Market Highlights 

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In November, Bitcoin demonstrated superior performance compared to the S&P 500, owing to heightened investor interest and the potential emergence of US Bitcoin ETFs. Concurrently, Ethereum's growth surpassed that of Bitcoin during the same period.

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In the penultimate month of the year, Bitcoin not only outpaced the S&P 500 but achieved this feat for the third consecutive month, registering a notable surge of 9%, reaching an unprecedented 18-month pinnacle. This upward trajectory was propelled by investors acquiring over $1 billion in EU-listed crypto Exchange Traded Notes (ETNs), coupled with MicroStrategy injecting an additional $600 million into spot Bitcoin. Of particular significance is the looming prospect of approval for several spot US Bitcoin Exchange Traded Funds (ETFs) in January, generating substantial interest and inquiries from discerning clients.

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Simultaneously, the US dollar underwent its most significant depreciation, plummeting by 3% since November 2022. This devaluation was triggered by conspicuous indications of weakness in the Q3 earnings reports of major retailers such as Wal-Mart and Target, alongside a more subdued labor market. The resultant frailty in the US consumer sector has heightened expectations of potential rate cuts by the Federal Reserve as early as the first quarter. In a separate development, apprehensions about a chaotic resolution of issues surrounding Binance subsided after the largest crypto exchange reached a settlement with the US Department of Justice, ensuring the continuity of its operations.

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In a noteworthy departure from the status quo, Ethereum outpaced Bitcoin, marking a 12% surge and marking the first instance since July. The MVIS Digital Assets small-cap token (MVDASC) witnessed a remarkable turnaround, transitioning from negative year-to-date returns in mid-October to concluding the year with a substantial gain of +55%. However, this still trails behind the +85% year-to-date gains of large-cap cryptocurrencies. Standout performers in this domain encompassed Coinbase equity (+62%), decentralized finance (DeFi) tokens (+41%), and layer 1 smart contract platforms like Solana (+54%) and Avalanche (+89%). Centralized exchange tokens, such as BNB, lagged behind in this dynamic landscape.

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Smart Contract Platforms

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In the wake of a robust October, experiencing a remarkable surge of 21%, layer 1 blockchain tokens witnessed yet another ascent of 28% in the month of November. The dynamics of blockchains and their associated prices often exhibit a reflexive nature, triggering an upswing in fees across almost all blockchains. As the valuation escalates, speculators intensify their engagement, resulting in heightened on-chain fees and an augmented demand for the acquisition of blockchain tokens to facilitate gas payments. The foremost beneficiary in this realm of fee generation was Bitcoin, witnessing a surge in its fee share from 12.5% to 27.5%, with fees averaging approximately $4.5 million per day. Ethereum, on the other hand, maintained its market share of fees from month to month, averaging around $7.6 million.

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The level of activity on the Ethereum network reached a zenith in November, once again pushing the platform into a state of deflation. Approximately 46,000 ETH were incinerated during this period, equivalent to $93 million at the time of this composition. Ethereum also saw an intriguing blog post penned by one of its co-founders and spiritual guide, Vitalik Buterin. In the post, Buterin delved into the prospect of reviving the Ethereum scaling solution Plasma and integrating ZK-proofs to enhance Plasma's functionality. Despite the informative nature of the post, Vitalik's prose seemed to correlate with a renewed interest in alternative layer-1 solutions incorporating execution scaling into their strategic roadmaps—a feature not currently present in Ethereum's trajectory. Moreover, on November 14, Ethereum's validator entity, Bitcoin Suisse, witnessed the slashing of 100 validators for 1 ETH each, attributed to inactivity. This event sparked extensive discourse within the Ethereum community, with many expressing concerns on social media regarding the need for slashing penalties to be applied judiciously to validators engaging in malicious activities, as opposed to those encountering outages beyond their control.

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AVAX (+85.9%) 

Avalanche's AVAX token emerged as a standout performer in the month of November, undergoing an impressive rally with a staggering uptick of 85.9%. Avalanche, in its concerted endeavors to entice financial entities, directed its focus toward the utilization of its blockchain of blockchains and the tokenization of off-chain assets. This strategic approach yielded partial success, as Ava Labs forged partnerships with JP Morgan's Onyx and Apollo Global to collaboratively construct a proof of concept alongside the Monetary Authority of Singapore, leveraging Avalanche Evergreen Subnets. This collaboration facilitates Onyx Digital Asset's access to WisdomTree funds tokenized on an Avalanche subnet blockchain. Adding momentum to AVAX's price surge, Republic, a cryptocurrency-centric investment firm, unveiled the launch of a tokenized fund named Republic Note on the Avalanche platform. The Republic Note garnered an impressive investment inflow exceeding $30 million at its inception. In another positive development for Avalanche, the blockchain game Shrapnel introduced its token $SHRAP, sparking speculation about its potential to become the inaugural blockbuster crypto game.

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In the fee landscape, November witnessed a notable escalation for Avalanche, recording a remarkable 600% month-to-month surge in blockchain fees. This surge correlated with a substantial increase in transactions on Avalanche's C-chain, reaching up to 20 times the usual volume on several days. Predominantly, over 95% of this heightened activity stemmed from ASC-20 inscriptions. Analogous to Bitcoin inscriptions, these ASC-20 inscriptions empower users to embed additional data into AVAX tokens, utilizing the extra data space in each transaction known as Call Data. Despite the considerable intensity of this flurry of activity, its duration was transient, reverting to average transaction volumes and fees after approximately a week. Notably, the surge in fee activity did not translate into a significant uptick in user engagement, with daily active addresses peaking at around 79,000—just over double the average observed on Avalanche over the preceding two months.

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Solana (+51.2%)

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The month of November began amid Solana’s annual developer conference, where several fascinating announcements and technology demonstrations took place. The founder of Solana, Anatoly Yakovenko, re-asserted Solana’s competitive positioning as a low-latency, high-throughput chain that would scale to meet the needs of hundreds of millions of users. To meet this vision, Kevin Bowers of Jump Trading introduced his team’s new Solana client, Firedancer, which was capable of processing more than 6M TPS using Solana’s existing network. To take advantage of this broad leap in capabilities, Sling Money, Backpack NFT, and Star Atlas discussed each project’s respective potential for payments, verified decentralized exchanges, and gaming.

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Token releases from several important Solana projects also helped Solana’s price. These included dominant MEV staking entity Jito ($JTO), 80% market share DEX aggregate Jupiter ($JUP), and price oracle with nearly total market share of Solana price feeds, Pyth ($PYTH). Due to the price performance of Solana and the anticipated launch of these tokens, a positive feedback loop of price and volume occurred on Solana, which surged DEX volumes by 320% month-to-month and resulted in Solana fees increasing 100% and usership up 50% compared to October.

DeFi

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In decentralized finance, the MarketVector Decentralized Finance Leaders index (MVDFLE) conspicuously outshone $ETH during the month of November, yielding an impressive return of 41% as investors strategically positioned themselves in tokens poised to benefit from an upswing in on-chain trading. Among the index constituents, Thorchain ($RUNE) stood out with the most remarkable performance, boasting a substantial surge of 122% for the month. The exceptional performance of $RUNE can be ascribed to the substantial uptick in activity observed on the protocol. The decentralized native asset settlement chain achieved new yearly highs in volume for the second consecutive month, propelling it to the third-highest volume among decentralized exchanges, trailing only Pancake Swap and Uniswap.

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Similarly, $UNI exhibited a noteworthy return of 44% for the month, maintaining its robust market share. Other components of the index, namely $MKR, $LDO, and $AAVE, delivered returns of 13%, 29%, and 21%, respectively. On the flip side, $CRV lagged behind its decentralized exchange counterparts, experiencing a modest appreciation of only 15% during the month. The underperformance of $CRV can be elucidated by the protocol's diminishing market share, with a marginal uptick in volume of 11%, notably trailing behind Uniswap and Thorchain, which recorded increases in volume of 51% and 84%, respectively.

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Metaverse and Gaming

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The MarketVector Media and Entertainment Leaders index (MVMELE) recorded a commendable return of 19%, slightly surpassing $ETH. However, it fell short of the remarkable returns observed in the decentralized finance (DeFi) sector, likely attributed to the ongoing limited adoption of metaverse ecosystems and the subsequent lack of value accrual to their associated tokens. Among the prominent metaverse tokens, $APE, $MANA, and $SAND posted returns of 19.3%, 19.4%, and 20% during the same period. While MVMELE didn't witness astronomical returns relative to $ETH, several tokens within the gaming/metaverse niche demonstrated exceptional performance. This trend can be attributed to investors showing a preference for smaller "moonshot" tokens, which potentially offer significantly more upside in a bullish market compared to the higher-valued tokens constituting the index. Noteworthy examples include $PRIME, $AURY, and $ATLAS, valued considerably lower than mainstream metaverse tokens, yet rallying impressively by 181%, 200%, and 223%, respectively.

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