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    Three tomb stones marked with crypto symbols

    Key Takeaways
    • Cryptocurrencies follow a predictable four-year market cycle, featuring alternating bull and bear markets driven by investor sentiment and trading activities.
    • Daily active users, developer activity, market sentiment, institutional acceptance and transaction volume demonstrate the vitality of the crypto market.
    • High trading volumes and transaction numbers indicate strong investor interest and active use of cryptocurrencies, reflecting market health and engagement.
    • Is crypto dead? Growing interest from banks and investment firms, increasing regulatory scrutiny and a thriving ecosystem suggest not.

    Is crypto dead in 2024? It’s a common question, and if you’ve kept track of skepitcal media coverage over the years, you’ll know it’s never far away from discussions about blockchain.

    But beyond the usual hum of cynicism, the past three years have been particularly choppy for the industry, which has been marred by scandals, implosions and major market downturns. Crypto titan FTX collapsed and some of the industry’s biggest names found themselves mired in controversy, accelerating the onset of crypto winter. Web3 was also rocked by a number of significant crypto scams and hacks like those on Ronin Bridge. These events eroded trust in the system, a feeling reflected in market behaviors. Regulators intensified their scrutiny, and the dramatic crashes of the NFT and metaverse markets added to the turmoil.

    Yet despite these challenges, 2024 is showing promise for the crypto industry. According to CoinGecko, the total crypto market cap rallied by +64.5% in 2024 Q1, reaching a high of $2.9 trillion on March 13. In this piece, we tackle the question “is crypto dead?”, highlighting key metrics that show the crypto market is very much alive – and maybe even booming.

    Is crypto dead? 5 Metrics that prove it’s not 

    Crypto follows a predictable four-year market cycle characterized by natural bull and bear markets. A bull market is a period of rising cryptocurrency prices driven by investor optimism, increased buying, and overall positive market sentiment. In contrast, falling prices, widespread pessimism, and increased selling pressure indicate a bear market.

    Beyond these natural market cycles, there are additional metrics that provide insights into the health of the crypto ecosystem:

    • Daily active users
    • Developer activity
    • Market sentiment
    • Institutional acceptance
    • Transaction volume

    These metrics tell us everything about the current crypto market and what it could become.

    1. Trading volume and transactions

    On-chain data refers to verified transactions recorded on a blockchain. The openly accessible data is a transparent ledger tracking all transactions, coin movements, block information, and smart contract activity.

    Analyzing on-chain data tells us a lot about the cryptocurrency ecosystem. Take trading volumes and transactions as an example.

    Imagine the cryptocurrency market as a giant marketplace. Trading volume and number of transactions are two ways to measure marketplace activity.

    The trading volume shows coin transactions within a period. If the trading volume is high, it means there’s a lot of activity – people are actively trading, which shows strong interest from investors. Low transaction volumes indicate less trading, suggesting low investor interest.

    The number of transactions is equally significant. It shows how many individual trades are happening. If there are a lot of transactions, it means more and more people are using cryptocurrency. Low transaction numbers could indicate reduced crypto usage.

    Fast Fact
    According to The Block, Bitcoin’s daily transaction volume has been above 500,000 since May 2024, a bullish sign for cryptocurrency.

    2. Developer activity

    Developers are crucial for cryptocurrency functions. They power the crypto ecosystem through their crypto-supportive applications. Crypto’s open-source nature allows us to track developer activity.

    According to the 2023 Developer Report by Electric Capital, while the number of developers has dipped slightly in the past year, there’s a bright side. Experienced developers—those with over two years of experience—have grown by 52% per year for the past five years. These statistics suggest the core group of crypto builders is getting stronger. Over 60% of active cryptocurrency developers have been around for at least a year.

    There’s another positive trend. Developers are increasingly working across different crypto networks. Today, 30% of developers support multiple blockchains, compared to just 3% in 2015.

    3. Market sentiment – fear or greed?

    Market sentiment measures the overall attitude of investors towards a market, influencing their buying and selling decisions. The Fear and Greed Index is a popular tool for gauging sentiment, ranging from 0, Extreme Fear, to 100, Extreme Greed.

    For example, during a bull run, the index shows high values indicating greed. Conversely, after a market crash, the index drops, showing fear. Recently, the crypto Fear and Greed Index has been wavering between fear and neutral, with figures ranging from 28 to 50. It shows the cryptocurrency market is experiencing normal cycles, reflecting its resilience and ongoing vitality.

    4. Institutional acceptance

    Banks and investment firms are showing genuine interest in cryptocurrencies. When institutional acceptance occurs, the market perceives cryptocurrency as legitimate and expects it to remain valuable for individuals and organizations.

    Institutional acceptance has two effects:

    • It strengthens the entire crypto market by providing credibility to the cryptocurrency market.
    • It attracts new investors who might have been hesitant before. With big institutions involved, crypto becomes more mainstream and accessible.

    Acceptance by legacy institutions bolsters and embeds crypto and is also likely to onboard a new category of users. Institutional trust adds stability, liquidity, and overall confidence in cryptocurrencies.

    Fast Fact
    A CoinGecko report highlights institutional acceptance, with US Spot Bitcoin ETFs holding over $55.1 billion in assets under management (AUM) as at April 2, 2024.

    5. Market capitalization 

    Cryptocurrencies are like company shares, but instead of stocks, they have coins. Investors analyze the crypto market capitalization or market cap to understand the cryptocurrency value. The crypto market cap is the total value of all the coins in circulation, calculated by multiplying the current price of each coin by the number of existing coins.

    The crypto market cap shows its establishment and acceptance level. A high market cap, like the current market capitalization of the entire crypto market, which is over $2 trillion, suggests more people trust it and there’s market liquidity. Bitcoin, for example, has a market cap of over $1 trillion, showing its dominance in the crypto market.

    Explore CoinMarketCap to learn about cryptocurrency’s performance over the years.

    The future of crypto

    Crypto’s not going anywhere. Market indicators point to an active crypto ecosystem, including a steady base of daily users, active developers constantly building new tools, and growing acceptance from major financial institutions.

    It won’t be smooth sailing for all cryptocurrency projects. Success will depend on a project’s unique value, robust security, ability to handle high traffic, and user-friendliness. Adapting to regulations, new technologies, and changing market trends will also be crucial.

    As a nascent industry that is often poorly understood by traditional media and feared by traditional finance, crypto was always bound to draw ire from some corners. It won’t be ther last time we see a headline or speech mulling “is crypto dead?“. But the overall trend points to growth and broader acceptance, and the most adaptable and innovative projects will lead the way.

    How to do your own research

    Conducting thorough research is essential for making informed cryptocurrency investment decisions. Here are the steps to follow:

    • Monitor market data: Monitor price movements, trading volumes, and market capitalization to learn about market trends.
    • Read white papers: Review white papers for projects you’re interested in. Understand their purpose, technology, and roadmap.
    • Understand technological developments and events: Stay updated on technological advancements and significant events in blockchain and cryptocurrencies.

    With this research toolkit, you can equip yourself with the knowledge necessary to understand and invest in the cryptocurrency market.

    Closing thoughts

    So, is crypto dead? 

    While the crypto market is subject to fluctuations and periodic downturns, the highlighted metrics illustrate its enduring strength and potential for future growth. Far from being dead, the cryptocurrency ecosystem is evolving, underpinned by technological progress and increasing mainstream acceptance. As these trends continue, the future of cryptocurrencies looks promising and full of opportunities.

    Disclaimer: This information is provided for educational purposes only and should not be considered financial advice. Please consult with a financial professional before making any investment decisions.

    Frequently asked questions

    What is crypto winter?

    Crypto winter is a term that signifies an extended period of falling cryptocurrency prices. Consider it a challenging period for the cryptocurrency market. A substantial price drop, a slowdown in trading activity, and a shift towards negative investor sentiment may occur during the crypto winter. While the duration and severity vary, crypto winters can test investor resolve and weed out weak cryptocurrency projects.

    What is the bear market?

    A bear market is a broader term used across financial markets, including crypto. It refers to a significant and prolonged price decrease, often over 20% from previous peaks. Like the crypto winter, trading activity drops, and investor confidence weakens. While crypto winter only covers cryptocurrencies, a bear market can have a broader impact on assets like stocks, bonds, and other investments.