Overview of Crypto Markets in 2024
The global cryptocurrency market is at $2.8 trillion in March 2024, close to the all-time high of $3 trillion achieved in November 2021.
Bitcoin is now the 8th largest asset by market cap, at $1.4 trillion, representing almost 50% of the market. Ethereum is the second largest cryptocurrency, at $484 billion.
This article will briefly examine five major crypto ecosystem sectors today.
Introduction:
The entire crypto market can be categorized based on an asset’s utility. At times, this is based on the leading narratives in the market, as we had NFTs and ICOs in past cycles.
Narratives change roughly every four years as crypto enters a new bull market. Today, we are at the cusp of one such market cycle. However, a few utility based categorization prevails in the market, and the following are the five significant sectors that continue to be most common:
- Layer 1 Protocols
- Smart Contract Platforms
- Stablecoins
- Decentralized Finance (DeFi)
- Meme Coins/Tokens
Layer 1 Protocols:
Layer 1 protocols refer to the underlying infrastructure of a blockchain network, which includes the core components and rules that govern its operation.
They are responsible for maintaining the distributed ledger, validating transactions, and securing the network from malicious actors. They also define the consensus mechanism to validate and record transactions, such as Proof of Work (PoW) or Proof of Stake (PoS).
Bitcoin and Ethereum are the two biggest layer 1 blockchains, followed by Binance Smart Chain, Solana, Avalanche, Dogecoin, and others.
Smart Contract Platforms:
Smart Contract Platforms are blockchain-based networks that enable the creation and execution of self-executing contracts. These platforms provide a decentralized and trustless environment where users can deploy smart contracts that automatically enforce the rules and regulations defined within them.
Smart Contract Platforms can be both layer 1 and layer 2 networks. The most popular smart contract platforms are layer 1 protocols like Ethereum, Binance Smart Chain, Solana, Polkadot, etc., but there are also layer 2 protocols that support smart contracts like Polygon and Stacks. Developers can build decentralized applications and other blockchain-based solutions on top of these platforms.
Stablecoins:
Stablecoins are tokens on a blockchain network designed to minimize price volatility by pegging their value to an underlying asset, such as fiat currency or commodities.
They offer a stable means of exchange and are commonly used in remittances, cross-border payments, DeFi applications, and as a bridge between traditional finance and the crypto ecosystem.
Stablecoins are of different types based on the underlying assets used to create them, like fiat-backed, commodity-backed, algorithmic, and crypto-backed stablecoins.
Some of the most popular stablecoins today are Tether (USDT), Circle (USDC), and Dai (DAI).
Decentralized Finance (DeFi):
DeFi is a financial system built on blockchain technology that allows users to access various financial services without relying on intermediaries or middlemen. These services include lending, borrowing, trading, and investing.
By using DeFi, users have more control and autonomy over their funds, and transactions are transparent and secure. DeFi applications are the most common use case of blockchain technology. It aims to create a more accessible and inclusive financial system for everyone.
Within DeFi, tokens are further categorized based on their use cases, but that is a topic for another article. Some of the biggest and most common DeFi tokens are Uniswap, THORChain, Maker, Aave, Synthetix Network, dYdX, etc.
Meme Coins/Tokens:
Meme Coins/Tokens are cryptocurrencies based on popular internet memes or have a humorous or satirical concept at their core.
These tokens often have a strong community focus and are driven by social media trends and online conversations.
Due to their speculative nature and lack of intrinsic value, meme tokens are considered to be high-risk, high-reward investments.
Some well-known meme coins/tokens are Dogecoin, Shiba Inu, Pepe, Floki, etc.
Conclusion:
This is how the overall crypto market is in 2024. Several other categories are out of the scope of this article. They include exchange tokens, layer 2 blockchain protocols, NFTs, liquid staking tokens, gaming, DePIN, restaking, metaverse, oracles, data availability, etc.
I hope this helps you understand the state of crypto markets in 2024 at a high level. In future articles, I plan to discuss each of these categories in more detail.
