Bitstamp Monthly Briefing – September 2024

September was a month of contrasts in the crypto world. While the total market value went up, trading activity slowed down. In this briefing, we'll break down these changes, highlight the best and worst performers from the CMC 100, and give you a quick look at important events coming up in October.

Let’s dive right in and explore how the market is evolving as we head into Q4!

Market update

The total crypto market cap increased by 7.5% month-over-month, reaching $2.18 trillion by the end of September. However, trading volume on the leading crypto spot exchanges we monitor saw a 25% decrease during this period.

BTC's market dominance remained stable month-over-month at 57.4%.

Total crypto market cap (grey) and BTC dominance (green)

Source: Total crypto market cap, Bitcoin dominance

Past performance is not a reliable indicator of future results. The performance of crypto assets can be highly volatile. Data taken on October 1, 2024.

Best performing CMC 100 assets in September

• +122.9% Sui (SUI) – SUI's price increase was driven by surpassing $1 billion in TVL and strong market momentum.
• +106.5% Nervos Network (CKB) – CKB's surge followed its listing on Upbit, one of South Korea's largest crypto exchanges, boosting investor interest and trading activity.
• +105.6% Bittensor (TAO) – TAO's strong performance was driven by the AI sector's overall strength.

Worst performing CMC 100 assets in September

• -10.7% Maker (MKR) – Maker continued its prolonged downtrend after a strong performance in Q1 2024.
• -8.7% Monero (XMR) – XMR’s price decreased following months of sideways price action.
• -5.3% POL (formerly MATIC) (POL) – POL’s price continued to struggle as Polygon began its transition from MATIC to POL.

Past performance is not a reliable indicator of future results. The performance of crypto assets can be highly volatile. Data taken on October 1, 2024.

Key macro & crypto events in October 2024

• October 9: US FOMC Minutes
• October 9-10: Bitcoin Amsterdam in Amsterdam, Netherlands
• October 10: US Inflation & Core Inflation rate
• October 10-11: World Blockchain Summit Dubai in Dubau, UAE
• October 11: US Producer Price Inflation MoM
• October 15-17: Meridian (Stellar’s annual conference) in London, UK
• October 17: Governing Council of the ECB in Ljubljana, Slovenia
• October 17-19: ETHSofia 2024 in Sofia, Bulgaria
• October 22-23: Blockchain Life 2024 in Dubai, UAE
• October 23-24: NFT Show Europe in Valencia, Spain
• October 29-November 1: Tokenize Global in Las Vegas, NV, USA
• October 30-31: SmartCon in Hong Kong

Real-world asset tokenization: The bridge between traditional and digital finance

The tokenization of real-world assets (RWAs) represents a significant evolution in financial markets, bridging the gap between traditional finance and the emerging world of digital assets. This process involves representing off-chain assets as digital tokens on blockchain networks, allowing for more efficient trading, management, and accessibility of these assets.

A recent report by Coin Metrics divides the RWA landscape into four major categories: public securities, private credit, commodities, and real estate. Within these categories, a diverse range of assets are being tokenized, from government securities and money market instruments to gold, real estate properties, and institutional lending products.

Key players in this space include both traditional financial institutions and crypto-native companies. Notable examples in the public securities sector include BlackRock's BUIDL, Ondo Finance's OUSG and USDY, and Franklin Templeton's FOBXX. Companies like Figure, Maple Finance, and Goldfinch Finance are making strides in private credit. Paxos Gold (PAXG) and Tether Gold (XAUT) lead in tokenized commodities, while Groma and RealT are pioneering real estate tokenization.

The adoption of RWA tokenization is occurring across multiple blockchain networks, each offering unique advantages. Ethereum currently hosts the majority of RWA value due to its security and network stability. Solana has attracted projects like Parcl and Baxus, leveraging its high transaction speeds and low fees. Stellar has found success with institutional adoption, hosting projects like WisdomTree Prime and Franklin Templeton's FOBXX.

The growth of RWA tokenization is driven by several factors, including increased liquidity, lower barriers to entry, improved price discovery, faster settlement times, and the potential for fractional ownership. These benefits address many of the challenges faced in traditional asset markets, such as illiquidity, high minimum investment requirements, and slow settlement processes. Looking ahead, several areas show promise for further growth and innovation. These include the development of interest rate swaps and smart contract-based derivatives, the integration of automated yield-generating strategies similar to Ribbon Finance's "theta vaults," and the exploration of on-chain foreign exchange mechanisms. The entry of established DeFi protocols into the RWA space signals growing interest from both institutions and on-chain protocols. Projects like Spark Protocol, MakerDAO, Ethena, and Aave are exploring ways to integrate RWAs into their platforms, potentially increasing capital inflows into the sector.

Regulatory developments are playing a crucial role in shaping the RWA tokenization landscape. The European Union's Markets in Crypto-Assets (MiCA) regulation provides a comprehensive framework for regulating crypto-assets, including tokenized RWAs. In the United States, the SEC's Staff Accounting Bulletin No. 121 (SAB 121) has significant implications for entities involved in the custody of crypto assets, including tokenized RWAs.

As the RWA tokenization sector continues to mature, it promises to reshape how we interact with and trade real-world assets in the digital age. While challenges remain, particularly in terms of regulatory compliance and technological infrastructure, the potential benefits of increased efficiency, accessibility, and transparency make this an exciting frontier at the intersection of traditional finance and blockchain technology.

Recommended reads

Why Ethereum ETPs (vs. ETFs) are so Significant by a16z

In July, U.S. stock exchanges introduced exchange-traded products (ETPs) based on Ether (ETH), allowing investors to buy and sell shares tied to the Ethereum blockchain asset. While often mistaken for exchange-traded funds (ETFs), ETPs differ in regulatory treatment, as they are not subject to the stringent requirements of ETFs. The U.S. Securities and Exchange Commission’s (SEC) approval of Ether-based ETPs marks a significant step and sets a precedent for other digital assets. This decision opens new investment avenues and could enhance the crypto industry’s growth and legitimacy.

Compound Interest is Apolitical by Tony Isola

As election rhetoric intensifies, it's important to remember that no politician can fix personal issues like relationships, finances, or health—only individual action can. Politicians often lack the qualifications to address these problems and prioritize big-money donors over the public's interests. Plato’s ancient critique of political incompetence remains relevant today, highlighting the need for wise leadership. When it comes to investments, party allegiance shouldn't guide decisions. Historical data shows that long-term investment success comes from staying the course, regardless of political power. In the end, compound interest is apolitical, and focusing on financial growth is key.

Beyond Seed Phrases by Decentralised

The article explores the evolution of internet access and its parallels to the development of passkeys and crypto wallets. Mobile devices transformed the internet by making it accessible and affordable, leading to a digital economy. Similarly, passkeys, driven by the FIDO standard, simplify wallet access in the crypto ecosystem. Capsule, a platform using passkeys, allows users to create wallets, sign transactions, and store assets using familiar login methods like Gmail or facial recognition, eliminating the complexity of seed phrases. This technology enhances Web3 interoperability, enabling seamless transactions across platforms and lowering barriers to entry for users and developers alike.

No information in this blog is intended to provide any personal investment services or advice nor is it an investment recommendation. Clients are responsible for making their own investment decisions. Bitstamp accepts no responsibility for any damage and/or loss arising from the use of information provided herein. Past performance is not necessarily an indicator of future results. Please consider your individual position and financial goals before making an independent investment decision.

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