Is Crypto Dead in 2024?

Key Takeaways

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

But beyond the usual hum of cynicism, the past three years have been particularly choppy, with the industry 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 cryptocurrency 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 market is very much alive – and maybe even booming.

Is Crypto Dead? 5 Metrics That Prove It’s Not

Unlike traditional markets, 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 investor 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 cryptocurrency market and what it could become.

1. Trading Volume and Transactions

On-chain data refers to verified crypto 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 in crypto exchanges 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 digital currencies, 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 built on blockchain technology. Crypto’s open-source nature allows users to track developer activity, providing insights into the overall developer sentiment towards blockchain technology.

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 and blockchain projects. 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 crypto assets. When institutional acceptance occurs, the market perceives cryptocurrency as legitimate and expects it to remain valuable for individual investors and organizations.

Institutional acceptance has two effects:

• It strengthens the entire cryptocurrency market by providing credibility to the cryptocurrency market.
• It attracts institutional investment from investors who might have been hesitant to take on the asset class 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, like institutional investors. For example, the SEC’s approval of Bitcoin exchange-traded funds (ETF) in January 2024, announced by Sec Chair Gary Gensler, allows more people to invest in Bitcoin through traditional stock exchanges, making it easier for mainstream investors to get into crypto.

Corporate 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 of April 2, 2024.

5. Market Capitalization 

Crypto assets are like company shares, but instead of stocks, they have coins. Investors analyze the market capitalization to understand the cryptocurrency value. The cryptocurrency 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.

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, highlighting its market dominance.

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

The Future of Crypto

Digital currencies are 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.

For instance, crypto has its own language and subculture that’s continually developing. Phrases like NGMI and WAGMI are great examples. While meaningless to the uninitiated, these terms are part of a shared experience that brings people together.

What’s more, the trend toward tokenizing real-world assets continues to build. Real-world asset tokenization brings tangible value to the digital space by allowing physical items such as real estate, art, and even company stocks to be represented as tokens on a blockchain. It creates new avenues for liquidity and accessibility, making crypto a more practical part of the global financial system.

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 the 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: Keep an eye on price movements, trading volumes, and market capitalization. These numbers tell a story. Watching them closely helps you spot trends, figure out what’s going on in the market, and decide when it makes sense to buy or sell.For instance, a sudden spike in trading volume can show increased interest in a specific coin. Similarly, market capitalization helps you compare the size of different cryptocurrencies and gauge their relative stability.
• Read white papers: White papers are essential sources of information. These documents explain the project’s purpose, technology, and roadmap. Reading a white paper allows you to understand what the creators are trying to achieve and whether they have a solid plan to reach their goals.If a project doesn’t have a clear white paper or the details seem vague, be cautious. Understanding the details can help you avoid projects that could end up being Ponzi schemes rather than legitimate opportunities.
• Understand technological developments and events: Staying up to date on blockchain technology and important events in the cryptocurrency world is crucial. New advancements and updates can influence the success of a project. If a coin you’re interested in is working on a major upgrade, it might affect its value.Major events, such as legal changes or regulations, can also impact the market. Keep an eye on developments in areas like Silicon Valley, where many blockchain innovations come from. Knowing how these changes affect the market can help you make more informed decisions.

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. From tokenizing real world assets to establishing crypto companies, the cryptocurrency space is becoming a mature market.

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?

It 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 winter. While the duration and severity vary, the period of low market performance 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. Trading activity drops, and investor confidence weakens during the period. While crypto winter only covers cryptocurrencies, a bear market can have a broader impact on assets like stocks, bonds, and other investments.