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Bitcoin Dominates Q1 2023 Crypto Resurgence with Liquid Staking Protocols

In the Brief:

  • Bitcoin and DeFi were the top-performing assets in Q1 2023, with BTC gaining 72.4%
  • Liquid staking governance tokens increased 210% and became the third-largest DeFi category
  • Ethereum's Shapella upgrade led capital to liquid staking pools
  • Stablecoin market cap fell by 4.5%, while Tether remained the largest by market cap

3 - 6 minute read

The first quarter of 2023 has been an exciting time for the cryptocurrency world as Bitcoin and decentralized finance (DeFi) protocols surge in market capitalization, according to CoinGecko’s Q1 Crypto Industry Report.

BTC emerged as the best-performing asset of Q1 2023, outperforming the likes of the NASDAQ index and Gold. All major asset classes saw gains through the first quarter of the year, with the overall cryptocurrency market capitalization reaching $1.2 trillion at the end of Q1. Ethereum’s Shapella upgrade played a major role in driving increased capital flows into liquid staking pools, with the network’s upgrade finally unlocking ETH staking reward withdrawals, leading to the accomplishment of liquid staking being the third-largest category in the DeFi sector.

Bitcoin has been the best performing asset through the first three months of 2023. Source: CoinGecko 2023 Q1 Crypto Industry Report 

DeFi saw gains of $29.6 billion in value through the first quarter, with liquid staking governance tokens being the standout performers with a 210% increase in market cap since the start of 2023. Bitcoin has been the best-performing asset through the first three months of 2023, with gains of 72.4%, while the stablecoin market cap recorded a loss of 4.5%.

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, with NFT marketplace newcomer Blur accounting for the majority of the NFT trading volume since its launch in October 2022.

BTC emerged as the best-performing asset of Q1 2023, with gains of 72.4%. “Bitcoin’s performance during Q1 2023 was impressive, far outpacing traditional assets such as the NASDAQ index and gold,” states the CoinGecko report. The report highlights that all major asset classes saw gains through the first quarter of the year, barring crude oil, which declined by 6.1%.

Regarding DeFi, the report cites the impressive performance of liquid staking governance tokens, witnessing a 210% increase in market cap since the start of 2023. Commenting on this, CoinGecko said, “The report notes that liquid staking is now the third largest category in the DeFi sector.” Ethereum’s Shapella upgrade played a significant role in driving the increase of capital flows into liquid staking pools, “with the network’s upgrade finally unlocking ETH staking reward withdrawals.”

Regarding the stablecoin market, Tether (USDT) strengthened its position as the largest stablecoin by market cap in 2023, while USDC and Binance USD recorded market cap losses of 26.9% and 54.5%, respectively. CoinGecko attributes this 4.5% drop in stablecoin 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.

Based on the analysis of the report, traders should consider Bitcoin and DeFi as the two significant movers in the cryptocurrency world during the first quarter of 2023. The report notes that liquid staking is now the third largest category in the DeFi sector, offering traders an opportunity for investment.

Given that Tether (USDT) has strengthened its position as the largest stablecoin by market cap in 2023, traders should consider investing in Tether. On the other hand, traders who have invested in USDC and Binance USD should rethink their investment strategy due to the drop in market capitalization.

The Bottom Line

The Q1 Crypto Industry Report by CoinGecko highlights that the cryptocurrency world has been buoyant in the first quarter of 2023, with Bitcoin and decentralized finance protocols playing a significant role in the surge. All major asset classes saw gains in Q1, barring crude oil, which declined by 6.1%. Traders should consider investing in Bitcoin and DeFi protocols, given their positive performances during the first quarter. Moreover, liquid staking is now the third-largest category in the DeFi sector, providing another opportunity for investment.

Disclaimer: The content in this article is provided for informational purposes only and should not be considered as financial or trading advice. We are not financial advisors, and trading carries high risk. Always consult a professional financial advisor before making any investment decisions.

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