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Bitcoin and liquid staking protocols drive cryptocurrency recovery in the first quarter of 2023.
The cryptocurrency landscape has experienced a vibrant beginning to the year, with Bitcoin (BTC) and decentralized finance (DeFi) protocols witnessing significant increases in market capitalization during the first quarter of 2023.
These are the primary insights from the inaugural quarterly Crypto Industry Report released by CoinGecko on April 18. BTC stood out as the top-performing asset of Q1 2023, achieving a remarkable 72.4% increase, surpassing the NASDAQ index and Gold, which recorded gains of 15.7% and 8.4%, respectively.
The report indicates that all significant asset classes experienced gains in the first quarter, except for crude oil, which fell by 6.1%. This decline was linked to inflation data from the United States, which pointed to a decrease in oil demand and the adverse effects of the U.S. banking crisis.
Bitcoin has been the top-performing asset during the initial three months of 2023. Source: CoinGecko 2023 Q1 Crypto Industry Report
The broader cryptocurrency markets have experienced a quarter of recovery, with the total market capitalization reaching $1.2 trillion by the end of Q1. CoinGecko notes a 48.9%, or $406 billion, increase from the cryptocurrency market cap of $829 billion at the close of 2022.
The DeFi sector was another notable performer, increasing by $29.6 billion in value throughout the first quarter. The report highlights the strong performance of liquid staking governance tokens, which experienced a 210% rise in market cap since the beginning of 2023.
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Ethereum’s Shapella upgrade significantly contributed to the influx of capital into liquid staking pools, as the network’s upgrade finally enabled ETH staking reward withdrawals. The report mentions that liquid staking has now become the third largest category within the DeFi space.
Related: Ether hits 11-month high as post-Shapella withdrawals pass 1M ETH
While Bitcoin and DeFi have been the primary drivers thus far this year, the top 15 stablecoins experienced a market cap decline of $6.2 billion. CoinGecko attributes this 4.5% decrease in market cap to the discontinuation of Binance USD by Paxos and the temporary depeg of USD Coin (USDC) during the collapse of Silicon Valley Bank in March 2023.
Tether (USDT) solidified its status as the largest stablecoin by market cap in 2023, gaining $13.6 billion since the year’s onset, while USDC and BUSD faced market cap reductions of 26.9% and 54.5%, respectively.
Nonfungible token trading volume has also rebounded in 2023, showing a 68% increase from Q4 2022 to $4.5 billion during the first quarter of 2023. The NFT marketplace newcomer Blur has accounted for the majority of NFT trading volume since its launch in October 2022, representing 71.8% of the NFT market share in March 2023.
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