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Bitcoin and liquid staking protocols lead crypto resurgence in Q1 2023

Bitcoin and liquid staking protocols lead crypto resurgence in Q1 2023

The cryptocurrency ecosystem is off to a strong start in 2023 with Bitcoin (BTC) and decentralized finance (DeFi) protocols seeing a surge in market capitalization during the first quarter. The insights come from CoinGecko’s “2023 Q1 Crypto Industry Report,” published on April 18. BTC emerged as the best performer, achieving gains of 72.4%, outperforming the likes of Nasdaq and gold, which marked 15.7% and 8.4% gains, respectively.

The report shows that all major asset classes rallied at the start of 2023 except crude oil, which dropped by 6.1%. The decrease was attributed to United States inflation data, which cited a reduction in oil demand and the ill effects of the U.S. banking crisis.

Bitcoin has been the best-performing asset through the first three months of 2023. Source: CoinGecko

The wider cryptocurrency markets enjoyed a resurgence with the overall market capitalization reaching $1.2 trillion at the end of Q1. CoinGecko notes a $406 billion gain, or 48.9%, from the cryptocurrency market cap of $829 billion at the end of 2022.

The DeFi space was another standout performer, rising by $29.6 billion in value at the beginning of 2023. The report cites the impressive performance of liquid staking governance tokens, which saw a 210% increase in market cap since the start of the year. Ethereum’s Shapella upgrade played a significant role in driving the increase of capital flows into liquid staking pools, with the upgrade unlocking ETH staking reward withdrawals. The report confirms that liquid staking is now the third-largest category in the DeFi sector.

Related: Ether hits 11-month high as post-Shapella withdrawals pass 1M ETH

Whilst Bitcoin and DeFi saw major movements in the first quarter, the top 15 stablecoins saw their market cap drop by $6.2 billion. CoinGecko attributes this 4.5% drop 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) strengthened its position as the largest stablecoin by market cap this year, adding $13.6 billion since the start of the year, whilst USDC and BUSD recorded market cap losses of 26.9% and 54.5%, respectively.

The trading volume of non-fungible tokens (NFTs) surged again in 2023 recording a 68% rise from Q4 2022 to $4.5 billion during the first quarter of 2023. The 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.

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