- The Crypto Market saw a 14% decline in market cap during Q2 2024.
- Bitcoin’s price dropped by 12% and its hash rate decreased by nearly 19%.
- Ethereum’s price fell by 5% despite the approval of spot ETFs.
- NFT trading volumes dropped by 32%, with Ethereum still leading but seeing a 45% decline.
The crypto market in 2024 has experienced significant ups and downs. The first quarter was filled with excitement, but the second quarter was not. The crypto market cooled down significantly.
So, CoinGecko released a Q2 report on the crypto market discussing the challenges and changes in the crypto market during this period. Below is an overview based on CoinBureau’s analysis, discussing what happened in Q2, key metrics, and what could come next.
Market Landscape: A Shifting Crypto Market
The second quarter of 2024 saw the total crypto market cap fall by 14%, while trading volumes declined sharply by 177%. CoinBureau noted that this decline marked a huge slowdown after the relatively stable performance in Q1. During this time, the crypto leaderboard also underwent some changes. For instance, Toncoin surged from 15th place to become a top 10 project by market cap. On the other hand, some projects, such as Arbitrum (ARB) and Dogecoin (DOGE), dropped out of the top 30.
CoinBureau stated that Bitcoin (BTC) maintained more than 50% dominance of the total crypto market cap. In contrast, Ethereum’s (ETH) dominance was just 17.7%. So, according to the report, this shift signifies a “flight to safety” as investors moved their assets into more established cryptocurrencies like Bitcoin and Ethereum.
Crypto Market Insights: Bitcoin’s Performance and Future
Despite its strong market dominance, Bitcoin did not have a stellar performance in Q2 2024. CoinBureau noted that Bitcoin’s price fell by 12%, and its mining hash rate decreased by nearly 19%. This drop is the first quarterly decline in hash rate since Q2 2022. Moreover, Bitcoin underperformed compared to major traditional assets like the S&P 500, Nasdaq, oil, gold, and even currencies like the Euro and Japanese Yen.
Furthermore, CoinBureau noted that Bitcoin’s halving event had little impact on its price. Instead, attention shifted to the long-anticipated release of over 140,000 BTC from the Mt. Gox exchange. After 10 years of waiting, this movement of Bitcoin has kept the market on edge, contributing to its price decline.
Another notable development was the launch of the Runes Protocol on April 19, which initially sparked a surge in transactions. However, within just a week, transactions on the Runes network dropped by 93%, from over 750,000 daily transactions to just 28,000 by the end of Q2.
Ethereum’s Role in the Crypto Market
Ethereum also experienced a challenging second quarter in 2024. Despite the approval of Ethereum spot ETFs, ETH’s price fell by 5%, around $300 in value. CoinBureau pointed out that while Ethereum had been on a downtrend for some time, the sudden ETF approvals provided only a brief spike in price. So, after the initial excitement faded, ETH continued its downward trajectory.
The report also discussed Ethereum’s layer 2 solutions, which saw more than 1.2 billion transactions in Q2, representing a 37% increase from Q1. Optimism (OP) led the pack, accounting for 34% of all layer 2 transactions. Despite this activity, Ethereum’s burn rate fell dramatically by 66%, turning ETH inflationary for the first time this year, adding 120,000 ETH to its supply.
Additionally, CoinBureau noted that while Ethereum’s mainnet has struggled, there is huge activity on layer 2 networks and competing chains like Solana. However, the report cautioned that Solana’s transaction count might be inflated due to its coding, which counts failed transactions, potentially giving a misleading view of its actual activity.
Solana and the Broader Crypto Market Trends
Solana’s performance in Q2 was mixed. The price of SOL fell by 28%, despite a 44% gain earlier in the year. CoinBureau attributed Solana’s relative strength to continued activity driven by meme coins and celebrity tokens. Also, a notable factor was the proliferation of meme coins launched on the Pump. Fun platform, which saw nearly 1.2 million meme coins created since July 1.
Furthermore, the report also mentioned VanEck’s application for a Solana spot ETF in late June, which briefly spiked SOL’s price. However, the market downturn still affected the price, and Solana has yet to recover to its April highs. Despite the challenges, CoinBureau believes Solana has the potential to become the top-performing Layer 1 blockchain in this market cycle.
DeFi Reaction To the Market
The decentralized finance (DeFi) sector also faced difficulties in Q2. The market cap of DeFi projects fell by 20%, despite a temporary rally following the surprise approval of Ethereum ETFs. CoinBureau noted that the DeFi market cap hovered around $90 billion for much of May before the ETF rally briefly pushed it above $100 billion. However, it soon fell back to its previous levels.
Ethereum remained the dominant chain in DeFi, holding around 70% of the market share. Meanwhile, Solana and Binance Smart Chain (BSC) each accounted for about 5% of the market activity. Also, Toncoin made huge gains, becoming the 10th largest blockchain by total value locked (TVL) thanks to the success of tap-to-earn games like NotCoin. TVL on the Ton blockchain increased fourfold from $200 million at the start of April to over $900 million by the end of June.
Moreover, the report stated that the liquid staking, lending protocols, and cross-chain bridges—saw a 6% decrease in TVL, some projects like Ethereum liquid staking saw substantial growth, liquid staking on Ethereum grew by 34%, with 71% of ETH being staked with liquid staking protocols. Lido DAO (LDO) also dominated the liquid staking space, holding 95% of the market share.
NFTs
Non-fungible tokens (NFTs) experienced a tough quarter as well. NFT trading volumes across the top 10 blockchains dropped by nearly 32% by the end of Q2. CoinBureau noted that even with the launch of the Runes protocol for Bitcoin NFTs, trading volumes still plummeted.
Ethereum remained the largest NFT blockchain, controlling 32% of trading volume, but saw a 45% drop in activity from Q1. Solana was close behind, trailing Ethereum by just $17 million in trading volume. Interestingly, Bitcoin NFTs saw a 70% decline in trading volume following the initial hype around Runes.
The Impact on Exchanges
The report also touched on crypto exchanges, which saw different performances in Q2. Spot Bitcoin ETF flows, for example, experienced $2.4 billion in net inflows.
However, the total assets under management (AUM) for these ETFs decreased by 7%. BlackRock’s iShares Bitcoin Trust (IBIT) remained the leader, holding 35% of the AUM market share, or nearly $19 billion, and accounted for around 50% of the trading volume.
What This Means for the Market
CoinBureau’s analysis of the Q2 report points to a market currently in a consolidation and repositioning phase. The sharp declines in various sectors, including Bitcoin, Ethereum, Solana, DeFi, and NFTs, show the market’s bearish sentiment. However, CoinBureau also indicated that these downturns could set the stage for a stronger rebound in the coming quarters.
Additionally, the flight to safety observed in the dominance of Bitcoin and Ethereum suggests that investors are looking for stability in a volatile market. This trend, coupled with the ongoing developments in the regulatory landscape, particularly the approval of spot ETFs, could provide a foundation for future growth.
Conclusion
Q2 of 2024 was challenging for the crypto market, with declines in market cap, trading volumes, and the price of major cryptocurrencies. However, the growth in specific areas and the approval of spot ETFs for Bitcoin and Ethereum provide hope for a rebound.
So, the market’s focus on safety and innovation suggests that while the ride may be bumpy, the long-term outlook for the crypto market remains positive.
CoinBureau status; Image source
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