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Blockchains Outperforming Other Categories in May, Including Layer-2s, Continuing April’s Trend

Last Updated May 27, 2024 11:38 AM
Valdrin Tahiri
Last Updated May 27, 2024 11:38 AM
By Valdrin Tahiri
Verified by Peter Henn

Key Takeaways

  • Blockchains have been the best performing crypto category in May.
  • Decentralized Finance (DeFi) is making a comeback, being ranked second.
  • The Cosmos ecosystem posted the worst performance, increasing less than 1%.

May has been a bullish month for the cryptocurrency market. A number of cryptocurrencies including Bitcoin bottomed on May 1 and have increased since. Bitcoin has increased by 17% while ETH has done so by nearly double the amount at 34%.

In this article, we will analyze the performance of different categories and sectors of the market to determine which ones have performed the best and which ones are lagging behind.

Blockchains Best Performing Category in May

The best performing category in May have been blockchains (blue) with an increase of 27%. They have been closely followed by decentralized finance (DeFi) at 25%, and memecoins at 21%.

The shift toward blockchains started to happen in April and has continued so far in May. The DeFi category has finally performed well after underperforming for most of 2024, while memecoins have been the best performing

Narrative May Performance
Category Performance May | Credit: TradingView

On the other side of the spectrum Ethereum Layer-2 solutions and Cosmos ecosystem tokens have been the worst performers. The former has increased by 6% while the latter has moved upwards by only 0.7%.

The underperformance of Ethereum Layer 2s is especially surprising, because the approval of the Ethereum ETF was expected to trigger a rally.

Ethereum Leads Blockchains

A closer look at the individual blockchain performance reveals that ETH  and SOL are the best performing assets with increases of nearly 30%. AVAX is ranked third with an increase of 12%. These are the blockchains with double-digit rates of increase.

Layer-1s Movement
Blockchain Performance | Credit: TradingView

Following AVAX, ADA and BNB have posted single digit rates of increase while TRX has actually fallen by 6%. TRX was one of the biggest gainers in the first two weeks of May, so its performance has taken a nosedive in the latter half of the month.

Ethereum to Outperform Solana

From the two biggest gainers in the blockchain category, the ETH price is likely to continue outperforming Solana. This is because the SOL/ETH chart shows a bearish reading. SOL reached an all-time high of 0.059 ETH in March but has fallen since. It made a failed attempt at starting another upward movement on May 23, but has fallen since.

The decrease created a triple top, considered a bearish pattern. On May 24, the price broke down from an ascending support trend line that had existed for 88 days, confirming the bearish trend.

Ethereum Solana
SOL/ETH Daily Chart | Credit: TradingView

The MACD and RSI are also falling, supporting the bearish outlook. If the trend continues, ETH is likely to outperform SOL at least until the 0.035 ETH support area, which would be a drop of 16% measuring from the current price.

Ethereum to Lead the Way

Ethereum has been the best performing blockchain in May. It is well positioned to continue this trend both because of the price action of the SOL/ETH chart and the positive news regarding the Ethereum ETF.

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