The year 2023 started off positively, with the market quickly recovering from the FTX crash and Bitcoin prices reaching levels close to those of June 2022. Despite some issues in Q1, particularly in the traditional finance sector, the crypto market is flourishing with airdrops, new projects, and increased investment activity in web3. The macro picture is mixed, with global markets battling inflation and a potential recession, while the banking crisis may be resolved by printing more money. This creates uncertainty for the crypto market’s performance, but it’s clear that the problems of traditional finance are increasing adoption and trust in Bitcoin. Will crypto prices go up until the end of 2023? Let’s analyze what happened so far.
The Current State of the Crypto Market
Bitcoin saw a turning point in early 2023 as it started to grow after a period of low volatility, resulting in a successful January and overall positive performance for the crypto market. Although February was average, March saw new heights reached. Among the top performers for the quarter were Solana, Lido, and Aptos, which showed significant gains. Despite some negative events, such as the Genesis drama and the collapsing banks, the market remained strong and diverse, with gains seen in the DeFi category and in projects with AI features. Projects based on Layer 2 blockchains, such as Arbitrum and Optimism, also performed well. Overall, the market showed resilience in the face of traditional financial instability.
Airdrop Season is BACK
During February, a significant event occurred in the cryptocurrency community – the first major airdrop in a long time. Blur, one of the largest NFT marketplaces, gave away tokens worth around $300 million. Blur aimed to engage with the community and reward loyal NFT traders, a decision that proved worthwhile for both Blur and its users. As a result, Blur became the largest NFT marketplace, surpassing OpenSea, and users received a substantial airdrop, along with several incentivizing activities to attract and retain new users.
In March, the airdrop activity became even more impressive. In the middle of the month, Arbitrum announced its airdrop plan and the launch of the DAO, which garnered a lot of attention and became the biggest airdrop ever. ARB quickly entered the top 50 and holds a strong position in the chart.
The rise of airdrop activity is a strong boost to the crypto market, as it attracts new users and encourages old ones to become more active, leading to an increase in project fees. Blockchain infrastructure projects are primarily interested in airdrops, as they represent the backbone of crypto. The hunt for airdrops will probably signify a market recovery before a new bull run begins.
The DeFi Setor is recovering
DeFi has been slowly recovering along with the growth of the market, but it’s still behind Bitcoin’s growth. However, new trends like liquid staking are emerging, and this is a good sign for the DeFi market’s recovery. Staking is important for Proof-of-Stake networks and is a significant source of income for validators and delegators. The upcoming Ethereum update, Shapella, will allow staked ETH withdrawals, which will make liquid staking even more popular.
DeFi users are showing interest in decentralized liquid staking providers, with Lido and Rocket Pool being the biggest ones. Liquid staking protocols have surpassed lending and borrowing protocols in terms of combined TVL, and are now second only to DEXs, with 78 protocols having a combined TVL of over $16 billion. DeFi’s total value locked increased by nearly 40% since the start of the year, and Ethereum retains its leading position among blockchains, with Tron and others following behind. Some notable projects that launched on new networks and gained attention, like Camelot, Velodrome, and Gains Network, saw a significant increase in TVL. Additionally, Lightning Network, one of the top 15 projects, performed well due to the growing adoption of Bitcoin as a means of payment.
Layer 2 Hype is BACK?
The adoption of Layer 2 blockchains began in 2022 and gained momentum in 2023 with the popularity of Optimism and Arbitrum’s incentivizing activity. These L2 blockchains provide faster transactions, lower costs, and better capacity compared to Ethereum. Following Arbitrum’s successful airdrop, several other L2 projects launched their mainnets and testnets, including zkSync Era and Polygon’s zkEVM. Many companies, including ConsenSys and Coinbase, are also developing their own zero-knowledge technologies and L2 networks.
Crypto Fundraising Trends
In the crypto industry, investors are leveraging the rising trend by investing in infrastructure and service projects. After a drop in fundraising due to the FTX collapse, there was decent growth in January and even better in March. Token sale activity saw relief in February, and in March, the monthly raise exceeded those of May. AI projects were among the best performers, and Space ID showed one of the best performances on Binance. In Q1 2023, projects on Arbitrum led by the total amount raised in token sales, while BNB Chain and Ethereum surpassed Arbitrum by the number of projects that held a public sale during the quarter.
NFTs are still Recovering
Despite an increase in trading volume, the NFT market is not experiencing significant growth like Bitcoin, altcoins, and DeFi. The increase in trading volume is mainly due to Blur’s airdrop, but the expected significant increase in price (denominated in ETH) has not happened. The total NFT market cap has only slightly reacted to the increase in trading volume. The market is not yet ready for growth, as it was heavily pumped in 2021 and is still in a cooling-off period. However, NFT adoption is continuing with the use of non-fungible tokens by non-crypto brands and corporations.
Conclusion: Will Crypto Prices go UP?
The crypto market is currently experiencing a very positive period, with critical levels being broken and the market showing readiness for growth, even in the face of negative news. While volume is still relatively low and volatility is worth considering, compared to late 2022, the markets are awakening. A chain of positive events, triggered by high expectations, has stimulated increased activity and prices, reinvigorating fundraising, both private and public. Despite challenges such as the upcoming Bitcoin halving and global economic issues, crypto is steadily becoming an essential part of the global economy, with more entities choosing to work with it. Cryptocurrencies may also prove their strength in challenging financial times, solidifying their place in the global payment system.
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