- The biggest highlight of the last quarter was Solana’s outperformance against Bitcoin and Ethereum.
- OP and MKR were at their highs as there was more to come in the fourth quarter.
The third quarter of 2023 (Q3) was full of twists and turns for the crypto market led by Bitcoin [BTC]. At some point, market participants had a lot to celebrate. In other cases, the belief that the market would either be favorable or maintain a good level of stability was tempered.
To read Bitcoins [BTC] Price prediction 2023-2024
Crypto assets are decoupling from others
Interestingly, 21Shares published a detailed study report of what has happened in the industry at all levels. First, the largest suite of cryptocurrency exchange traded products (ETPs) mentioned that macroeconomic factors remained in limbo despite the Fed raising interest rates to 25 basis points (bps).
However, the interest rate did not rise in September, leaving the possibility of a rate increase in later months open. On a quarterly basis (QoQ) Bitcoin decreased by 11.52% ether [ETH] decreased by 13.60%. The S&P 500, which at times had a strong correlation with BTC and ETH, moved in the opposite direction, leading 21Share to conclude that
“Crypto has historically been negatively correlated with this index, suggesting that investors view it as a risky asset class. However, as crypto encompasses more and more use cases, we are seeing increasing decorrelation within the asset class itself.”
Solana beats Bitcoin and Ethereum
But there was Solana [SOL], which has faced numerous challenges and FUD recently, outperformed both Bitcoin and Ethereum. One of the main reasons for the token’s impressive performance was its partnership with payments platform Visa.
Around September, the credit card giant announced that it had added support for the Solana blockchain Circle [USDC] Transactions. According to Visa, the decision was to integrate Solana Because blockchain efficiency to process up to 2,000 transactions per second (TPS).
Consequently, SOL price was the only part of the ecosystem that was positively impacted. According to data from 21Shares, Solana’s Total Value Locked (TVL) also saw a significant increase in the quarter.
Source: Coingecko and Defi Llama via 21Shares
The TVL measures the unique deposits of assets locked or pledged in a protocol. When TVL increases, it means an increase in liquidity deposits in dApps under a protocol.
Conversely, a decline indicates a lack of liquidity. In Solana’s caseThe increase means that market participants have confidence in the project again.
OP and MKR had their times
It also appeared that only Solana saw a 90-day increase in TVL over the top project. However, there were two projects that could not be ignored during the quarter MakerDAO [MKR] And optimism [OP].
For Optimism, its native token was able to maintain a 7.43% increase over the last 90 days. This increase could be related to several developments within the blockchain. For example, there has been an increase in the adoption of the OP stack, among other things.
MKR, on the other hand, posted a 79% increase in the third quarter, thanks to the increase in its annual sales and the participation of Maker’s participation with Real World Assets (RWAs). Ethereum also made some notable progress this quarter, particularly when it comes to staking and scaling solutions on the blockchain.
Ethereum and Chainlink days
For example, to combat the centralization of the blockchain, Ethereum used the Distributed Validator Technology (DVT). The DVT allows multiple node operators to run a single validator. This is done to reduce the risk of compromise associated with the validators without affecting the blockchain.
Additionally, the liquid stake sector continues to dominate activity on the blockchain. According to the report, liquid staking accounted for 42.8% of all activity Lido Finance [LDO] leads the cohort.
Source: Dune Analytics
Meanwhile, Ethereum has also postponed its next major upgrade, the Dencun upgrade, until next year. For scaling on the blockchain, Eclipse, a customizable rollup provider, has introduced a modular scaling solution. Interestingly, this Development brought Solana and Ethereum together.
21Shares noted that
“In the context of Eclipse, the L2 architecture will leverage Ethereum for settlement while leveraging Solana for execution based on its parallel processing capabilities for high performance.”
Another project that saw major development this quarter was chain link [LINK]. But this time a study was presented that explains how tokenizing global assets on the blockchain can improve adoption.
Source: IMF
As shown above, Chainlink explained that the Cross Chain Interoperability Protocol (CCIP) could help with the infrastructure for dollar stablecoins, noting that
“The initiative is based on three pillars – educational content to facilitate understanding of the ecosystem, development of best practices and industry recommendations to promote a compliant industry, and active work to build on-chain infrastructure that is adaptable to the needs of all stakeholders .”
Q4 could bring more
Looking ahead to the fourth quarter (Q4), there appears to be a lot to look forward to. One example is the integration of the Bitcoin Lightning Network on Coinbase. This is intended to ensure faster and more effective BTC transactions and cross-border payments.
However, on-chain data from TheBlock showed that activity using the Bitcoin scaling solution decreased at one point. But its recent resurgence means that market participants trusting the Lightning Network has increased and may continue to do so.
Source: The Block
Realistic or not, here it is The market cap of SOL in ETH terms
Another aspect to consider is the possible revival of Solana. It is no news that the blockchain’s reaction to FTX’s collapse was very poor. However, an increase in Solana adoption is observed due to several key developments in the third quarter. In this regard, 21Shares noted that
“Thanks to a new protocol called Bubblegum that compresses the minting process, Solana is seeing a surge in ultra-low-cost NFT minting. For reference, an $86,000 collection can be sent to users for about $100 using Solana, compared to nearly $200,000 on Ethereum.”
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