In the Adoption section of the 2023 CMC Crypto Playbook, CoinMarketCap shares interesting findings from our data and analyses the up-coming trends in crypto.
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Chapter 1: Crypto Market Overview
The global crypto market capitalization has continued its downward trend in December, and has now stabilized around $800 billion, representing a 63.5% drop from the beginning of January 2022.
Source: CoinMarketCap, Dec. 28, 2022
Bitcoin’s market dominance remains around 40%, while the altcoins (others) decreased from 25% to now only 15% of the crypto market. This decrease is often expected, as the market goes through a bear stage where capital often rotates back to the safer large cap assets and stablecoins (as seen the growth of USDC, Tether, BUSD on the chart).
Source: CoinMarketCap, Dec. 28, 2022
1.3 Which sectors are users actively engaging with?
Source: CoinMarketCap, Dec. 22, 2022
Chapter 2: Bitcoin and Ethereum Key Events
Chapter 3: Understanding Crypto Through CMC
Taking a look at the most viewed categories on CoinMarketCap to draw insights into which sector or narratives retail users are interested in, we can see that:
Looking at what CMC users were keeping an eye out for the most amidst the bear of 2022, we can see that the world’s most valuable cryptocurrency — Bitcoin, is unsurprisingly leading the charge, with Ethereum coming in a close second.
In crypto winters, BTC’s drawdown (-64%) is relatively less drastic compared to other altcoins like Solana (-90%), Cardano (-80%), Shiba Inu (75%). However, Ethereum (-67%) and Polygon (-68%) are not far off, while BNB (-52%) has actually bucked the trend and outperformed, showing the relative strength of these altcoins.
Which Crypto Sectors Received the Highest Engagement?
This is likely due the collapse of FTX, once a top five centralized crypto exchange, and the colossal amount of user deposits squandered due to fraud — prompting widespread awareness on self-custody and the merits of decentralized financial products. Uniswap surpassing most CEXs’ (except Binance) daily trading volume for a few days in November and hardware wallet Ledger’s breaking record sales numbers post-FTX are just a few examples — and where the trend (and retail interest) could be headed into 2023.
See which top cryptos we had our eyes on this year
In a year filled with hacks, bankruns, bankruptcy and outright fraud, Bitcoin remained steadfast in its ethos as a decentralized, peer-to-peer digital currency. While some may criticize its relative lack of technical progress — Bitcoin’s last major update was Taproot in June 2021 — its simplicity and immutability in code is partly why Bitcoin has the largest market cap.
Finally, in third, Ethereum’s successful shipping of the Merge, a highly anticipated and complicated maneuver, was one of the standouts in an otherwise bleak year for crypto. In the months leading up to Merge, investors' interest was fixated on ETH, which rallied almost 90% from the June lows to hit the $2,000 level.
Popular Crypto Exchanges
The most heavily traded-on crypto exchange — Binance, which processed $22 trillion in trades this year, is the most viewed exchange.
Chapter 4: Frontier of the Crypto Market
With the cryptocurrency market in the state that it is — recovering from the shock of the Luna stablecoin collapse, the subsequent collapse of several large VC firms, and the alleged fraud and bankruptcy proceedings at FTX — one of the most important topics for 2023 is going to be self-custody. As both experienced crypto traders and crypto newbies grapple with the fallout from these “too big to fail” crypto company failures, it will become a more important narrative to provide education and resources surrounding what custody, self-custody, private keys and the like mean for your crypto investments.
Conversely, centralized crypto exchanges will need to be more transparent in order to remain competitive with self-custody solutions, namely by developing trusted ways to show both proof-of-reserves and proof-of-liabilities.
Regulators Move In
And — fortunately or unfortunately — 2023 is going to be a year of increased regulatory scrutiny. As the FTX bankruptcy case and the fraud trials of three of its key players play out in the United States, regulators will be taking note of any legal precedents that will be set by any rulings. SEC Chair Gary Gensler has often repeated in 2022 his desire for more regulatory clarity — perhaps this will be the year that both the U.S. SEC and CFTC come up with clearer crypto guidance that will allow crypto companies to register and operate within the country.
Another year has also passed without a spot Bitcoin exchange-traded fund being approved. With the ARK 21 Shares ETF deadlines for approval pushed back again to January 15, 2023, there is a chance (albeit a small one) that 2023 could be the year of the Bitcoin ETF.
DeFi Summer 2.0?
We also see DEXs playing a large role in the 2023 crypto narrative. GMX, a perpetual-focused DEX, has already surpassed Uniswap for the first time ever in daily fees earned in November 2022. The DEX (built on Avalanche and Arbitrum) saw its popularity grow in the wake of the FTX collapse as it offers crypto perpetuals trading with what it touts as low transaction fees. Another DEX, STFX, has gained in popularity this fall and brought a new economic model to the forefront: social trading in DeFi with a focus on short-term asset management.
With innovations and low fees like what DEXs GMX and STFX can offer, we expect more creative ways to trade in 2023, as traders move away from traditional, centralized crypto exchange trading and explore self-custody DeFi solutions. Perhaps the summer of 2023 could even be DeFi Summer 2.0.
What’s Being Built?
It’s possible that if the bear market continues, coins without intrinsic value like memecoins will lose more of their popularity and that sector will shrink as it becomes more unprofitable to create/invest in memecoins. As well, with the collapse of the first real algorithmic stablecoin success story, 2023 might see less of a focus on building stablecoin projects in general.
Instead, the sectors that are most likely to see growth with more builders are GameFi, decentralized asset management (like STFX discussed above), and SocialFi (like Lens Protocol, as Twitter continues to play its weird, Elon-Musk-centered games with its users).
The CMC listings team expects to see growth in the newer L1 ecosystems that hit the industry this year, namely Arbitrum, Linera, Aptos and Sui Network (expected launch in H1 2023).
Chapter 5: Around the World With CMC
Even throughout this bear market, meme coins like Shiba Inu and Baby Doge Coin were still viewed quite often across almost all regions globally.
As well, Terra Classic — the rebranded coin associated with the algorithmic stablecoin project that lost its peg back in Spring 2022 — is still a commonly viewed coin globally for CoinMarketCap users, despite LUNA never regaining its peg.
Solana, a cryptocurrency ecosystem that aims to provide many of the same functionalities (and more) as Ethereum, was a top searched coin only in Europe, Asia and Africa — North American and South American users were less interested in SOL. The end of this year saw Solana Breakpoint, the ecosystem’s flagship conference, take place in Portugal, which could account for the increased European interest.
Interestingly, there was less interest in viewing XRP in South America than could have been expected, as Ripple (the company associated with the XRP token) has a focus on using cryptocurrency for remittances in South America via their partnership with MoneyGram.
Data from Sept. 1 - Nov. 30
Even though CoinMarketCap is a global company, the majority of our visitors do come from the United States. But Vietnam is in second place (even with ⅓ of America’s population size) for countries whose users most often visit CMC. This high ranking for Vietnam could be related to the extreme popularity of GameFi, or play-to-earn, within the country — a popularity which appears to bring Vietnamese to check GameFi token prices even as the industry has taken an overall hit (both in terms of price and amount of P2E game plays).
In third place is India, a country not known for its friendly cryptocurrency regulation or tax structure. However, the amount of negative news about crypto coming from the country’s government and central bank could be responsible for a heightened interest from India in checking crypto prices — as they say, all press is good press.
In seventh place is the Russian Federation, a country whose population has had a fraught relationship with cryptocurrency this year as its citizens faced the effects of economic sanctions that both left crypto as the only viable alternative while many crypto exchanges simultaneously stopped serving Russian customers. Ukraine, the victim of Russia’s war, has also used cryptocurrency this year to solicit donations for the war effort — but Ukrainians visiting CMC in the latter portion of 2022 only come in 14th place.