Bitcoin and liquid staking protocols lead crypto resurgence in Q1 2023

The first quarter of 2023 saw Bitcoin outperform traditional assets after a 72% quarterly gain in market capitalization.

The cryptocurrency ecosystem has enjoyed a buoyant start to the year as Bitcoin (BTC) and decentralized finance (DeFi) protocols surge in market capitalization through the first quarter of 2023.

These are the key takeaways from the first quarterly Crypto Industry Report published by CoinGecko on April 18. BTC emerged as the best-performing asset of Q1 2023, with gains of 72.4%, outperforming the likes of the NASDAQ index and Gold which marked 15.7% and 8.4% gains, respectively.

The report highlights that all major asset classes saw gains through the first quarter of the year, barring crude oil, which dropped by 6.1%. This decline was attributed to United States inflation data which cited a reduction in oil demand and ill effects of the U.S. banking crisis.

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

The wider cryptocurrency markets have enjoyed a quarter of resurgence, with the overall market capitalization reaching $1.2 trillion at the end of Q1. CoinGecko highlights a 48.9%, $406 billion gain 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 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. The report notes that liquid staking is now the third largest category in the DeFi sector.

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 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.

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