AZC.News Research: Market Overview

Table of Contents

Crypto Market Performance – September 2024

In September 2024, the cryptocurrency market saw an 8.0% increase in total market capitalization, aligned with the strong performance of equities following positive signals from the Federal Reserve’s decision to lower the federal funds rate by 50 basis points to 4.75%-5%.

Concerns about the labor market eased slightly thanks to positive unemployment data in August, while inflation gradually approached the Fed’s 2% target. However, this sparked mixed reactions from investors, balancing fears of a potential economic slowdown with hopes for a successful “soft landing.”

On September 27, the People’s Bank of China lowered the seven-day reverse repo rate by 20 basis points and reduced the reserve requirement ratio (RRR) by 50 basis points, aiming to combat deflationary pressures from the property market downturn and weak consumer confidence, injecting 1 trillion Yuan (around US$142.5 billion) into the banking system.

As major stock markets in the U.S. and China rallied due to these positive macroeconomic developments, the crypto market also benefited and continued its upward trend into October. However, close monitoring of upcoming economic reports and central bank decisions remains essential.

Notable Ecosystems

In September, the Total Value Locked (TVL) in Decentralized Finance (DeFi) increased by 9.6% as on-chain activity picked up along with the market rally. Capital inflows into DeFi led to significant TVL gains on several blockchains, with Sui up 60.7%, Base up 44.6%, and Sei up 102%.

SUI

Sui saw remarkable TVL growth, driven by increasing interest in its Move-based Layer 1 (L1) ecosystem. The Sui network is also gradually rolling out Mysticeti, its new consensus engine that enhances transaction speeds while reducing CPU requirements for validators.

At the Sui Builder House in Singapore, several key updates were announced, including the integration of Circle’s USDC on the Sui Mainnet and the release of the Walrus Whitepaper. The launch of the AUSD stablecoin on the Sui network in early September, following its success on Ethereum and Avalanche, has further strengthened Sui’s DeFi ecosystem.

Additionally, Sui introduced a handheld Web3 gaming device called SuiPlay0X1, which supports both Steam and Epic Games libraries, combining a premium gaming experience with digital assets.

Layer-2 Base

Driven by strong interest in DeFi projects, Base saw a 44.6% increase in TVL, surpassing $2.2 billion. Protocols in the lending, derivatives, and DEX sectors all experienced substantial TVL inflows, with Aerodrome—a native DEX on Base—standing out with 94.0% month-on-month growth.

According to TokenTerminal, Aerodrome ranked sixth in 30-day revenue, generating $15.6 million from trading fees. Base also saw a 64.2% increase in daily active addresses, now at 1.2 million.

This growth is largely attributed to Coinbase’s smart wallet, which uses “account abstraction” to streamline the user experience when interacting with on-chain applications, allowing users to manage their Coinbase balance without complex transfers to a self-custody wallet.

Sei

Sei, a parallelized EVM-compatible Layer 1 blockchain, experienced a 102% increase in TVL in September, driven by heightened interest in DeFi.

Yei Finance, a native lending protocol forked from Aave V3, saw a 158% TVL increase, fueled by attractive incentive rates on USDT lending. Yei now dominates 66.1% of the DeFi market share on Sei.

Silo Stake, an MEV-focused liquid staking protocol, also posted a 161% TVL gain in September. DEXes like DragonSwap and JellyVerse saw significant growth as well, up 82.8% and 52.6% respectively.

Other Ecosystems

Besides the three highlighted ecosystems, other notable developments include:

Ethereum: Gas fees surged back up (peaking at 50 gwei) after bottoming out at 0.6 gwei, largely driven by the Neiro memecoin, which saw a 10x rise after Binance announced its listing.
Solana: Similarly, Solana experienced a period of stagnation after a boom earlier this year, but the memecoin MOONDENG has since revived the entire Solana ecosystem.
Aptos and zkSync: Both ecosystems showed impressive growth, attracting significant capital back into their ecosystems.

Trending Areas

AI

One of the sectors that continues to generate bullish sentiment is AI, with top projects experiencing substantial growth. The AI sector’s market cap rose from $24 billion to $40 billion.

The bullish outlook for AI stems from Web3 AI projects beginning to capture the Web2 market. Moreover, the Web2 AI trend has continued to surge since the introduction of ChatGPT. Many Web3 AI projects have already generated revenue through their products.

Major players have also entered the Web3 AI space, notably Grayscale, which launched an AI fund called LLC for five projects: Bittensor (TAO), Filecoin (FIL), Livepeer (LPT), Near (NEAR), and Render (RNDR). Additionally, Bittensor (TAO) launched a separate investment fund built on Layer 1 SUI.

Top-performing AI projects in September include: TAO (+150%), WLD (+50%), FET (+50%).

Memecoins

The memecoin market continued to explode in September, with memecoins consistently being top gainers. The market cap of memecoins surpassed $50 billion by the end of September.

The most surprising development was Binance’s announcement of three memecoin listings in a single day.

Top-performing memecoins in September include: POPCAT (+100%), MOG (+100%), WIF (70%).

Layer 1

While Layer 2 solutions on Ethereum saw little price action, Layer 1 networks continued to solidify their positions in the market. SUI, SEI, and Aptos consistently reached new all-time highs in TVL, and their prices showed very positive momentum.

Top-performing Layer 1 projects in September include: SUI (+122%), SEI (+70%), APT (+60%).

October Projections

The crypto community often refers to “Uptober,” signaling that Bitcoin typically closes in the green during October. However, early news of war has slightly impacted BTC, causing some investors to panic sell amid the “FUD.”

However, AZC.News has outlined three reasons why they are confident Bitcoin will close October in the green. Ecosystems, trends, and projects that AZC.News anticipates will benefit this month include:

Continuous capital inflows into Layer 2 Base, which could potentially outperform Arbitrum.
Avalanche may see significant gains in October or later in the year, thanks to a newly established Grayscale investment fund and a $40 million injection from the Avalanche Foundation for ecosystem development.
AI and memecoins will remain dominant trends, and Real World Assets (RWA) are also likely to benefit from this period.