Comprehensive analysis of the digital currency market in the first half of 2024

Following a strong 2023, total crypto market capitalization continued its climb in the first half of 2024, ending the period at about US$2.27T, representing a 37.3% growth year-to-date.

The gains were front-loaded in the first quarter of the year, which saw a significant 60.2% increase. The second quarter was relatively more challenging, as the crypto market reversed some of the gains and fell by 14.3%.

 

Performance of layer one projects (L1)

Layer-1s (“L1s”) have had a strong start to the year, with Bitcoin continuing to gain market dominance following the fourth Bitcoin Halving, the launch of the Runes Protocol, and the approval of the U.S. spot ETFs (which have attracted over US$14B of inflows so far). Ethereum saw a restaking explosion and the EIP-4844 update, BNB Chain continued work on opBNB and Greenfield, while Solana excelled in the memecoin space and launched blockchain links (“blinks”).

 

Dramatic growth of layer two (L2)

The first half of 2024 has been the season of airdrops in the Layer-2 (“L2”) world, especially for the zero knowledge (“zk”) projects. The promise of incentives has brought large inflows of capital onto the L2 chains, bringing the total value locked in L2s to US$43B. This represents a 90% increase in total value locked (“TVL”) within just the first 6 months. 

 

Booming Decentralized Finance (DeFi) Market

2024 has seen a substantial influx of capital into Decentralized Finance (“DeFi”), driving the TVL up 72.8% year-to-date (“YTD”) to US$94.1B, from US$54.4B at the year's start. This boost has benefited nearly every DeFi sector, across both major and niche markets, leading to the emergence of protocols that are making previously inaccessible financial primitives available on-chain.

 

Stablecoin market developments

The stablecoins market has staged a notable turnaround, and we are now just 14.5% shy of the peak in April 2022, just before the crash of TerraUSD (UST). As of June 30, 2024, stablecoins market capitalization was US$161B, representing a 2-year high. While Tether’s USDT continues to dominate, Circle’s USDC and Ethena’s USDe have seen increases in market share.

 

NFT markets volatility

NFT markets had a turbulent first half, with sales volumes declining and major projects experiencing 50%+ declines in floor price. Blur continued its dominance, spurred on by the Blast token airdrop, while Pudgy Penguins saw some success with their physical toys. Bitcoin NFTs also continued to shine. 

 

Other emerging fields

SocialFi

SocialFi continued to see development, with Lens Protocol announcing their upcoming zk chain, Lens Network.

Farcaster

Farcaster saw continued user growth following the launch of Frames, while friend.tech released their token and v2. The Fantasy.top trading card game was also a notable highlight. 

The Web3 gaming sector had a strong Q1, but Q2 saw gaming project tokens drop significantly in market capitalization alongside the rest of the altcoin market. In contrast to falling prices however, user growth metrics have been healthier than ever with projects like Pixels and Hamster Kombat managing to attract large numbers of players with the promise of token airdrops. 

Other notable areas include memecoins, artificial intelligence (“AI”) and decentralized physical infrastructure networks (“DePIN”). These sectors have continued to see strong interest from investors and the broader community in the first half of 2024.

 

The prospect of the future

Moving into the second half of 2024, six key themes are particularly exciting to us, and we anticipate significant progress in these areas throughout the year. These themes span various narratives and sectors, such as those related to the macro environment, Bitcoin ecosystem, ownership economy applications, real-world assets (“RWAs”), and more.

 

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