Bitcoin Dominates Market, Ethereum Loses Share, CoinGecko Report Says
Bitcoin’s dominance reached a three-year high of over 53% in CoinGecko’s third quarter report, with the market down 1.0%. Despite its success, it underperformed assets such as Treasuries, influenced by global economic policies. Ethereum saw an increase in Layer 2 transactions, but lost market share in decentralized exchange trading to Base and Solana.
CoinGecko’s third quarter crypto industry report found that the overall market is down 1.0%. Bitcoin is at a three-year high in terms of market dominance, and Ethereum has been on the decline in several metrics.
There are some minor concerns that need attention, but overall the quarter was positive for crypto.
Bitcoin in Global Markets
The CoinGecko report outlined several interesting market trends. With an overall crypto market share of over 53%, bitcoin is doing well at first glance. Furthermore, bitcoin’s dominance is over 58%. This would mark its highest dominance relative to other crypto assets since its bull rally in April 2021.
Nevertheless, CoinGecko made several points which seem not so bullish. The total market capitalization of all cryptoassets declined slightly during this period, and even bitcoin underperformed traditional assets such as gold and various government bonds. After the beginning of August, British, Japanese and US government bonds all outperformed bitcoin.
Government policies around the world, and in particular those of these countries, have had a significant impact this quarter. In particular, interest rate cuts in the United States helped Bitcoin, as did potential tax cuts in Japan.
Stimulus announcements in China also helped boost the entire crypto market. CoinGecko did not evaluate Chinese Treasuries, but analyst Eric Balchunas noted high ETF performance:
“YEAR OF THE BULL: Total October inflows for China ETFs now total $11 billion. What a chart. $90 billion in asset purchases by the government will do that…” said Balchunas in a Monday posting.
In short, Bitcoin is seizing a disproportionate advantage over the crypto market, but this is no triumph. The broader market is faltering, and global economic policies brought this decentralized currency its biggest win:
“Although Bitcoin prices held steady in the third quarter, U.S. Bitcoin spot ETFs experienced higher net inflows…in the third quarter compared to the second quarter. The resurgence in inflows increased AUM by 13.2%,” the report stated.
Ethereum Overshadowed?
Ethereum (ETH) has lost some of its market share to bitcoin. But that’s not the only development CoinGecko has been focusing on. Ethereum’s Layer 2 (L2) transactions were up 17.2% this quarter. But nearly half of that came from Base.
Accounting for 42% of ETH L2 transactions, this Ethereum L2 has been a breakout hit of late. Base has been steadily eroding Ethereum’s grip on decentralized trading (DEX), and is on the rise while ETH is on the decline.
Solana has also been taking market share away from ETH, as CoinGecko has previously pointed out the technical advantages of this chain:
“In Q3 2024, Ethereum was the dominant chain for DEX trading, although its market share is now consistently below 40%. DEX trading activity continued to flourish on Solana, driven by the Memecoins crowd. Meanwhile, Base continued to grow its market share in Q3, despite being a slow quarter for the crypto market,” CoinGecko said.
At the end of the day, neither bitcoin nor Ethereum can claim a completely successful quarter. It is still a worrying sign that the crypto market only fell slightly in the third quarter of 2024. Bitcoin’s successes and failures seem to be tied to a variety of other factors. Ethereum faces real competition.
By Leonardo Perez