.5 billion USD, with hedge funds accounting for the majority.According to the recent SEC Form 13F filling, The investment levels in Bitcoin ETFs vary among institutions. There are 18 institutions holding related assets exceeding $100 million, 102 institutions holding related assets exceeding $10 million, and 371 institutions holding related assets exceeding $1 million. For most institutions, BTC ETF assets represent only a small portion of their total assets under management.

The 18 institutions holding related assets exceeding $100 million are mostly well-known hedge funds and asset management companies, such as Millennium Management, Jane Street Group, Schonfeld Strategic Advisors, etc. Similarly, investments in crypto assets by large institutions only make up a small fraction of their total assets under management.

Will Coinbase become a super company?
Coinbase provides Custody services for 7 out of the 10 largest U.S. Bitcoin ETFs, and now account for 78% of the total institutional assets by Total Asset Under Management (AUM). Together with its existing crypto exchange business, Coinbase-related wallets now hold a significant amount of BTC (est. around 1.2 million BTC, 6% of the circulating supply).

How big is the Ethereum ETF Market
On the 23rd May 2024, the SEC approved the Ethereum Spot ETFs in the U.S. market, which saw ETH price increase by 17.7% on the day. How big is the Ethereum ETF market and how will this impact ETH price? Let’s analyze it from both Demand and Supply’s perspective separately: Outside the United States, where both Bitcoin and Ethereum exchange trade products (ETPs) are already available, assets in Ethereum ETPs amount to about 25%-30% of assets in Bitcoin ETPs. On this basis, we could make the assumption that net inflows into U.S.-listed spot Ethereum ETFs will be around $5billion over the first 4 months or so.

In terms of ETH supply, Significant portion of ETH supply inaccessible to new spot ETFs. Around 17% of the ETH can be categorized as idle or relatively illiquid, together with the ETH used as gas, in protocol treasuries, and staked, it further limits the supply of ETH available. To the extent that existing uses limit the available supply available to the new spot ETF products, any incremental increase in demand could have a larger impact on price.

CoinMarketCap is the world’s most-referenced price-tracking website for crypto assets in the rapidly growing cryptocurrency space. Its mission is to make crypto discoverable and efficient globally by empowering retail users with unbiased, high quality and accurate information for drawing their own informed conclusions. CoinMarketCap Research CoinMarketCap Research aims to leverage CMC’s data analysis and bring unique insights into the crypto market. We look to collaborate with other industry-leading voices and create a platform for people to learn and share their passion for crypto. Disclaimer This report contains links to third-party websites or other content for information purposes only (“Third-Party Sites''). The Third-Party Sites are not under the control of CoinMarketCap, and CoinMarketCap is not responsible for the content of any Third-Party Site, including without limitation any link contained in a Third-Party Site, or any changes or updates to a Third-Party Site. CoinMarketCap is providing these links to you only as a convenience, and the inclusion of any link does not imply endorsement, approval or recommendation by CoinMarketCap of the site or any association with its operators. This report is intended to be used and must be used for informational purposes only. It is important to do your own research and analysis before making any material decisions related to any of the products or services described. This report is not intended as, and shall not be construed as, financial advice. CoinMarketCap is not responsible for the success or authenticity of any project, we aim to act as a neutral informational resource for end-users. Start your crypto journey: http://coinmarketcap.com Follow us on Twitter: https://twitter.com/CoinMarketCap Join our new crypto-first social network: https://coinmarketcap.com/community Learn about crypto: https://coinmarketcap.com/academy/categories/cmc-research