Significant Growth in the Digital Asset Space
The digital asset space has grown significantly in recent years. Institutional interest, especially as a macro asset class, has expanded. Bitcoin has historically led the market, a trend continuing through 2023 and 2024.
Bitcoin’s Market Dominance
Bitcoin’s market cap increased by over $1.13 trillion (+370%) as of March 2024, since the cycle low in November 2022.
Ethereum, the second-largest asset, saw its valuation rise by $354 billion (+267%) over the same period, in line with the wider altcoin market. The supply of stablecoins began increasing in March 2024, following a net redemption period since mid-2022.
Aggregate Market Cap of Digital Assets
The digital asset landscape now has an aggregate market cap of around $2.56 trillion. Bitcoin commands over half of this, at $1.33 trillion. Ethereum’s market cap stands at $451 billion, while the broader altcoin market represents $611 billion in total value. Stablecoins have become significant within the digital asset market, with a total supply of $145 billion over the last four years. Tether (USDT) remains the dominant stablecoin with 74% dominance, followed by USD Coin (USDC) with 22%. USD-denominated stablecoins comprise over 99% of the total stablecoin market, while other fiat currencies have negligible adoption.
Bitcoin’s Enduring Leadership
Bitcoin has retained its position as the largest digital asset for the last 16 years, commanding over 52.7% of the total industry value. Analysts often use Bitcoin dominance to assess market cycles. Bitcoin dominance typically grows during bear markets and early bull markets as capital seeks safer havens. However, it declines during speculative phases of bull markets when risk appetite increases.
Ethereum’s Role in the Altcoin Sector
Ethereum has dominated the altcoin sector for several years, representing 41.7% of this market currently. Ethereum’s dominance declined slightly since mid-2023, as new competitors in smart contract-enabled blockchains emerged. Stablecoin capital accounts for around 5.7% of the aggregate digital asset market, peaking at 16.1% in late 2022.
Internal Market Cycles of Digital Assets
Digital assets display internal market cycles, with capital rotating through various market sectors over time. On-chain data helps model these rotations by measuring the 30-day change in capital flows into Bitcoin, Ethereum, and total stablecoin supplies. Historically, capital migrates towards Bitcoin during market downturns and immediate recoveries. As investor confidence builds, capital flows to Ethereum and then further out on the risk curve during bull markets.
Stablecoins as Preferred Quote Currency
Stablecoins have emerged as a preferred quote currency on centralized and decentralized exchanges. Thus, growth in total stablecoin capital can indicate demand further out on the risk curve. This chart illustrates how capital waves have moved between various market sectors over the last six years.
