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Unveiling Cryptocurrency Narrative Dynamics: Insights from Data Analysis



DAte :

April 19, 2024

Unravelling the Complex World: Demystifying Cryptocurrency Narratives and Dynamics

Every day is a new day in blockchain space which brings new trends and narratives, defining the course of what's possible with blockchain technology and adding to its ever-increasing list of applications.

This space can be a bit like a bustling marketplace with all sorts of ideas and projects floating around, each with its own story to tell. Some narratives focus on making money, others on changing the world. By looking at online conversations, social media trends, and even news articles, we can start to understand what narratives are resonating with people most. This helps us see what people are excited about in Web3, and how those ideas are evolving over time. It's like being able to measure the buzz around different stories in this exciting new space.

Understanding the Market Dynamics

Now, navigating these trends requires a bit of know-how about the underlying market structure. Imagine a giant waterfall – that's kind of how liquidity, or the ease with which an asset can be bought or sold, flows in the crypto market. The biggest, most established cryptocurrencies, like Bitcoin and Ethereum, sit at the top, with the most liquidity.  

Consider the top 10, top 50, and top 100 cryptocurrencies as examples. The top ten cryptocurrencies hold global renown, attracting traders, particularly whales, who frequently engage in trading activities involving these top-tier assets like as Bitcoin, Ethereum, Binance Coin, Doge, XRP, and Solana.

Source: CoinGlass

As per the heatmap from CoinGlass, the top 10 cryptocurrencies, known as large-cap coins, see the highest liquidation levels daily, showcasing their widespread popularity and active trading. This liquidity cascades down to large market cap coins, mid-caps, and eventually smaller projects like NFTs. This pattern holds true across the entire market, as well as within individual blockchain ecosystems, whether we're looking at short-term trends or long-term developments.

Observing Past Market Trend Cycles  

Examining past market cycles can provide valuable insights into how narratives evolve over time. For instance, in previous cycles, the prominent cryptocurrency – Bitcoin maintained dominance initially, followed by Ethereum’s rise, which catalysed the altcoin season.  

A graph of a bitcoinDescription automatically generated
Source: CoinMarketCap

Based on data sourced from CoinMarketCap, Bitcoin currently holds a dominance of approximately 52% in the cryptocurrency market, with Ethereum following closely behind at 18%. The remaining share of dominance is distributed among various altcoins. It's worth noting that a significant aspect of market narratives tends to revolve around emerging tokens and technologies, significantly influencing market dynamics.

In the wake of a significant downturn in the market, a resurgence of interest has been observed, particularly in novel technologies such as Artificial Intelligence (AI), Decentralized Finance (DeFi), Decentralized Physical Infrastructure Network (DePIN), RWAs, Restaking, NFTs, and fast chains. These emerging trends have captured the attention of both investors and businesses alike, shaping the latest narratives in the market as the global cryptocurrency market capitalization inches closer to the $3 trillion milestone.

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Source: Tradingview  

A comprehensive examination of top cryptocurrencies reveals an intriguing trend: accumulating both established and new coins during the 2020-2021 period has resulted in superior performance compared to holding onto assets from the previous market cycle in 2017.

In 2017, Bitcoin surged to nearly $20,000 during a bullish run, however, plummet instantly to touch as low as $4000, but it achieved its new all-time high of $68,000 in late 2021. Consequently, newer coins like Solana, Dogecoin, and BNB have emerged as standout performers, delivering substantial returns within a relatively short timeframe, surpassing assets such as Bitcoin Cash (BCH) and EOS in the 2020-2021 cycle.

Furthermore, while BTC reached a new all-time high of $73,700 in 2024, many altcoins have yet to revisit their previous highs despite the ongoing bull run. This dispels the myth that if Bitcoin reaches new highs, all altcoins will automatically outperform.

Identifying narratives

As technology continues to advance, pinpointing potential projects, particularly those poised for success, presents a growing challenge. Therefore, one of the initial indicators of a narrative taking shape is often the emergence of an asset's breakout that defies association with existing narratives. To illustrate this concept further, let's delve into a comprehensive analysis of Solana, a layer 2 blockchain:

Source: Messari

Solana, renowned for its high scalability and status as a non-EVM blockchain, emerged as a frontrunner in the fast chain's narrative during the final quarter of 2023, preceding the widespread adoption observed by other assets in the market.

Predicting the next wave of assets poised for growth can be achieved by understanding the underlying market sentiments or utilizing momentum indicator such as relative performance index (RPI). Assets following a narrative typically exhibit low RPI volatility and synchronous momentum, whereas those diverging from the narrative prolong high volatility and independent movement.  

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Source: Messari


Based on insights from Messari, we observe that assets such as SUI, SEI, Aptos, Avalanche, Injective, Osmosis, and Celestia exhibit low Relative Performance Index (RPI) volatility, indicating alignment with a narrative. Conversely, assets like Aave, Compound, Curve, Lido, Maker, Sushiswap, and Uniswap have demonstrated high RPI volatility in recent months, suggesting a lack of narrative formation.

It's crucial to understand that effectively navigating the intricate cryptocurrency market landscape demands a nuanced comprehension of narrative dynamics. Despite the complexities involved, it's evident that numerous projects are tackling significant untapped challenges worldwide. Among these initiatives, Zeebu stands out as the settlement platform revolutionizing the telecom industry through decentralized finance.

Zeebu: Redefining Financial Narrative  

Zeebu, a Web3 Neobank catering to the telecommunications sector, stands as a revolutionary force in payment settlement platforms, spearheading the adoption of decentralized finance (DeFi) within the industry. Unlike conventional centralized payment systems, Zeebu harnesses the power of blockchain technology to tackle the sector's intricate challenges, including security vulnerabilities, transparency issues, prolonged remittance delays, and manual errors. Through its innovative approach, Zeebu is reshaping the financial narrative of the telecom industry, paving the way for a more efficient and transparent ecosystem.