If our recent analysis of the Ethereum vs ERC-20 market cap taught us anything, it’s that there’s still not enough info out there to help people grasp the many relative scales of the crypto market.
To fix that, we decided to take a closer look at 11 biggest segments of the crypto industry, compare their performance over time and give you a bird’s-eye view of their respective size and development.
At Santiment, we typically categorize the 1100+ projects in our database into 51 separate categories. Of course, comparing 51 different anythings is inherently problematic, and would be terribly noisy.
Instead, for this analysis, we bucketed all crypto assets into 11 broader market segments or buckets, based on the projects’ overarching themes and industries. Here’s our master list:
- Cloud Storage/Computing
So how do we truly compare the relative and absolute performance of these 11 market segments?
If you said market cap, we’ve got some bad news. As an example, here’s what happens when we plot absolute market cap values over the last 2 years for each market segment:
The first (and pretty much only) thing you see are two massive outlier categories, towering over everything else. The big purple line, of course, are currencies, including BTC which by itself makes up ~50% of the crypto marketcap. The blue line marks crypto platforms, counting the biggest market Dapp solutions like Ethereum and EOS.
Exclude these two, and we can at least see the correlation between other industries a bit more clearly, with privacy coins (spearheaded by Monero) edging out the rest throughout the observed time frame (last 2 years):
Comparing absolute market cap values, however, can be dangerously misleading when trying to measure performance. Just because a segment’s cumulative market cap is larger does not mean its returns were better over the observed time frame.
For example, say the total market cap is 120bn for currencies and 5-10bn for all other crypto buckets. If the former lost 40bn in market cap value in an observed time frame while all the small buckets improved by 40bn, currencies would still dwarf every individual market segment, despite a clear difference in market trends.
So instead, we decided to look at growth multipliers, or how much each segment’s market cap improved or deteriorated within a certain time frame.
The method is fairly straightforward. Select a time frame that you want to observe. All market segments are assigned a start value of 1. If a segment climbs to, say, 2 by your end date, it means its market cap doubled in size in the selected time frame. If it dips to 0.5, it means its market cap halved in the selected time frame.
This makes the market cap analysis much more contextually relevant.
The Rise of Exchanges
Take exchanges as an example, represented by an almost invisible light blue line in the above graph.
Although their absolute market cap is peanuts next to currencies and platforms, exchanges actually outperformed all other market segments over the last 2 years, if we were going off the absolute change in their market cap:
All of a sudden that blue line seems a lot more prominent, doesn’t it?
As it turns out, exchanges had the biggest increase in market cap over the last 2 year period, excluding stablecoins (more on that in a second).
(P.S. here’s a SANbase Watchlist with all exchanges included in this analysis)
Looking at the entire time frame (Jan 2017 – Jan 2019), the growth multiplier for crypto exchanges sits at 110x (!!!)
Compared to exchanges, all other crypto segments (again, excluding stablecoins) have performed significantly worse, with most growth multipliers stuck somewhere in the 0 to 40 range.
This graph also further reinforces a common truth in crypto: that despite thousands of Dapps and billions in token sales, the industry in general is still overwhelmingly speculative, with very few market-defining utility projects.
The only other segment that even came close is ‘Cloud storage & computing’, which recorded a similarly astronomic spike at the beginning of 2018. Here’s a SANbase Watchlist with all the projects in this segment.
This is in large part due to Siacoin, which experienced unparalleled growth during the second part of 2017, but has lost much of that momentum over the last 13 months. The growth can also be attribtued to Dent and Golem, both of which have recently overtaken Siacoin by marketcap.
Here’s the graph of the ‘Cloud storage’ market segment for said time frame:
The mushrooming of exchanges is made even more obvious when choosing August – December 2017 as our start and end points:
In those five months, the cumulative market cap of all crypto exchanges grew almost 120 times, dwarfing every other market segment by a mile.
Although unfathomable, the graph does in fact make sense – as the price of most cryptoassets skyrocketed, it created a huge demand for an easy way to buy crypto.
Still, no other market segment came even close to those kinds of gains. The second best performer for the selected time frame is the IOT/supply market, whose entire market cap improved a ‘measly’ 13 times.
Of course, it goes without saying that this analysis includes only those exchanges that did an ICO and are publicly traded, allowing us to track the performance of their respective coins.
CZ leads the way
Let’s take a closer look at our ‘exchanges’ bucket, and see what’s driving this meteoric growth. Here’s the cumulative market cap of all exchange coins in our database over the past 2 years:
As we can see, Binance is spearheading the performance of all crypto exchanges, especially over the last 10 months.
The world’s biggest crypto exchange by trading volume fared relatively well even during the bear market. In fact, it just recently hit an all-time high in the BTC market (tho it’s still down 60% in the USD market).
If we take a look at Binance’s market share of the overall exchange segment, a decidedly upward trend emerges:
Save for a few major dips, CZ’s brainchild has been on a steady incline ever since its inception, and currently holds a 46% market share.
Charting all market segments from January 2018 to January 2019 tells a similar story, although it does add a few intriguing chapters:
Exchanges have once again outperformed most of the market; however, the actual growth multipliers are much more sombering this time around.
While most crypto industries did start off a year strong, the bear market quickly took its toll. Over the last year, nearly all market segments actually decreased in market cap – all except stablecoins.
What’s up with stablecoins?
That neon line on the above graphs clearly does not give a crap about established market patterns. While all other segments faltered, the cumulative market cap for stablecoins has experienced a steady upsurge in virtually every time frame we observed.
Does this mean stablecoins are practically immune to major market forces? Eeerm, not quite.
In fact, what stablecoins are actually immune to is our methodology – and for good reason. Market cap equals price times supply, and since the supply of most coins is more-less fixed, it is their price that’s behind most major market cap fluctuations.
Stablecoins, on the other hand, exhibit low price volatility, which means that the changes in coin supply are causing the most, if not all significant movements in their cumulative market cap. So while the stablecoin segment does boast the best growth multiplier over the last year, it’s mostly down to a medley of new coins entering the market.