As 2023 comes to a close, Kaiko Research reflects on the year’s crypto landscape through over 800 charts, highlighting Bitcoin‘s standout performance with a 160% increase, outpacing traditional assets. The year for Bitcoin was marked by a strong early rally, a mid-year stagnation, and an impressive year-end surge signaling a potential new bull market.
Binance started the year as a dominant force on centralized exchanges but faced significant changes. Market dominance waned following the halt of zero-fee trading pairs, leading to a 50% market share drop. Despite facing legal challenges, including accusations by the CFTC and SEC and a substantial fine, Binance’s settlement is seen positively, allowing its operations to continue.
The Alameda Gap, identified by Kaiko over a year ago, continues to be relevant post-FTX collapse, indicating a 50% decrease in market depth at 1%. This liquidity gap, attributed to institutional caution, presents challenges and opportunities for the sector.
Crypto markets are witnessing liquidity concentration, with the top 8 exchanges holding over 90% of market depth and volume. While this concentration offers benefits, it also poses potential failure points, as seen during the FTX collapse, making the balance between concentration and market resilience a focal point for the industry.
Bitcoin’s role as a hedge and alternative asset evolved in 2023, with a declining correlation between Bitcoin and traditional assets. As Bitcoin surpassed $40,000, its reduced correlation with traditional assets and macro conditions questioned historical ties and set the stage for a new narrative.
Contrary to expectations following the FTX collapse, Solana not only survived but thrived, outperforming Ethereum and boosting network activity with successful airdrops. Meanwhile, stablecoins faced challenges, such as USDC’s significant depeg during the March crisis and Tether‘s discounted trading, highlighting the complexities of stablecoin valuations.
In summary, 2023 was a dynamic year for the crypto industry, characterized by Bitcoin’s resilience, shifting landscapes of major exchanges, and various tokens and protocols facing challenges and successes.