With a 109% increase in total market capitalization, 2023 marked a “largely favourable turnaround” for the crypto industry, according to a Binance report.
#Binance Research is delighted to announce the release of our comprehensive industry year-in-review report.
We uncover the top crypto industry dynamics of 2023 and discuss key trends as we head further into 2024.
Check it out ?https://t.co/okLKsocwjx
— Binance Research (@BinanceResearch) January 15, 2024
In the first and fourth quarters of the year, the digital asset market showed significant growth. Optimism in the final quarter was largely driven by the anticipated approval of spot Bitcoin ETFs in the United States.
On a broader scale, favourable macroeconomic factors for cryptocurrencies included steady global GDP growth and easing inflation levels. This fueled investor interest in high-risk assets, according to Binance experts.
Among the main trends of 2023, they noted the strengthening dominance of L1 blockchains led by Bitcoin, which regained more than half of the total capitalization. Leading altcoin networks like Ethereum, BNB Chain, Solana, Avalanche, Cosmos, and others supported the leader, exchange specialists noted.
Bitcoin, along with Ethereum, outperformed most popular TradFi indices in terms of annual returns.
On-chain metrics of the first cryptocurrency network were significantly supported by the boom in Ordinals and BRC-20 tokens. By the end of the year, users had issued over 53 million “inscriptions,” generating fees exceeding $230 million.
The excitement led to the average share of transaction fees in Bitcoin miners’ revenue reaching 5.5% for the year, compared to 1.6% in 2022. Experts believe this could provide significant financial support to cryptocurrency miners ahead of the expected halving in April 2024, when the block reward will decrease from 6.25 BTC to 3.125 BTC.
Leading up to 2023, one anticipated event in the Ethereum ecosystem was the unlocking of staking withdrawals following the activation of the Shapella hard fork. There were concerns that this opportunity would lead to an outflow of assets, Binance recalled.
However, by the end of 2023, there was an inflow of over 9.4 million ETH into protocols for passive income. LSD platforms, led by Lido, accounted for nearly 50% of this volume.
The total TVL of second-layer networks also increased by 321.3% over the year. Rollups solutions control more than 80% of the market.
The volume of daily transactions in L2 solutions reached 77.2% of the total operations in the Ethereum ecosystem.
In the fourth quarter, the NFT segment showed signs of recovery. In December, trading volumes reached a 2023 high of $1.7 billion. A notable event was the impressive launch of the Blur marketplace-supported L2 protocol Blast. Binance analysts believe a response from the former market leader OpenSea, which is losing market share, should be expected.
One of the trends of 2023 was the launch of the social platform Friend.Tech based on Coinbase’s L2 solution Base, according to Binance experts. The success of the project and its forks demonstrated the potential of the SocialFi sector, analysts believe.
Over the past year, in the stablecoin segment, centralized assets led by Tether’s USDT increased their dominance to 70.6% of the total market capitalization.
Among the trends expected in 2024, Binance specialists anticipate:
- institutional adoption of Bitcoin;
- development of ownership economy applications;
- expansion of the artificial intelligence sector;
- growth of the real-world asset tokenization sector (RWA).
Earlier, CoinShares specialists assessed the prospects of public Bitcoin miners in light of the upcoming halving.