Key Points:
The cryptocurrency market has seen significant developments and trends in the first half of 2023, according to a Q2 review by CoinMarketCap (CMC). While the global crypto market cap increased 48% YTD to $1.17 trillion, Q2 lacked significant developments compared to Q1. However, sectors like DeFi, Memes, and AI have shown remarkable growth in market cap year-to-date, while blue-chip DeFi projects and infrastructure are making a strong comeback. CMC’s report also highlights the most viewed cryptocurrencies and sectors and key themes for H2 2023, including decentralized public infrastructure networks and liquid staking derivatives.
The global crypto market cap increased 48% YTD to $1.17 trillion at the end of Q2, but Q2 lacked significant developments compared to Q1. The CMC Crypto Fear and Greed Index improved from Fear to Neutral, and the Total Spot Trade Volume of the Top 20 Crypto Exchanges peaked in March and declined by around 36% quarter-on-quarter.
However, VR/AR and AI & Big Data have shown remarkable growth in market cap year-to-date, while bluechip DeFi projects and Infrastructure are making a strong comeback. The Memes sector added over 260 new coins YTD, making it the most active sector in terms of new listings.
According to CoinMarketCap data, the cryptocurrency market in the first half of 2023 saw a surge in viewership in several sectors. Memes, DeFi, Collectibles & NFTs, and AI & Big Data were the most viewed of these sectors. The Memes sector, in particular, garnered the most interest in the last three months of H1 2023. This was largely due to PEPE’s explosive rally of over 3700X from April to May. While PEPE retraced from its highs in May, it rallied almost 100% from its lows in mid-June. Other memecoins from previous meme cycles, such as DOGE, SHIB, and BabyDoge, remained in the most viewed of this sector.
Ethereum was the main focus of interest in the Smart Contracts sector after the network successfully underwent the Shapella upgrade on April 12, allowing staked ETH on the beacon chain to be withdrawn. Cardano (ADA) also received significant interest, likely due to technical developments like scaling solution Hydra and governance proposal CIP 1694.
The DeFi sector was mainly concentrated in Terra Classic (LUNC), likely due to events like Binance burning 2.65 billion of LUNC tokens, worth $236K, and the release of Alliance, a cross-chain yield trading protocol, by TFL. The Collectibles & NFTs sector saw considerable interest in the first three months, mainly due to the Blur Season 1 airdrop, but views dropped off in the later half of H1.
AI & Big Data was a new entrant to the most-viewed sectors in 2023, following the launch of OpenAI’s ChatGPT, and the AI narrative took off in Q1 2023. SingularityNET (AGIX) and Fetch.ai (FET) received the most views after bouncing almost 40% from the lows in mid-June. June saw a substantial return in interest in AI-related tokens.
In addition, the document also mentions that besides the blue-chips, other coins are mainly Ethereum Layer-2 scaling solutions, like Polygon, Arbitrum, or competing Layer-1s, such as BNB and Solana. Furthermore, PEPE joined the list of most added coins to the watchlist by CMC users, alongside other established memecoins Dogecoin and Shiba Inu.
The most engaged sector in CMC Community is memes, with the highest views. During the memecoin season in April and May, coins such as PEPE, SNEK, and LADYS experienced explosive pumps. Top gainers for H1 2023 include tokens from the Arbitrum, Radiant Capital, and Optimism ecosystems and layer-one blockchains like Dione Protocol, Conflux, and Injective. Other top gainers include AI-related tokens such as SingularityNET and Render.
Bitcoin ETF
In June 2023, BlackRock filed for a Bitcoin spot ETF, with others like Valkyrie, Fidelity, ARK Invest, and 21 Shares seeking approval for similar Bitcoin ETFs. These ETFs could unlock institutional investor demand for Bitcoin by offering regulated products for asset allocation. Current crypto ETFs and ETPs globally have assets worth $9.5 billion. A surge in demand for Bitcoin could push its price beyond its All-Time High if the new Bitcoin spot ETF approvals are granted.
Decentralized Public Infrastructure Networks
Decentralized Physical Infrastructure (DePIN) provides solutions for access sharing of physical assets or services like warehousing and data networks. Notable players include Helium (decentralized wireless infrastructure), IoTeX (Internet-of-Things hub), Arweave, and Filecoin (decentralized storage).
Real World Assets
There is an ecosystem of projects focused on making RWAs tradeable on-chain. These projects include credit market protocols like Maple Finance and Goldfinch that allow businesses to use DeFi to secure financing and tokenization of RWAs, including real estate, collectibles, stock, intellectual property, and more, which can be traded on-chain with less friction. First, consumer-ready products are expected to launch by year-end.
Liquid Staking Derivatives
Liquid Staking Derivatives (LSDs) saw a surge in activity in H1 2023 due to the Ethereum Shapella upgrade, with market leaders like Lido and Rocket Pool seeing their respective total value locked (TVL) swell by 138% and 220%, respectively. LSD platforms had secured over a third of Ethereum’s TVS by the end of June, with Lido capturing almost 75% of this at its peak. The proliferation of the related LSDfi landscape, with platforms like Pendle, Lybra, and Flashstake, is expected to continue through the remainder of 2023.
Restaking
EigenLayer’s Restaking Smart Contracts were deployed in June 2023 and reached their maximum limits within a day of mainnet launch, demonstrating considerable demand for restaking services. The platform is set to increase its LST restaking capacity, opening the floodgates for a new wave of projects.
ZkSync
zkSync emerged as a popular Ethereum-based layer-2 solution and competition for existing Ethereum optimistic rollups, including Optimism and Arbitrum. With a zkSync airdrop potentially on the way and a slew of projects set to launch on the platform, zkSync is shaping up to be a key player in 2023.
Modular Blockchains (Celestia)
Modular blockchains, like Celestia, separate blockchains into three layers: execution, settlement, consensus, and data availability. It provides developers with modular data availability and consensus layers, which dApps and sidechains can leverage to bootstrap development. Other platforms, including Rollkit (settlement) and Fuel (execution), provide modular execution environments and settlement layers.
FTX Bankruptcy Developments
FTX depositors were left in limbo for months after its collapse last year. In January, it was revealed that more than $5 billion in liquid assets had been shored up from various sources, increasing to over $7.3 billion by April 2023. Creditors were recently contacted by the restructuring firm handling the case and were given a “Customer Bar Date” of September 29, 2023. The FTX legal team is also considering restarting the cryptocurrency exchange, but debtors cannot expect to receive their payout until at least H2 2024.
In H1 2023, Bitcoin (BTC) was the most-viewed cryptocurrency globally, with BTC.D increasing from 40.09% to 50.39% by the end of H1 2023. Shiba Inu (SHIB) and Baby Doge Coin (BabyDoge) were popular memecoins across all regions, while PEPE gained attention in most regions except South America. Ethereum (ETH) remained popular in most regions, with scaling solutions like Polygon (MATIC) and Arbitrum (ARB) gaining attention in South America and Others region.
Top Countries by Users on CMC
The U.S. continues to dominate in terms of the distribution of cryptocurrency users worldwide. 17.4% of traffic in H1 2023 came from users in the United States, with 7.90%, 7.40%, 6.98%, 6.75%, and 6% of users in India, Turkey, Germany, Brazil, and Vietnam, respectively.
DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.
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