A quarterly report from cryptocurrency data aggregator CoinGecko highlights Bitcoin and Ethereum dominance as investors shifted away from altcoins in Q2.
The two largest cryptocurrencies by market capitalization both came through Q2 seeing a quarter-on-quarter price gain while a number of altcoins saw significant losses.
While cryptocurrency markets only saw a market cap increase of 0.14% from Q1 to Q2, Bitcoin managed to see an average value increase of 6.9% and ETH increased by 6.0% in Q2. This means that both BTC and ETH outperformed the total cryptocurrency market cap by a percentage increase.
Trading volumes also decreased drastically through the second quarter of 2023, with average daily trading volumes down 58% from $33 billion in Q1 to $13.8 billion in Q2.
As per the report, Binance’s decision to remove zero-fee trading incentives for Bitcoin in March had a marked effect on trading volumes which continued from there.
CoinGecko also notes a major sell-off of altcoins in comparison to BTC and ETH. Binance Coin (BNB), Ripple (XRP), and Cardano (ADA) saw drops of 24%, 12%, and 28% in value as they faced respective scrutiny in the United States.
ADA and BNB were directly listed in the U.S. Securities and Exchange Commission (SECs) lawsuits against Binance.US and Coinbase as unregistered securities.
The stablecoin market was not saved from losses in Q2 but Coingecko’s data suggests that the sector only lost 3.5% value quarter-on-quarter.
A mini-banking crisis in the U.S. and the SEC once again played a role here, as USD Coin (USDC) and Binance USD (BUSD) emerged as the biggest stablecoin losses.
USDC was directly impacted by the bankruptcy of Silicon Valley Bank, which held some $3.3 billion of reserves of the stablecoin. The resulting fall-out saw a large amount of USDC sold across the markets, losing $5.1 billion in Q2.
Binance’s stablecoin was affected by Paxos’ being instructed to stop issuing the exchange’s dollar-back token, with $3.4 billion of BUSD removed from circulation as a result.
Tether (USDT) saw a 4% gain in market cap, totaling $83 billion at the end of Q2.
Coingecko also highlights the surge in interest and gains made by a variety of memecoins in May 2023.
$PEPE led the way with mind-shattering 1813x returns at its peak trading, accumulating $1.8 billion in market capitalization after Binance listed the token.
The inception of BRC-20 tokens, which allow for the minting of NFTs on Bitcoin’s blockchain, saw Bitcoin Ordinals $ORDI attract $600 million in market cap.
Despite the influence of memecoins and BRC-20 tokens, the NFT space saw a drop-off in trading volumes from $4.84 billion in Q1 to $3.15 billion in Q2.
While altcoins endured an overall drop in market capitalization in Q2, a ruling partly in favor of XRP in its ongoing case against the SEC could signal renewed hope for altcoins in general.
The SEC originally sued Ripple Labs and executives Brad Garlinghouse and Christian Larsen for allegedly raising $1.3 billion through an unregistered, ongoing digital asset securities offering.
The latest development in the five-year-long legal dispute saw Southern District of New York judge Analisa Torres rule that XRP was not considered a security when sold programmatically on cryptocurrency exchanges.
The SEC was somewhat vindicated, as Torres also ruled that XRP met the conditions of security set in the Howey Test when it was sold to institutional investors.
The likes of major cryptocurrencies Polygon (MATIC), Solana (SOL), and ADA were listed in SEC lawsuits against both Binance.US and Coinbase, but Torres’ ruling could mean there’s a legal precedent that will absolve tokens that have come under regulatory scrutiny.
CFTC commissioner Caroline Pham suggests that regulatory clarity over the sector would require different agencies to work together.