Marketing Communication

Reflecting on the Transformative Year of Crypto in 2023

10 December 2023

Menno Martens

Crypto Specialist and Product Manager

As we're approaching the end of 2023, the cryptocurrency industry seems ready to embark on a significant transformation, signalling the start of a promising bull run. Despite the initial calmness that felt a bit like the market taking a long winter's nap at the beginning of the year, asset prices have leapt significantly. This surge contradicts any expectations of stability experienced during the first half of 2023, especially in the case of Bitcoin.

Now, let's dive into the pivotal events that have guided the path of the crypto space throughout this dynamic year.

Recap of Crypto in 2023

NFTs Enter Bitcoin's Realm

NFTs, those unique and non-interchangeable digital assets residing securely on blockchains, found their way into Bitcoin's realm. While Bitcoin has been a veteran in the crypto sphere, its recent embrace of NFTs has proven lucrative, grossing around $401 million trading volume in November, albeit trailing Ethereum's staggering $433 million (Cryptoslam, data of 10/29/2023 to 03/12/2023). Despite lagging behind Ethereum, Bitcoin's NFT sales still outstrip those on the Solana network by nearly fourfold, amounting to approximately $97 million. The expansion of inscriptions to other networks underlines the burgeoning value of block space, emphasizing its critical role. There is an ongoing debate on how the Bitcoin Blockchain should be used, opponents of Ordinals (Bitcoin-based NFTs) declare them as spam attacks while proponents see it as part of the freedom that decentralization brings.

MiCAR and Europe's Regulatory Push

The finalization of MiCAR in 2023 fortified Europe's position as the global vanguard in comprehensive crypto regulation. The Markets in Crypto-Assets (MiCA) regulation aims to standardize the crypto-assets framework across the European Union. MiCA promises legal clarity for issuers, service providers, and users, bolstering consumer protection and market integrity. Additionally, it fosters a level playing field, nurturing innovation and competition among market participants.

Tokenized Real-World Assets (RWAs) Shine

The ascent of digitally native tokenized assets witnessed remarkable growth in 2023. The market capitalization of tokenized RWAs surged from zero to over 400M$ (Dune, data as of 10/12/2023), reflecting a monthly growth rate of approximately 6%. Their value stems from real-world assets, demand for the blockchain version of the asset, and utility within the blockchain ecosystem (for example within DeFi), a trend indicating potential future growth.

Non-Blockchain Cryptocurrencies Step Forward

Emerging as potential alternatives to blockchain-based counterparts, non-blockchain cryptocurrencies address scalability and transaction speed constraints. The market share and user adoption of these assets have increased, with examples like Hedera Hashgraph, Nano, IOTA, Kaspa, SUI, SEI, and other smaller players gaining traction. The rise of Directed Acyclic Graph (DAG) based ledgers highlights an evolution in technology, hinting at a potential successor to traditional blockchain frameworks. This information should not be understood as financial advice for particular digital assets.

Staking Surge in Ethereum and Other Proof-of-Stake (PoS) Cryptocurrencies

Staking, a practice embraced not only by Ethereum but also by various PoS-based cryptocurrencies, has witnessed a surge in participation. This trend stems from technological advancements, increased institutional involvement, and a quest for additional yields in a bearish market. Ethereum's staking ratio has surged from 12% to nearly 25% (Stakingrewards.com, data as of 10/12/2023), accentuating its deflationary nature and intensifying pressure on its limited circulating supply.

Airdrops and Token Unlocks: Christmas Year-round

Largest Airdrops of 2023 (by $ value)

Airdrops in the cryptocurrency context are events where tokens or coins are distributed for free to the wallets of active members of the blockchain community, often as a promotion or reward for loyalty. They are used by new or existing projects to increase awareness, distribute tokens widely, and incentivize participation in the network. Airdrops can also serve as a way to reward early adopters or users who perform specific tasks within the ecosystem. Some of the largest airdrops that happened this year include:

Project	Description	Airdrop in tokens and dollar value
Arbitrum	Arbitrum is an Ethereum layer-two (L2) scaling solution.	1.1 billion ARB (approx. $1.5B)
Jito	Jito Network is a liquid staking provider on Solana	90 million JTO (approx. $225M)
Blur	Blur is a non-fungible token (NFT) marketplace	360 million BLUR (approx. $185M)
Worldcoin	Worldcoin is a layer-one (L1) co-founded by Sam Altman	43 million WLD (approx. $110M)

Source: Coinmarketcap, data as of 10/12/2023. Historic performance is not an indicator of future results. This information should not be understood as financial advice for particular digital assets.

Largest Token Unlocks (by $ value)

Token unlocks refer to the scheduled release of previously locked or reserved tokens into the circulating supply of a cryptocurrency. These events are typically outlined in a project’s tokenomics and can occur at various intervals, often after an initial coin offering (ICO) or similar fundraising event. Token unlocks can impact the market by increasing the available supply, which may affect the token’s price depending on the demand. Thanks to Blockchain's transparency, anyone can access this information.

Project	Description	Tokens unlocked and dollar value
Aptos	Aptos is a Layer 1 Proof-of-Stake (PoS) blockchain	67.5 million APT (approx. $470M)
Worldcoin	Worldcoin is a layer-one (L1) co-founded by Sam Altman	443 million WLD (approx. $1.10B)
Solana	Solana is a Layer 1 Proof-of-Stake (PoS) blockchain	31 million SOL (approx. $2.30B)
Avalanche	Avalanche is a Layer 1 Proof-of-Stake (PoS) blockchain	72 million AVAX (approx. $2.17B)

Source: token.unlocks.app, data as of 10/12/2023. Historic performance is not an indicator of future results. This information should not be understood as financial advice for any particular digital asset.

Examining the Performance Metrics: Biggest Winners and Losers of the Year

As we evaluate the transformative journey of cryptocurrencies throughout 2023, it's essential to delve into various performance metrics that illuminate their growth and decline.

Price Performance

The Year-to-Date (YTD) price performance, depicted in the column chart, showcases the percentage increase or decrease in value of each token.

Source: MarketVector, data as of 06/12/2023, Historic performance is not an indicator of future results.

Total Value Locked (TVL) and Market Capitalization

The Year-to-Date (YTD) TVL performance, depicted in the column chart, showcases the percentage increase or decrease in total value locked (TVL) or total value secured (in the case of Chainlink) for each token.

Source: Defillama, data as of 06/12/2023, Historic performance is not an indicator of future results.

The Year-to-Date (YTD) TVL performance, depicted in the column chart, showcases the percentage point increase or decrease in the percentage of market share of each token.

Source: Coinmarketcap, data as of 10/12/2023. Historic performance is not an indicator of future results.

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