September 2024 Recap of Digital Assets Industry
Bitcoin reacted well to the Federal rate cut and China’s stimulus by jumping 7.7% and beating Ethereum (+3.2%), Gold (+5%), and the S&P (+1.7%). Bitcoin ETFs saw $1.2 billion in net inflows, a large rebound from last month's negative number. Cumulatively, the Bitcoin ETFs have purchased more Bitcoin than Bitcoin miners have mined since they launched, making them very important to price formation.
October arrived early this year thanks to positive macro developments and a jump in on-chain activity. Across L1s, transaction activity increased +3.5% with Ethereum recapturing significant market share. This occurred at the same time as Solana’s revenues tanked, primarily due to a large drop in memecoin activity.
Financial institutions are rushing to create their own stablecoins backed by fiat assets and short-term debt as they recognize their potential. The business model of a stablecoin issuer is to collaborate with entities that can have stablecoin users such as crypto exchanges, blockchains, and dApps. These partnerships involve the sharing of revenues that stablecoins generate on the assets backing their assets with the partners that bring new holders.
The market cap of stablecoins has grown nearly 39x since 2020, compared to 8x for BTC. Most stablecoins are pegged to the US dollar.
Sony Bank and Revolut announced recently that they will launch stablecoins. Blackrock has partnered with stablecoin issuer Ethena to create a new stablecoin, called UStB. Circle announced that its stablecoin, USDC, is now available in Brazil and Mexico. Ripple said that its stablecoin will appear in Q4 2024.
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