The recent H1 2023 report released by CoinMarketCap (CMC) provides valuable insights into the cryptocurrency market’s performance and key trends during the second quarter of the year. The report highlights several noteworthy findings that shed light on the industry’s recent developments.
Cryptocurrencies were worth $1.17 trillion in the second quarter, up 48% year-to-date. Q2’s market value was almost identical to Q1’s, making it seem like an unsuccessful quarter in crypto.
In Q1, the bitcoin price doubled, L2s like Arbitrum and ZK grew, and product improvements and Blur’s token issuance boosted the NFT market. However, Q2 did not deliver revolutionary advancements. Instead, Q2 had “memecoin season” and BRC20 tokens, which were noticeable but not as enthusiastic as the previous quarter. Key highlights include:
Total Spot Trade Volume of the Top 20 Cryptocurrency Exchanges: The CMC Crypto Fear and Greed Index increased from 30 (Fear) to 52 (Neutral) at the end of the first quarter, signaling a substantial market change. Total Spot Trade Volume for the Top 20 Cryptocurrency Exchanges peaked in March and then fell by around 36% quarter over quarter to reach an almost stagnant $523 billion per month by the end of June.
The top 10 sectors by YTD market cap growth: VR/AR (704%) and AI & Big Data (323%) are dominating the market narrative, while bluechip DeFi initiatives and Infrastructure are making a solid return. Some of them are Lending & Borrowing (149%), Derivatives (75%), Storage (86%), and Interoperability (58%). The Memes sector had the most new listings YTD with around 260 coins. AI & Big Data contributed 61 coins, while DeFi added 47.
Bitcoin Price and Key Events: Bitcoin Ordinals increased its user base in Q1. This was followed by the dramatic U.S. bank collapse. From there BTC price started climbing and breached the $30k mark. Several events unfolded, however, the BTC price still managed to stay above the $30k level.
Ethereum Price and Events: The year started with the SSV network launching a $50M ecosystem fund. This was followed by Vitalik Buterin calling to improve the Ethereum network as a form of payment, in the last week of February. Similar to BTC, Ethereum price started climbing post U.S bank collapses and breached the $2k mark. However, it was not able to maintain above that level for long.
Most Popular Coins and Sectors: The Memes sector had a boom in H1 2023, with PEPE driving the rally. Due to technological developments, Cardano attracted attention while Ethereum (ETH) remained the preferred choice for Smart Contracts. Terra Classic dominated attention in DeFi, while SingularityNET and Fetch.ai experienced a rise in interest in AI & Big Data.
Most Community Engagement: As one of the currencies that CMC users put to watchlists the most, PEPE joined venerable memecoins Dogecoin and Shiba Inu. Memes, which also happened to be the most popular sector in CMC Community, attracted the greatest participation. Explosive pumps for currencies like PEPE, SNEK, and LADYS occurred during the Memecoin season in April and May.
Top Performing Coins in H1 2023: Tokens from the Arbitrum and Optimism ecosystems, such as Pendle (PENDLE), Radiant Capital (RDNT), and Velodrome Finance (VELO), were among the top gainers in H1 2023. Significant rallies were also seen on layer-one blockchains including Dione Protocol (DIONE), Conflux (CFX), and Injective (INJ). Additionally, top performances included tokens with an AI focus like SingularityNET (AGIX) and Render (RNDR).
Bitcoin ETF: BlackRock and other industry pioneers filed for a Bitcoin spot ETF in June 2023, raising hopes for the SEC’s approval. The $9.5 billion in assets held by the existing global crypto ETFs and ETPs demonstrates the significant demand for regulated crypto products.
Decentralized Physical Infrastructure Networks: A trending narrative, DePIN (Decentralized real Infrastructure) permits the sharing of physical goods and services via token incentives and access made possible by staking, burning, or buying tokens or NFTs. Helium (decentralized wireless infrastructure), IoTeX (Internet-of-Things hub), Arweave, and Filecoin (decentralized storage) are notable participants in this nascent market.
Real World Assets: The DeFi ecosystem is attempting to implement credit market protocols like Maple Finance and Goldfinch so that Real-World Assets (RWAs) may be traded on-chain. Further developments in the RWA field are anticipated for H2 2023 and beyond, with consumer-ready goods perhaps debuting by year’s end.
Liquid Staking Derivatives (LSDs): Liquid Staking Derivatives (LSDs) saw a sharp increase in activity in H1 2023, mostly as a result of the Ethereum Shapella update. Total value locked (TVL) increased significantly for market leaders Lido and Rocket Pool. By the end of June, LSD platforms had accounted for more than one-third of Ethereum’s TVL, with Lido reaching a peak share of around 75%. Platforms like Pendle, Lybra, and Flashstake saw huge rises in TVL, and this trend is anticipated to continue for the remainder of 2023, as did the related LSDfi landscape.
Restaking: With the release of EigenLayer in H1 2023, users were able to reuse staked ETH or liquid staked ETH tokens for increased profit and shared security. After the mainnet’s introduction, EigenLayer’s Restaking Smart Contracts swiftly attained their maximum limits and showed strong demand. The platform is anticipated to draw greater attention and spur the development of new enterprises as it expands its capacity for restaking.
zkSync: In 2023, zkSync, a layer-2 Ethereum-based solution that competed with Optimism and Arbitrum, gained popularity. ZkSync’s TVL has increased significantly since the debut of its alpha mainnet in March 2023, reaching $686 million by H1 2023 with more than 1.1 million unique wallets and 1.38 million transactions. ZkSync will be a major factor in 2023 thanks to an impending zkSync airdrop and other projects that want to debut on the platform.
Modular Blockchains (Celestia): By segregating execution, settlement, consensus, and data availability into separate levels, modular blockchains like Celestia seek to resolve the blockchain trilemma.
FTX Bankruptcy Updates: As of April 2023, over $7.3 billion in liquid assets have been secured, bringing relief to clients. Creditors have been issued a “Customer Bar Date” of September 29, 2023, and the restructuring process is proceeding. Although compensation to debtors is not anticipated until at least H2 2024, the FTX legal team is contemplating reopening the exchange.
Most Viewed Coins in Different Regions: The most popular cryptocurrency in the world in H1 2023, Bitcoin (BTC), continued to dominate altcoins. While PEPE gained popularity everywhere outside South America, Shiba Inu (SHIB) and Baby Doge Coin (BabyDoge) were also widely used memecoins. Except for Asia and Africa, where scaling solutions like Polygon (MATIC) and Arbitrum (ARB) respectively gained favor, Ethereum (ETH) remained popular in most locations.
Countries with the Highest Number of Users on CMC: The US continues to lead the world in terms of cryptocurrency users on CMC, accounting for 17.4% of all traffic in the first quarter of 2023. With varied percentages of users, India, Turkey, Germany, Brazil, and Vietnam are the next. Users in Europe and Asia make up the bulk of the remaining traffic.
The report from CMC covers the state of the crypto market in the first quarter, including significant trends and performance metrics for each market sector. Participants in the sector and potential investors may benefit greatly from these insights in order to better comprehend current trends and make sound decisions.
