Bitcoin and floating staking protocols lead to crypto resurgence in Q1 2023

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

This is the key from the first quarterly Crypto Industry Report published by CoinGecko on April 18. BTC emerged as the best performing asset in Q1 2023, with gains of 72.4%, outperforming 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, except crude oil, which fell 6.1%. This decline was attributed to US inflation data citing a reduction in oil demand and ill effects of the US banking crisis.

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

The broader cryptocurrency markets have had a quarter of a resurgence, with the total market capitalization at $1.2 trillion at the end of Q1. CoinGecko highlights a gain of 48.9%, $406 billion from the cryptocurrency market cap of $829 billion by the end of 2022.

The DeFi space was another standout performer, rising $29.6 billion in value through the first quarter. The report cites the impressive performance of floating stake management tokens, which had a 210% increase in market capitalization since the start of 2023.

Ethereum’s Shapella upgrade played an important role in driving the increase in capital flows into liquid staking pools, with the network’s upgrade finally unlocking ETH reward withdrawals. The report notes that liquid staking is now the third largest category in the DeFi sector.

Related: Ether Hits 11-Month High As Withdrawals After Shapella Pass 1M ETH

While Bitcoin and DeFi have been big movers so far this year, the top 15 stablecoins saw their market capitalizations drop by $6.2 billion. CoinGecko attributes this 4.5% drop in market cap to the shutdown of Binance USD by Paxos and the temporary depegging of USD Coin (USDC) during the March 2023 collapse of Silicon Valley Bank.

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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.

Non-fungible token trading volume has also increased again in 2023, marking a 68% increase from Q4 2022 to $4.5 billion during the first quarter of 2023. NFT market newcomer Blur accounted for the majority of NFT trading volume since launch in October 2022, and accounted for 71.8% of the NFT market share in March 2023.

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