Crypto has experienced numerous black swan events in the recent past, such as the collapse of Terra Luna and FTX’s bankruptcy. These incidents led to an extended period of bearish market conditions. However, there is always a glimmer of hope even in the darkest times. Now, in October 2023, there are indications of a revival in the crypto market.
Today, we will examine four signs that indicate a resurgence in crypto adoption. To support our analysis, we will refer to a tweet by Thor Hartvigsen.
1. An Increase in Activity on Ethereum and Its Layer 2 Projects
So, how can we determine that crypto adoption is improving? First, let’s examine Ethereum and its Layer 2 (L2) projects. Ethereum is widely recognized as the blockchain with the highest Total Value Locked (TVL), indicating a thriving ecosystem for DeFi, NFTs, gaming, and other on-chain activities.
Therefore, we can use Ethereum’s activity, along with its L2s, as a measure of crypto adoption. In this case, we have observed a consistent upward trend in activity since October 2020. This suggests that more individuals and investors are engaging in on-chain activities. Naturally, an increase in investor interest typically leads to higher crypto prices.
2. Total Stablecoin Market Cap Activity
Another clear indication of increasing crypto adoption can be seen in stablecoin activity. Below, you’ll find a chart displaying the total market capitalization of stablecoins over the past three months. As you can observe, there has been a decrease in this market capitalization, which generally has a negative impact on crypto prices.
The reason behind this is that stablecoins are needed to purchase cryptocurrencies. Therefore, an increase in demand for stablecoins often leads to higher crypto prices, and vice versa.
However, in the past month, the decline in stablecoin market capitalization has come to a halt. Additionally, it has started to move sideways, indicating that the demand for stablecoins has stabilized. This could potentially be a sign that a bullish reversal is on the horizon.
3. Ethereum Generates $10 Billion in Revenue
Another notable indicator of crypto adoption is Ethereum’s revenue. Since its inception in 2015, Ethereum has experienced rapid growth and has currently generated over USD$10 billion in revenue.
At first glance, this figure may not appear significant. However, when we compare Ethereum’s revenue to industry giants like Microsoft or Meta in the tech sector, it becomes apparent that Ethereum has achieved this milestone in a shorter timeframe.
What does this imply? It suggests that consumers are swiftly recognizing the value of Ethereum’s product. Consequently, this serves as a sign that the demand for $ETH and cryptocurrencies could potentially rise in the near future.
4. All-Time Highs Reached in Ethereum’s Liquid Staking
Liquid Staking begins when a user stakes a token, such as $ETH, $BNB, or $SOL, and in return, they receive another token. This token serves as proof of their stake and is referred to as a Liquid Staking Derivative (LSD).
In 2023, the Total Value Locked (TVL) in liquid staking protocols surged from $7.9 billion to $20 billion, representing a remarkable 200% increase. A significant portion of this $20 billion is directed towards the Ethereum chain. In essence, this indicates a substantial level of interest in the Ethereum ecosystem and its associated projects.
Conclusion
In addition to the aforementioned indicators, there are other factors contributing to the adoption of cryptocurrencies. One notable trend since the last bull run is the emergence of Real World Asset (RWA) projects. Furthermore, the ETF space for crypto has also witnessed significant advancements. With the introduction of ETFs, substantial amounts of institutional capital can now enter the crypto market.
Currently, there is a significant disparity between sentiment and reality in the crypto space. However, this situation may actually be advantageous. We believe it presents us with an opportunity to acquire some valuable altcoin gems at discounted prices.