Q3 of this year was a difficult one for the cryptocurrency market. The total capitalization of cryptocurrencies fell by 8.6%, the total value locked (TVL) of the DeFi sector dropped by 13.1%, and the trading volume of non-fungible tokens (NFT) was the lowest in the last three years.
According to Binance’s quarterly report, Q3 2023 wasn’t easy for the crypto market. Between July and September, the crypto market capitalization decreased by about $110 million. The main reason for this trend, analysts said, was the increase in key interest rates in the U.S.
However, Q3 also saw a short-term growth in the market, particularly after both Ripple and Grayscale’s legal victories in court against the SEC. However, these surges proved to be insignificant. Binance analysts said the market was kept from a precipitous decline by high levels of institutional adoption, particularly Web3 initiatives by giants such as Deutsche Bank, Sony, and PayPal.
In Q3 2023, the downturn affected various aspects of the crypto market. In particular:
- BTC dominance fell by 1.5% during the quarter, but the first cryptocurrency’s price rose 63.1% over the year amid massive filings for spot BTC ETFs from TradFi participants.
- The Ethereum network’s TVL went down 18.6% despite the growing popularity of ETH staking.
- The weekly number of active developers is declining.
- The total funds raised dropped by 21.4% as Q3 saw 24.9% fewer fundraising rounds.
- The Fear and Greed Index is down by 9 points, moving into the fear zone after traders lost over $1 billion in a 24-hour period in August.
- The decentralized finance sector’s TVL dropped by 13.1%.
- NFT sales fell to $300 million in September, the lowest in three years. Prices for NFT collections Azuki, BAYC, and MAYC decreased by more than 25%.
However, Binance analysts also noted some positive trends. These include:
- The average number of monthly transactions on the NEAR blockchain network grew 120% over the quarter.
- The TVL of liquid staking protocols increased by 10.5% in Q3 and showed a sixty-fold growth year-over-year.
- The Tron network’s TVL increased by 17.9% due to the launch of Tron Wallet.
- The trading volume of gaming NFTs grew despite a decline in the number of new Web3 game releases in Q3. Analysts attribute this trend to Google’s decision to allow mobile blockchain games using NFTs to be listed in the Play Store.
Binance analysts also noted the positive dynamics in the development of Layer 2 protocols, emphasizing the special importance of the Base network, whose number of active users exceeded the same indicators of the Optimism network.
Recently, EU officials said that the DeFi sector couldn’t pose a significant threat to financial stability as its volume was still too small.
