Q3 crypto market rundown: Who thrived, who crashed, and what’s next?

What are the main takeaways from CoinGecko’s Q3 2024 report about the crypto market’s highs and lows? How did market cap, trading volumes, and investor sentiment shift this quarter?

According to CoinGecko’s Q3 2024 Crypto Industry Report, the third quarter of 2024 was a rollercoaster for the crypto market, marked by key shifts in market dominance, surprising price movements, and investor interests.

Let’s break down the key highlights, exploring how different sectors performed and what the future holds for crypto.

Crypto market cap shrinks

The third quarter of 2024 wasn’t exactly smooth sailing for the crypto market. Despite early highs, things took a turn when global economic forces began to affect markets.

At the start of Q3 2024, the total crypto market cap reached a solid $2.61 trillion on Jul. 22, buoyed by positive investor sentiment.

However, that optimism was short-lived. By the end of Q3, the market had contracted by 1.0%, shedding $95.8 billion to close at $2.33 trillion. In addition to the dip in market cap, average daily trading volume also fell by 3.6% to $88 billion for the quarter.

This decline wasn’t just a crypto-specific issue — it was the result of broader economic forces. Global financial markets were hit by the unwinding of the yen carry trade, triggered by the Bank of Japan’s decision to raise interest rates in August.

For context, the yen carry trade involves borrowing money in Japan, where interest rates have historically been low, and investing in assets elsewhere that offer higher returns. 

It’s a nifty way to make money—until interest rates rise. When Japan hiked its rates for the second time in 2024, this strategy was thrown into disarray.

Japan’s rate hike made borrowing yen less attractive, and investors began unwinding their carry trades. This caused a market shake-up, particularly on Aug. 5, with repercussions across various asset classes — including crypto. Following the shock on Aug. 5, the total crypto market cap fluctuated between $2.00 trillion and $2.20 trillion.

Moreover, escalating tensions in the Middle East, where several countries and militant groups are engaged in conflict, worsened the situation, leading to increased panic and sell-offs.

While the overall market faced turbulence, a few individual cryptos made remarkable moves in Q3 2024. 

Sui (SUI), the layer-1 blockchain platform, was the standout performer, skyrocketing from 50th to 22nd in the rankings. Another notable mover was Bittensor (TAO), a machine learning network, which jumped from 57th to 25th.

On the other hand, Ethereum Classic (ETC) and Monero (XMR) saw their rankings slip, falling out of the top 30 entirely.

Toward the end of the quarter, the market experienced some recovery, thanks to a 50 basis point (bps) rate cut in the U.S. and stimulus announcements in China. These moves helped push the market back up to $2.33 trillion, though still far below peak Q2 levels.

BTC gains market share but trails behind traditional assets

Bitcoin (BTC) may not have seen a huge price gain in Q3 2024, but it certainly made its presence felt in the market. BTC’s dominance — the measure of its market share in the crypto world—rose to 53.6%, a 2.7% increase from the previous quarter.

In fact, the last time BTC saw such dominance was in April 2021, when Bitcoin was riding high on the excitement of institutional investments and broader adoption.

It’s worth noting that this surge in dominance wasn’t so much about Bitcoin rallying hard but more about the fact that altcoins, like Ethereum (ETH) and Binance Coin (BNB), took a bigger hit.

Ethereum, in particular, experienced a steep drop in dominance, falling by 3.6% to end the quarter with a 13.4% share. BNB also saw a decline in dominance as regulatory scrutiny on centralized exchanges like Binance continued to dampen investor sentiment.

However, while Bitcoin managed to boost its market share, it lagged behind major traditional asset classes in terms of price performance during Q3 2024.

Gold, often viewed as the ultimate safe-haven asset, rose a whopping 13.8%. This came as fears of an economic slowdown in the U.S. and growing instability in the Middle East pushed investors toward safer assets.

Another strong performer was the Japanese yen, which surged by 12.0% following the unexpected interest rate hike in August. This hike, combined with the Fed’s rate cuts, gave the yen a boost as traders flocked to the currency, expecting better returns. 

The yen’s sharp rise contrasted with Bitcoin’s modest gains, highlighting that traditional currencies were the stars of Q3.

On the flip side, crude oil and the U.S. Dollar Index (DXY) underperformed Bitcoin. Oil prices struggled due to weaker demand projections, while the DXY declined as U.S. rate cuts took a toll on the dollar.

Despite all major fiat currencies gaining against the dollar, Bitcoin’s steady price increase was enough to outperform these two assets, which suffered in the wake of macroeconomic shifts.

2024 Q3 crypto price returns

The third quarter of 2024 wasn’t a thrilling ride for most of the crypto market. While the overall market remained flat, some tokens managed to shine, while others took a hard hit.

Amid a sea of neutral or negative returns, a few tokens stood out. Aave (AAVE) was the big winner, skyrocketing by an impressive 61%.

Aave’s strong performance can be attributed to the “fee switch” proposal that allowed AAVE token holders to earn yield simply by holding onto their tokens. This move attracted more interest from yield-seekers and boosted AAVE’s revenues through increased liquidations during the quarter.

Another notable gainer was Ripple (XRP), which jumped 29%. Ripple’s rise can largely be credited to its legal victory in August. The court ruling significantly reduced the penalties Ripple Labs had to pay, from the $2 billion the SEC initially sought to just $125 million.

Lastly, Thorchain (RUNE) posted a solid 22% return, driven by its announced merger with the Cosmos Layer 1 project, Kujira. The merger means that Kujira’s DeFi products and revenue streams will now flow through Thorchain, adding fresh excitement around RUNE’s prospects.

On the flip side, Ethereum had a rough quarter, dropping its price by 24%. This might surprise some, especially considering the launch of spot Ethereum ETFs in July, which many thought would fuel price gains.

However, despite this milestone, overall enthusiasm for ETH seems to have cooled, with fewer investors and traders engaging in Ethereum-based DeFi projects.

Meanwhile, Maker (MKR) saw the steepest drop, falling by 36%. This decline was largely due to the U.S. Federal Reserve’s rate cuts, which led to a decrease in the DAI savings rate. Maker’s DAI relies heavily on yield from U.S. Treasuries, so when those yields fell, the attractiveness of holding DAI diminished, dragging down MKR’s price.

The play-to-earn sector continued its downward trend, though the declines were less severe than in Q2. Notcoin (NOT), which had a meteoric rise last quarter, cooled off, dropping 42%. Despite the decline, NOT still ranks among the top 3 P2E tokens. 

On a more positive note, ImmutableX (IMX) saw a modest recovery in Q3 after a tough Q2, helping it retain its top spot in the P2E sector.

Meme Coins, Solana, and AI lead the way as DeFi and NFTs struggle 

Meme coins proved once again that their appeal is far from fading. In Q3 2024, meme coins accounted for an impressive 17.05% of web traffic across CoinGecko’s categories. Solana’s (SOL) meme coins followed closely behind with 11.41%, showing that the quirky and often unpredictable side of the crypto world continues to capture attention.

Altogether, meme-related coins made up 31.8% of traffic, reinforcing that even in a relatively flat market, these tokens are still drawing significant interest.

Solana remained a key player in Q3, with its ecosystem (including meme coins) capturing 22.1% of the market share, positioning it as one of the most active and talked-about blockchain ecosystems.

Artificial intelligence (AI) also stayed in the spotlight, taking 9.6% of the market share in Q3. AI-driven platforms are gaining traction, particularly as industries look to leverage this technology for enhancing decision-making, trading, and more.

While meme coins and Solana surged in interest, the DeFi market had a tougher time. The total DeFi market cap dropped to its yearly low of $60.5 billion on Aug. 6, coinciding with the broader market correction when Bitcoin fell to $49,000. 

Though DeFi rebounded slightly to end Q3 at $78.1 billion, the sector still saw a 15.2% decline over the quarter, losing $14 billion in market cap.

DeFi’s shrinking share in the overall market has raised questions about its future. Once seen as the cornerstone of crypto innovation, the sector is now facing challenges in attracting new users and maintaining its appeal. 

Meanwhile, the NFT market, which once saw explosive growth, continued its sharp downturn in Q3. Trading volume across major networks like Ethereum and Bitcoin fell by a staggering 61.3%, dropping from $3.1 billion in Q2 to just $1.2 billion in Q3.

Ethereum’s NFT dominance took a significant hit, sinking from 45% to 35% over the quarter. Bitcoin-based NFTs, largely driven by the Ordinals protocol, also suffered. Despite a 90% drop in volume from its April peak, Ordinals trading still outpaced Solana NFTs, with Bitcoin holding 25.2% of the NFT market share compared to Solana’s 16.0%.

Layer 2 networks like Base and Blast saw some NFT activity, but even these networks couldn’t escape the broader market downturn, with monthly trading volumes shrinking to around $3 million in Q3.

The road ahead

Now, 15 days into the final quarter of 2024, Bitcoin is riding a bullish wave, with its dominance surging to 57%. The excitement of “Uptober” is palpable, a month historically known for being Bitcoin’s most profitable. 

As always in crypto, volatility is the only certainty, and the thrills of Uptober could either pave the way for a strong close to 2024 — or offer a reminder of how unpredictable this market can be.