Cryptocurrency Soars in Q1 2023
The cryptocurrency market has started off 2023 with a bang, as shown in CoinGecko’s Q1 2023 Crypto Industry Report. The report highlights the surge in market capitalization of Bitcoin (BTC) and decentralized finance (DeFi) protocols, making them the key takeaways of the first quarter.
BTC emerged as the best-performing asset of Q1 2023, with gains of 72.4%, outperforming other assets such as the NASDAQ index and Gold, which marked gains of 15.7% and 8.4%, respectively. The report notes that all major asset classes, except crude oil, saw gains through the first quarter of the year. Crude oil dropped by 6.1%, which was attributed to United States inflation data that cited a reduction in oil demand and the ill effects of the U.S. banking crisis.
The overall cryptocurrency market capitalization reached $1.2 trillion at the end of Q1, with a gain of $406 billion from the market cap of $829 billion at the end of 2022. The DeFi space was another standout performer, rising by $29.6 billion in value through the first quarter. Liquid staking governance tokens saw a 210% increase in market cap since the start of 2023, making it the third-largest category in the DeFi sector.
Ethereum’s Shapella upgrade played a major role in driving the increase of capital flows into liquid staking pools. The upgrade finally unlocked ETH staking reward withdrawals, which helped the network gain more attention.
While Bitcoin and DeFi have been major movers thus far this year, the top 15 stablecoins saw their market cap drop by $6.2 billion. CoinGecko attributes this 4.5% drop in market cap to the shutdown of Binance USD by Paxos and the momentary depeg of USD Coin (USDC) during the collapse of Silicon Valley Bank in March 2023.
Tether (USDT) strengthened its position as the largest stablecoin by market cap in 2023, adding $13.6 billion since the start of the year, while USDC and BUSD recorded market cap losses of 26.9% and 54.5%, respectively.
Nonfungible token (NFT) trading volume has also surged again in 2023, marking a 68% rise from Q4 2022 to $4.5 billion during the first quarter of 2023. NFT marketplace newcomer Blur accounted for the majority of NFT trading volume since its launch in October 2022, accounting for 71.8% of the NFT market share in March 2023.
The cryptocurrency market is still relatively new and volatile, but the Q1 2023 report shows that it is gaining momentum and acceptance from investors. Despite some drops in stablecoin market cap and the decline in crude oil, the overall cryptocurrency market has been performing exceptionally well. This growth could lead to more mainstream adoption and could open doors for new developments and opportunities in the future.
