March in Figures: Inflows to DeFi and Bitcoin’s Recovery Amid the Banking Crisis

• The number of small addresses — balance ≥0.01 BTC — continued to rise toward new highs after the late February–early March dip that tested the $20,000 price level.
• A similar, though less pronounced, pattern is seen among other retail addresses — for example, those with ≥1 BTC balance. Since the start of the year, the metric for this category has grown by 1.3%.
• The growth in small-address balances may point to a gradual increase in new crypto investors and their desire to accumulate more digital gold amid turmoil in traditional finance.

• Analysts at Glassnode concluded that amid March’s rally investors boosted the inflow of Bitcoin to centralized platforms to 4,180 BTC (14D-EMA) — a maximum since Terra’s collapse in May 2022. The trend underscores profit-taking by many market participants.
• However, observations suggest that over 90% of coins moved to exchanges in late March belonged to speculators.
• For hodlers, the stance remains unyielding, as shown by the Liveliness. The indicator continues to point to large players’ willingness to hold Bitcoin and confidence in the asset’s prospects.

• Since activation of EIP-1559, the Ethereum network has burned over 3 million coins. Of these, more than 92,000 ETH burned in March (around 85,000 ETH in February). The burn rate has accelerated for the third consecutive month, aided by market recovery and rising DeFi activity.
• According to Ultrasound Money, over the last 30 days the supply of Ethereum decreased by 33,000 ETH. The largest net outflow (8,500 ETH) occurred through Uniswap-related operations, with transfers between network participants (~5,450 ETH) following.
• As of March, the share of ETH and its locked value in smart contracts rose to 26.96%. .
• Over the period, total Ethereum on centralized exchanges fell by 3.5%. The two latest metrics point to growing investor interest in decentralized applications of the ecosystem ahead of the Shapella upgrade, which will activate on 12 April.

• In March, the number of validators rose by 3.5% to 570,653. The amount of assets in staking surpassed 18 million coins. Since the start of the year, the metric has grown by almost 14%.
• The number of unique addresses that deposited 32 ETH or more remained essentially unchanged over the month.

• At month’s end, Lightning Network capacity fell by 7%. In February the metric had recorded an all-time high of 5,206 BTC.
• The number of nodes and channels also dropped by 22% and 19% respectively. The trend may reflect rising popularity of services that provide users with payment infrastructure, such as Kraken’s offering.
• According to mempool.space, almost 55% of nodes are hosted on Google and Amazon cloud servers.

• Against a recovering market, Bitcoin’s hashrate (7 MA) hit a fresh high near ~350 EH/s. Since the start of the year, the metric has risen by ~26%. The steadily rising trend signals confidence in Bitcoin’s long-term prospects and in mining.
• The mining difficulty, closely tied to hashrate, again reached an all-time high — 46.84 T. Since the start of the year the indicator has risen by ~33%.

• Despite rising difficulty, Bitcoin’s hashprice resumed its recovery — at the end of March it stood at $0.08373, and by month-end around $0.078.
• The hashprice is up about 31% year-to-date, largely offsetting the drop in mining profitability from higher difficulty.

• Total miner revenue rose 21% month-on-month to $757.8 million — the highest in ten months.
• The share of fees in miner revenue rose above 3% for the first time since June 2021. This reflects stronger on-chain activity, as shown by daily transaction counts in the Bitcoin blockchain (the measure reached May 2021 levels). At the same time, Ordinals-related activity in March slowed.

• In the last month the average fee per Bitcoin transaction rose 98% from $1.56 to $3.09. On March 24, the measure peaked at $4.14, a level not seen for a little over a year.
• The average Ethereum transaction fee remained largely unchanged, hovering above $5. Despite a drop in activity, on March 11 the metric exceeded $16 but quickly returned to balanced levels.

• In March, trading volume on leading platforms rose 8% to $843bn.
• Despite the elimination of fees on the BTC/USD pair on Binance, activity across the board did not change meaningfully. Platform-wide volume rose amid market activity, reaching $556bn.
• Most ForkLog-tracked exchanges improved their positions, with Gate.io notably rising from $20bn to $43bn in March.

• For the first time since summer 2022, Bitcoin futures volume exceeded $1.3 trillion. The best quarter since last November was also seen for Ethereum-based contracts — $703bn.
• Options were in demand amid market recovery — $32.1bn for Bitcoin and $14.6bn for Ethereum (figures close to historical highs).

• Despite elevated activity in Bitcoin futures, open interest has trended lower since late 2023 (from 660,000 BTC in October to 407,000 BTC at the end of March).
• Meanwhile, the aggregate Bitcoin option open interest reached a record high of 523,000 BTC. The subsequent quarterly expiry pulled the figure back to around 326,000 BTC.

• In March, TVL in smart contracts of DeFi projects rose 3.5%, to $84.44 billion over the period. At the peak, driven by the Arbitrum ARB airdrop, TVL reached $86.44 billion.
• In the backdrop of ARB distribution, Layer-2 TVL grew 14% for March. Ethereum remains the undisputed leader, accounting for more than 66% of the total.

• Most DeFi top-20 assets ended March in the red. MakerDAO (MKR) suffered the worst, down 21%, due in part to the depeg of the platform’s DAI stablecoin following USDC issues.
• The strongest performer was Solar (SXP), up 94%. The price movement is linked to the migration to its own blockchain and Binance’s support for the token.
• On Ethereum, Lido remains the leader in TVL for liquid staking. Its TVL rose almost 20% in March, driven by the approaching Shapella hard fork.

• Decentralised exchanges continued to dominate the overall DeFi TVL — at the time of writing, they account for about 22% of the total, or $18.69bn.
• March saw a notable inflow into liquidity-providing DApps — the segment’s TVL rose 15%, with Ethereum accounting for more than 66% of the total.
• Over the period, the aggregate market cap of “Bitcoin on Ethereum” shrank by almost 10%, to $4.57bn.

• The Tron blockchain remains the leader in on-chain activity. In March the network processed an average of 7.06 million daily transactions, above February’s 6.8 million.
• The Arbitrum metric rose by 55% — as an L2 solution it processed 955,466 transactions on average, still below Ethereum’s ~1.07 million.
• Meanwhile, in terms of intraday activity, the network repeatedly outpaced Ethereum’s blockchain in transactions. For example, during the ARB airdrop, transactions exceeded 2.73 million.

• March saw notable revival in the decentralised exchange segment — trading volume reached $129bn. Of that, Uniswap accounted for $72.8bn, SushiSwap for $17.8bn, and Curve for $17.5bn.
• This was driven by several factors. In the wake of a successful ARB drop, users redirected substantial liquidity to DeFi and actively used DEXs. The ARB distribution itself also drew funds into protocols.
• In early March the industry also faced triggers. As noted, the SEC took action against SushiSwap’s leadership, affecting its volumes. Difficulties at the USDC issuer also aided the metric’s rise as investors rushed to exit the asset (stablecoins were in demand in DeFi).

In March, stablecoins’ market capitalisation slipped to $131bn, influenced by the U.S. banking crisis.

On March 11, the second-largest stablecoin USD Coin (USDC) lost parity with the U.S. dollar due to problems at Silicon Valley Bank (SVB), which was closed during the banking turmoil. The issuer Circle held $3.3bn in the bank, which were blocked. The company immediately announced plans to use its corporate reserves and external capital to cover the shortfall, but investors did not stop.

Because USDC is actively used in DeFi and as collateral for other assets, a cascading effect followed — decentralised stablecoins DAI and FRAX also lost their dollar pegs. The situation was resolved in favour of SVB clients — authorities announced a rescue, and USDC returned to its $1 target.

Despite the resolution, USDC’s market cap continued to decline, finishing March down by $9.1bn. In contrast, Tether (USDT) grew by $8.7bn.

In March, True USD (TUSD) issuance doubled, supported by Binance (rising from $1bn to $2bn). As Binance gradually exits Binance USD (BUSD), it converted stablecoins into SAFU reserves in TUSD and USDT. Moreover, Binance’s zero-fee trading now operates only in the BTC/TUSD pair.

The Blur marketplace cemented its position as the leading platform in the NFT space, eclipsing OpenSea. In March, daily volumes were on average three times higher.

• Flagship BAYC collections showed weakness, while premium tokens CryptoPunks drew renewed interest from NFT collectors.
• Solana ecosystem performed well with DeGods and y00ts delivering strong results.
• Among blockchains, Polygon, ImmutableX and Arbitrum showed positive momentum.

• In March, Yuga Labs held an auction for TwelveFold NFT on Bitcoin, raising $16.5m and reaffirming the Bitcoin-Ordinals trend.
• Ordinals surpassed 700,000 in total, and a peak 13 BTC in protocol fees was paid by March 24. In total, users paid 153 BTC for NFT issuance.
• PlayStation maker Sony filed a patent for NFT products in 2021. The document describes infrastructure enabling holders to own and transfer NFTs across platforms.
• According to media, an Amazon NFT marketplace launch is planned for April. Meta, by contrast, rejected pursuit of NFT initiatives.

• One of the largest Bitcoin holders, MicroStrategy, toped up 6,455 BTC between February 16 and March 23, 2023. The total purchase was around $150m, acquired at an average price of $23,238.
• Marathon Digital Holdings also increased its digital reserves substantially, aided by record mining outputs — averaging 11.4 BTC per day.
• Riot notably surged due to record mining in 2022 (5,554 BTC — up 46% versus the prior period).

• Open interest (OI) in Bitcoin futures on the CME fell by 5% over the month, but the uptrend remains intact.
• At month-end the number of long and short positions among large players (Non-Commercial and Commercial) were roughly level, though among retail traders long positions were notably dominant.

• Open interest in Ethereum futures on CME was down 37.5% by the end of March, but the upward trend remains intact.
• Among Commercials with rising edge, longs outnumber shorts, indicating optimism among large market participants ahead of the Shapella upgrade.

Venture rounds

Regulation

Crypto exchanges halted operations on hryvnia bank cards for Ukrainian users amid the fight against illegal gambling.

• In the United States, policymakers proposed taxing miners 30% of electricity costs.
• The U.S. Internal Revenue Service plans to classify NFTs as tangible art and tax accordingly.

French authorities adopted new rules for registering crypto companies.

Belarus extended tax relief for the Bitcoin industry until 2025.

Denmark court explained the principles of taxing profits from Bitcoin.

Thailand relaxed tax rules for issuers of investment tokens.

European Parliament passed a law on digital wallets and will require crypto platforms to comply with AML requirements.

Bitcoin will be categorized in a separate category on UK tax returns.

Hong Kong’s financial regulator will hold a meeting between crypto firms and banks, “to foster direct dialogue and knowledge sharing.”

Month’s materials

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