Binance Research, the research branch of the Binance exchange that provides institutional-level insights and in-depth analysis on the world of cryptocurrencies, has released today its annual review report on the cryptographic industry, “Full Year 2023 and Themes for 2024“.
The report provides an in-depth analysis of the factors that have driven the crypto market in the past year, exploring topics such as Bitcoin, DeFi, NFTs, blockchain games, and much more, and identifies future trends for 2024.
Let’s retrace together with Binance Research the milestones of 2023 and project ourselves into the future by revealing the new market trends.
All the details below.
Binance Research: Reflection on the Evolution of the Cryptographic Industry in 2023
Binance Research has identified the main drivers of the evolution of the crypto market in 2023, which has experienced a significant structural change.
The first point of reflection concerns the market capitalization of the entire cryptographic sector, which has increased by 848 billion dollars in the last year (109%), fueled by excellent performances of the major coins in Q1 and Q4.
After a terrible 2022 in which over $1.4 trillion of market capitalization was lost, resulting in an overall decline of 65%, in 2023 we witnessed a partial recovery of this metric.
What has stimulated the growth of the market above all else has been a favorable macroeconomic environment for high-risk assets such as cryptocurrencies, with global GDP growth accompanied by monetary policies that are less aggressive from the USA.
In the last quarter of the year, optimism has been accompanied by the increasingly mainstream narrative of the Bitcoin spot ETF, which was then approved a few days ago, and by the pre-halving euphoria of the first decentralized currency.
Another key factor of 2023 analyzed by Binance Research concerns the total market capitalization of stablecoins.
Despite a significant rebound in October, last year cryptocurrencies with a peg to a fiat currency decreased their overall presence by 5.2%.
According to Binance, various dynamics of the crypto market have led centralized stablecoins to attract dominance, reaching a quota of 92% compared to decentralized counterparts, with USDT currently representing 70.6% of this entire niche.
It is worth noting in this context the emergence of more and more actors who use Collateralized Debt Positions (CDPs) and stablecoins supported by LST in their new projects.
The progress of the cryptographic market in the last year has been driven by an increase in investments for web3 projects.
Binance Research has identified a total of 1173 investments in this field, with a total capital of 9 billion dollars.
Of the total, 36.5% was invested in infrastructure projects, followed by 13.3% in CeFi and 8.6% in DeFi.
Despite the evident reduction both in investment volume and overall evaluations in 2023, there are positive indicators, including signs of market recovery and a considerable capital allocated to infrastructure construction.
On-chain analysis of Defi and NFT markets
The research branch of the Binance cryptocurrency exchange has also used on-chain metrics to offer interesting insights into the evolution of the crypto market in 2023.
It is worth noting in particular how Non-Fungible Tokens (NFT), after the first 3 disastrous quarters that accompanied most of the year with low trading volumes, have experienced a significant recovery in Q4.
The December volumes of 1.7 billion US dollars were the highest of 2023, with Bitcoin NFTs showing the most impressive growth.
The market for non-fungible tokens on Solana has also seen a strong increase in trading activity in the last part of the year, simultaneously driving up the price of SOL.
NFT marketplaces have gone through a highly competitive 2023, with Blur clearly surpassing its rival OpenSea and becoming the most adopted trading platform in this field.
In the current year, according to Binance, we could witness a new marketplace, which will be developed on Blast, Ethereum’s L2 aligned with Blur, on which there could potentially be a lot of interest.
Looking closer at the on-chain metrics, we can see how in the blockchain gaming niche, user activity in 2023 was much more thriving compared to the previous year.
In the last week of the year, there were 12.6 million active unique wallets weekly, more than double compared to the beginning of the year, which was 5.8 million.
On the front of sales of Gaming-related Non-Fungible Tokens (NFTs), we note that on Ethereum, the majority of volumes were concentrated in the first quarter of the year, with most investor interest focused on the project “Otherdeed for Otherside“.
Outside the Ethereum ecosystem, we see a fairly stable activity throughout the year, with exchanges on “Gods Unchained” leading the market metrics, followed by those on “Axie Infinity“, “Aurory”, and “Alien Words”.
2024 seems to be a year full of events with the upcoming releases of several games by important industry giants.
Binance’s latest reflection for 2023 focuses on the DeFi sector, which has witnessed a strong growth in 2023, with a year-on-year (YoY) increase of 38.9% in TVL.
After a drop of about $130 billion in TVL witnessed in 2022, the following year recovered some of the lost ground by adding about $20 billion to the metric.
Despite the long road still ahead towards the highs of November 2021, in the last 12 months there has been a very significant rise in liquid staking projects (LST), such as Lido which has further strengthened its position as a leader in the DeFi world.
According to Binance, the growing adoption of real-world assets and the emergence of intent-based architecture are significant developments that have contributed to the growth of the industry.
The next trends for 2024 identified by Binance
Regarding the forecasts on trends that could potentially attract more interest and capital in 2024, here are the niche sectors that are most focused on by Binance’s internal research branch.
We remind you that the crypto and blockchain industry is constantly evolving, so what may seem promising today could lose interest tomorrow in the face of a more appealing new narrative.
Anyway, these are the 6 fields where more development is expected for the newly started year:
- Developments related to the Bitcoin ecosystem: the work of the Bitcoin Core developers is making the cryptographic network increasingly impenetrable and more aligned with the market’s needs. The introduction of Ordinals, although not welcomed positively by everyone, has allowed for significant growth of the network, at least in terms of fees paid to miners and the number of transactions.
- On-chain property economics: the concept of property on the blockchain becomes more solid compared to previous years. This is demonstrated by the spread of protocols based on on-chain domains and decentralized messaging platforms.
- Artificial Intelligence (AI): after the introduction of ChatGPT and Worldcoin by OpenAI, the focus of the retail audience has been exclusively directed towards projects that integrate elements related to artificial intelligence to a greater or lesser extent. A significant growth in the evolution of AI is expected in 2024.
- Real World Assets (RWAs): Avalanche, Chainlink, and many other respected players are strongly focusing on this market niche, which is slowly finding interesting use cases and is about to be experimented with by the masses.
- On-chain liquidity: with the spread of LSTfi projects, on-chain liquidity has taken on a completely different aspect compared to the past. Today, cryptographic assets such as ETH, wstETH, or various stablecoins are reused multiple times on different platforms, making decentralized market liquidity increasingly efficient.
- Institutional adoption: thanks to the introduction of the first spot ETF for Bitcoin in the United States, institutional adoption is no longer a mirage but rather an expanding process. Now, investors of a certain caliber will be able to rely on regulated, secure, and transparent investment vehicles, and they will be able to pour hundreds of billions of dollars into the crypto market.
In conclusion, we quote this sentence taken from the Binance Research report, which is representative of the way in which this dynamic and constantly evolving market should be approached:
“As we envision the future of the cryptographic market, the lessons of 2023 highlight the industry’s ability to adapt, innovate, and grow, even amidst challenges. The strong recovery of 2023 sets the foundation for further progress, growth, and opportunities for the cryptographic space.”
