Quarterly Report on the Cryptocurrency Market – Q3/2023

The third quarter of this year was mostly marked by lower volatility and activity in the cryptocurrency market compared to previous quarters. However, it is historically known that the summer months tend to be quieter, and this period is usually considered “duller”. Nonetheless, there have been several notable events during the past quarter that have caught the attention of the media and the financial world at large.

You will also find this information in the full report:

• During the third quarter, the price of Bitcoin dropped by 10.9% from $30,468 to $27,100 as of September 30, 2023. The cryptocurrency Ethereum experienced a similar price trend, dropping by over 13% to $1,660 in the third quarter.
  
  
• Ripple Labs won a lawsuit against the U.S. Securities and Exchange Commission (SEC) regarding the sale of unregistered securities.
  
  
• The U.S. Securities and Exchange Commission (SEC) has delayed all applications to launch a spot ETF fund. A decision will probably not be made until early next year.
  
  
• Payments giant PayPal has launched its own stablecoin on the Ethereum blockchain called PayPal USD (PYUSD).
  
  
• The Fed left interest rates unchanged at its September meeting. However, one more 25 basis point increase is expected before the end of this calendar year.
  
  
• The number of Bitcoins held on exchanges continues to decline and the computing power of the Bitcoin network has reached a new high ahead of the upcoming halving.
  
  
• Coinbase has officially launched a second-layer scaling solution built on top of the Ethereum network called Base.
  
  
• FC Barcelona is expanding in the Web3 space.
  

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Bitcoin Price Development

Source: Messari

The third quarter of 2023 in the cryptocurrency market was largely marked by lower volatility and a duller period, during which the Bitcoin price mostly consolidated in the $25,000 to $32,000 price range. The price of Bitcoin between the months of July and September fell 10.9% from $30,468 to approximately $27,100 recorded as of September 30, 2023. Bitcoin reached its three-month high on July 13, when it traded as high as $31,820 at one point. Bitcoin reached its three-month low on Sept. 11, when its price tested price support at $25,000.

Evolution of Cryptocurrency Market Capitalization

Source: Coinmarketcap

The market capitalization of the cryptocurrency market was $1.19 trillion at the beginning of the third quarter. After a rise in market capitalization in the first half of this year, there was a slight decline during the third quarter, and the market capitalization of cryptocurrencies largely oscillated between $1 trillion and $1.2 trillion. At the end of the third quarter, the total market capitalization was $1.08 trillion.

You can read the evolution of Bitcoin’s dominance or the performance of the TOP 10 altcoins on the market in our quarterly cryptocurrency market report.

Highlights From the Crypto World

Ripple Victory Over SEC

Back in 2020, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Ripple Labs Inc. and some of its executives. The SEC said in its action at the time that the sale of the XRP cryptocurrency, of which Ripple Labs was the issuer, was illegal because the Commission viewed the XRP token as an unregistered security.

However, Ripple Labs decided to defend itself and prove that the Commission was wrong and that XRP is not a security. Ripple officials argued that XRP is a cryptocurrency and its distribution and use were not under the company’s control and therefore should not be considered a security. The dispute between Ripple and the SEC has dragged on for more than 2.5 years.

Around mid-July, however, there was significant progress in this litigation. Judge Analisa Torres, who was in charge of the dispute between Ripple and the SEC, issued a partial ruling that XRP cryptocurrency sold to retail investors on exchanges and through algorithms is not a security. However, the judge also ruled that the offering of XRP to institutional investors was a sale of unregistered securities.

Grayscale Wins Lawsuit Against SEC

At the end of August, Grayscale Investments achieved a very important victory in its lawsuit against the U.S. Securities and Exchange Commission (SEC). Grayscale has long sought to convert its over-the-counter Bitcoin Trust (GBTC) into an exchange-traded fund (ETF). The SEC has long refused to review Grayscale’s application to transform the fund, arguing that the product was not designed to “prevent fraudulent and manipulative practices.”

According to published court documents dated August 29, Judge Neomi Rao of the U.S. Court of Appeals for the D.C. Circuit ruled that Grayscale’s petition for review will be granted and the SEC’s decision to deny GBTC’s conversion to a spot ETF will be reversed. In her ruling, Judge Rao stated that the SEC did not provide any relevant explanation as to why it should not review Grayscale’s request.

Paypal Launched Its Own Stablecoin

Payment giant Paypal is expanding its presence in the world of cryptocurrencies. In early August, the company launched its own stablecoin called PayPal USD (PYLUSD), which is reportedly fully backed by deposits in U.S. dollars. Stablecoin can be bought and sold directly in the PayPal app or on the website, with a 1:1 exchange rate between the dollar and USD.

For more cryptocurrency and traditional finance news, check out our quarterly cryptocurrency market overview.

On-chain Data

BTC – Balance on Exchanges

Source: Coinglass

The total number of Bitcoins on exchanges continues to trend downwards, according to analytics platform Coinglass. According to current data, there are around 1.82 million BTC held in exchange wallets, which is one of the lowest values ever recorded in this very important metric. The most common reasons why people are moving their funds from exchanges to private wallets include the ability to manage them individually, the uncertainty surrounding some crypto exchanges, or planning to hold these cryptocurrencies for the long term.

ETH – Number of ETH Staked

Source: Beaconscan

The amount of ETH staked continued to grow in the third quarter, surpassing the 25 million ETH staked mark. During the third quarter, the amount of ETH staked grew 29.4% from 20.4 million to 26.4 million ETH. The total circulating stock of ETH is now 120.23 million ETH, which means that roughly 21.9% of all ETH in circulation is staked. At the same time, the more users stake their ETH, the more secure the Ethereum blockchain becomes. Staking ETH also allows validators to participate in validating transactions and producing new blocks, for which they collect staking rewards averaging 3-5% per year.

More interesting on-chain cryptocurrency data for Bitcoin and Ethereum can be found in our comprehensive cryptocurrency market report.

DeFi & NFTs

Total Value Locked (TVL)

The total value locked up in the DeFi sector fell by as much as 15.5% during the third quarter from the $45 billion recorded at the end of June 2023 to about $38 billion recorded at the end of September, according to analytics portal DeFiLlama. The largest network by TVL metric continues to be Ethereum, which has $20.5 billion in locked-up funds with a market share of 54.7%. Ethereum’s market share among smart-contract platforms declined by over four percentage points quarter-on-quarter.

In second place in terms of TVL is the Tron network, which has $6.56 billion locked up with a market share of 17.52%. The third largest blockchain in terms of TVL remains Binance Smart Chain with a TVL of $2.83 billion and a market share of 7.53%.

Source: Defillama

Stablecoins and DeFi

The largest stablecoin in the cryptocurrency sector continues to be Tether (USDT) with a market capitalization of $83.3 billion. The capitalization of this stablecoin was almost unchanged compared to the end of the second quarter. However, a drop of almost $1 billion in capitalization occurred between the 7th and the 18th August during a more pronounced downturn in the cryptocurrency market.

Source: Coingecko

For more information on DeFi & NFTs, please see our full report. In addition, the report covers news in the US spot BTC ETF space, Fed monetary policy or interesting facts and news from the world of DeFi and NFTs. 

You can download the report at this link.

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