Binance September Analysis: wBTC trading continues to hit new highs, ETH deflation narrative challenged

Binance has released the Market Insights Report, showing that the total market capitalization of the cryptocurrency market increased by 8% in September, mainly driven by positive sentiment from the Federal Reserve rate cut and improved U.S. labor market data. wBTC maintains a strong market position with record-high weekly trading volume. However, ETH is facing challenges with rising issuance rates and a narrative of deflationary pressures.

Crypto Market Cap Grows by 8%, Best September Performance in 2019

The total market capitalization of cryptocurrencies grew by 8% in September, marking the best September performance in 2019. Positive sentiment was primarily driven by the Federal Reserve's interest rate cut, improvement in U.S. labor market data, and actions by the People's Bank of China to lower interest rates and reserve requirements to combat monetary tightening pressures, injecting 1 trillion yuan into the banking system. These favorable global macroeconomic developments led to rebounds in major stock markets and the cryptocurrency market. However, future economic reports and central bank policies remain worth monitoring.

wBTC Weekly Trading Volume Reaches Historic High

wBTC continues to show strength in the market, with weekly trading volumes exceeding 100,000 transactions in recent weeks, reaching a historic high. The supply of wBTC remains steady above 152.4K, capturing over 65% of the total wrapped Bitcoin market share. Despite challenges from new competitors like cbBTC from Coinbase, wBTC maintains its market dominance. However, reports highlight transparency and trust issues arising from wBTC's new "multi-jurisdictional and multi-institutional" custody model.

ETH Issuance Rate Rises, Deflation Narrative Challenged

In September 2024, the issuance rate of ETH continues to rise, reaching an annualized rate of 0.74%, the highest level in two years, moving ETH away from its previous deflationary status. This is mainly due to the cost reduction from Layer 2 solutions, leading to reduced network activity, lower transaction fees, and burning preventing ETH from continuing its deflation, resulting in an increase in daily net supply.

ETH's supply is no longer decreasing, posing a challenge to its Ultrasound Money narrative designed to create a system resistant to inflation while maintaining purchasing power.

To restore its deflationary status, the Ethereum mainnet needs to increase activity. However, the report also notes that with the growth of L2 solutions, users are increasingly inclined towards these more user-friendly and cost-effective scaling solutions.

RWA Hits New High

The total value of on-chain RWA has reached a historical high of $12 billion, excluding the $175 billion stablecoin market. Private loans represent the largest portion of the market, accounting for around 70% of all RWA value at $9.1 billion, largely attributed to a fintech company named "Figure." Tokenized national debt also experienced explosive growth in 2024, rising from $769 million at the beginning of the year to over $2.2 billion in September, a growth possibly influenced by the impact of the U.S. interest rates being at a 23-year high until recently cutting rates.

Binance Research: Overview of RWA Development Landscape, Understanding Technical Risks and Constraints of Asset Tokenization