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BTC and ETH Reached Historic Highs, Metaverse Projects Were on the Rise - November 2021 Crypto Market Recap

source-logo  coincodex.com 01 December 2021 20:25, UTC

Key takeaways:

  • During the month of November, the cryptocurrency market cap surpassed $3 trillion for the first time ever on the heels of Bitcoin and Ethereum all-time highs 
  • The share of long term BTC holders and the number of active BTC addresses reached multi-year highs
  • The surge in popularity of metaverse projects was arguably the biggest story of the month - 2 out of 5 biggest gainers in the cryptocurrency top 100 by market cap were blockchain gaming tokens

The cryptocurrency market capitalization surpassed $3 trillion as Bitcoin and Ethereum hit peak values 

Over the course of November, the cryptocurrency industry achieved numerous milestones - Bitcoin (BTC) and Ethereum (ETH) reached their respective price peaks on November 10 and pulled the combined value of all digital assets in circulation past $3 trillion for the first time ever. Facebook’s rebranding to Meta spurred massive growth among crypto metaverse projects, with many of them boasting notably high gains in November.

While most digital assets experienced explosive growth at the start of the month, the second half of November was characterized by market consolidation and several significant drops, which ultimately negated the early-November success. The total cryptocurrency market cap increased from $2.68 trillion on Nov. 1 to the peak value of $3.03 trillion on Nov. 10 but subsequently dropped to $2.69 trillion on Nov. 30 to conclude the month in a roughly breakeven range.

The digital assets in the cryptocurrency top 10 have been trading in distinctively opposite directions. Binance Coin (BNB) was the biggest gainer with a 22.6% price increase, followed by Solana (SOL) with 12.4%, and Ethereum with exactly 10%. Dogecoin (DOGE) was the worst-performing top-10 asset, losing 21.3% during November, closely followed by Cardano (ADA) with losses of 18.8%, and Polkadot (DOT) with 13.6% losses. Bitcoin was down 6.8% in the last month.

If we expand our focus to the cryptocurrency top 100, crypto gaming token GALA (GALA) emerges as the top gainer. GALA was the biggest beneficiary of the hype surrounding metaverse projects and finished the month up 547%, becoming the best performing crypto in terms of ROI in November. Loopring (LRC) and The Sandbox (SAND) rounded up the podium with gains of roughly 300%.

Over 85% of Bitcoin supply in profit at current market rates, the number of BTC addresses with a non-zero balance at an ATH

Bitcoin was trading at the $60,000 level to start off the month, reached ATH of $68,770 in mid-November but has since retraced below the $58,000 mark. 

According to a recent report by a blockchain analytics firm Glassnode, the recent market pullback was somewhat unique. The primary reason for the market downturn was market participants realizing their profits near all-time high prices. However, Glassnode researchers found out that the share of long-term holders deciding not to sell at the $57,000 price level was at a historic high. 

The share of Bitcoin circulating supply in profit over the past year. Image source: Glassnode

While the number of short-term holders (STHs) dropped a multi-year low as fresh BTC buyers quickly sold their holdings, the share of long-term holders (LTHs) has increased to a multi-year high as LTHs have mainly been holding on to their investment, deciding not to realize profits. Glassnode researchers elaborated:

“Low STH supply is typical at the end of bear markets and in early bull markets, usually following long periods of accumulation. Seeing STH supply this low whilst price is near ATHs is a relatively unique case.”

Furthermore, the increase of non-zero balance BTC addresses past 38 million signified a historic peak. A large amount of active BTC addresses indicates a relatively even distribution of BTC among institutional and retail investors - a claim which is supported by the data from The Block that shows only 11% BTC in circulation is concentrated in the hands of large holders (holders with more than 0.1% of supply).

Deflationary pressure introduced with EIP-1599 has been driving Ethereum to new highs

The second-largest cryptocurrency continued where it left off in October and managed to reach its historical peak of $4,867 on November 10. The price of ETH retraced a bit since its ATH but still managed to retain much of its gains going into the end of November. The $4,749 price tag ETH concluded November with marks the highest monthly close in its history.

The price of ETH has been on a steady climb since the London hard fork went live in early August. The London hard fork was a highly anticipated Ethereum network upgrade that set the stage for the eventual transition to a Proof-of-Stake (PoS) consensus mechanism with the launch of Ethereum 2.0 slated for 2022.

The August upgrade brought several improvements to Ethereum, most notably the EIP-1599, which fundamentally altered the way transaction fees are handled – fees that were previously paid to miners are now removed from circulation and destroyed, a process dubbed ‘burning’.

By November 24, 1 million ETH tokens, worth $460 billion at current market rates, had already been burned. The burning mechanics have introduced deflationary pressure on the value of Ethereum and pushed the value of ETH towards new highs. 

According to CryptoRank, non-fungible token (NFT) marketplace OpenSea accounted for the largest share of burned tokens, with over 110,000 ETH forever destroyed due to NFT-related fees. The second-largest share was attributed to ETH transfers, such as peer-to-peer (P2P) and various stablecoins transactions, accounting for approximately 97,000 ETH being burned.

Ethereum supply is projected to reach its peak in April 2022. Image source: UltraSound Money

It is worth noting that the total amount of burned tokens is not yet high enough to turn ETH into an inherently inflationary asset. According to data collected by Ultra Sound Money, ETH supply is currently growing at about 1.8% annually. However, given the current market dynamics, ETH supply is projected to peak in April 2022 and is set to slowly decrease in the Ethereum 2.0 era.

Goldman Sachs’ Global Markets managing director Bernhard Rzymelka is convinced that the deflationary pressure makes Ethereum an excellent inflation hedge against inflation, even more so than Bitcoin. Rzymelka thinks that if the economy keeps overheating and the inflation rate remains above 2.5%, we could see the price of ETH surpassing $8,000 by year’s end.

Metaverse projects have been November’s biggest movers

The blockchain gaming sector has seen impressive growth in November. GALA, The Sandbox, and Decentraland (MANA) have stood out as the most successful projects in both the blockchain gaming sector and the broader cryptocurrency market.

After Facebook announced its rebrand to Meta, showing the social media giant’s commitment to the metaverse, the prices of blockchain gaming and metaverse-focused tokens surged to historic highs. Decentraland overtook Axie Infinity (AXS) as the biggest gaming token by market cap, while GALA became last month’s biggest mover with more than 500% gains. 

Judging by year-to-date price changes, the crypto gaming industry outlook for the future seems even more impressive than when looking at monthly results. GALA is up more than 520x, AXS more than 240x, and SAND over 170x YTD. 

On the tailwind of the increased popularity and growing interest in metaverse projects, several companies announced massive investments in the sector to capitalize on the ongoing market trend. 

Enjin (ENJ) announced a $100 million fund to back projects building on Efinity (EFI) and the broader Enjin platform in the first week of November. At the same time, The Sandbox announced it raised $93 million to continue developing its own version of a virtual blockchain-powered world.

Generally speaking, the crypto gaming sector has primarily benefited from the hype ramping up around metaverse projects and the excitement about Play to Earn (P2E) mechanics. This new monetization model is set to disrupt the broader gaming industry by allowing gamers to earn income while playing their favorite games. 

US financial regulators outline a crypto oversight road map for 2022, Binance urging policymakers and industry leaders to work together

The stablecoin sector has received the biggest share of attention from regulators over the last couple of months. Many analysts and avid crypto followers were expecting the long-awaited outcome of the so-called “policy sprint” will yield concrete answers pertaining to stablecoin regulation. 

On November 24, US financial industry watchdogs, comprised of the Office of the Comptroller of the Currency (OCC), Federal Reserve (Fed), and Federal Deposit Insurance Corp. (FDIC), finally released a joint statement about the current legislative status of the crypto sector and stablecoins in particular.

While many expected a more hands-on approach to currently lacking regulations, the US regulators more or less just outlined key areas of focus that require further attention in 2022. The regulators touched on crypto asset custody, crypto trading, crypto-collateralized loans, stablecoins, and how these cryptocurrency products and services fit into the existing US banking regulatory framework.

Last week, Sherrod Brown, the Chairman of the U.S. Senate Committee on Banking, Housing and Urban Affairs, sent a letter to stablecoin issuers like Centre, Tether and Paxos, as well as crypto exchanges such as Coinbase and Binance.US, requiring them to disclose their business information related to consumer and investor protection. Brown reportedly has “significant concerns” regarding stablecoin redemptions and expects a response by December 3.

When the Securities and Exchange Commission (SEC) greenlighted the first BTC futures exchange-traded fund (ETF), trading under the ticker BITO, in October, many crypto enthusiasts speculated that the approval of the first-ever spot BTC ETF could be just around the corner. Unfortunately, after years of back and forth, the SEC rejected VanEck’s physical BTC proposal in the first week of November, citing the potential for “fraudulent and manipulative acts and practices” as the primary reason.

“It’s time for industry leaders, regulators, policymakers, and users to help shape the future of global finance together. We believe it should be up to each nation’s policymakers and their constituents to decide who should have oversight over the industry.” - Binance

In a surprising turn of events, the largest cryptocurrency exchange Binance has lately been urging policymakers and industry leaders to work together to create a beneficial legislative environment for the average crypto user. Binance went so far as to put together a list of 10 fundamental rights for crypto users. It is fascinating to see Binance championing proactive regulatory compliance after years of regulatory bouts with financial agencies worldwide.

coincodex.com