The cryptocurrency industry has started 2023 on a high, with Bitcoin and decentralized finance (DeFi) protocols outperforming traditional assets in the first quarter. These findings are part of the “2023 Q1 Crypto Industry Report” published by CoinGecko on April 18.
The report highlights that Bitcoin has emerged as the best-performing asset of Q1 2023, with gains of 72.4%. This outstrips the Nasdaq index and gold, which marked gains of 15.7% and 8.4% respectively. The overall cryptocurrency market capitalization reached $1.2 trillion at the end of Q1, with a gain of $406 billion from a market cap of $829 billion at the end of 2022.
The DeFi space has been another standout performer, rising by $29.6 billion in value through the first quarter. The report cites the impressive performance of liquid staking governance tokens, which saw a 210% increase in market cap since the start of 2023. Ethereum’s Shapella upgrade played a major role in driving the increase of capital flows into liquid staking pools, with the network’s upgrade finally unlocking ETH staking reward withdrawals. Liquid staking is now the third-largest category in the DeFi sector.
Non-fungible token (NFT) trading volume has also seen a significant surge in 2023, marking a 68% rise from Q4 2022 to $4.5 billion during the first quarter. NFT marketplace newcomer Blur accounted for the majority of NFT trading volume since its launch in October 2022, accounting for 71.8% of the market share in March 2023.
While Bitcoin and DeFi have been major movers thus far this year, some stablecoins have experienced a drop in market capitalization. The top 15 stablecoins saw their market cap drop by $6.2 billion, a 4.5% drop attributed to the shutdown of Binance USD (BUSD) by Paxos and the temporary depeg of USD Coin (USDC) during the collapse of Silicon Valley Bank in March 2023. Tether (USDT) has 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.
The cryptocurrency industry has seen several positive indicators in the first quarter of 2023, which could potentially lead to further growth over the rest of the year. The surge in adoption of decentralized finance protocols and non-fungible tokens indicates that cryptocurrencies and their underlying blockchain technology are gaining mainstream acceptance. Furthermore, Bitcoin, the most established cryptocurrency, continues to shine as a store of value in uncertain economic times. Overall, these factors could lead to more investment and development in the cryptocurrency industry for the foreseeable future.
