The cryptocurrency market saw a resurgence in the first quarter of 2023, as evidenced by the strong performance of Bitcoin and an increase in spot trading volume. According to a report from Coingecko, the cryptocurrency market started the year on a positive note, with a market capitalization of $1.2 trillion at the end of Q1, a 48.9% increase from the previous year. The daily average trading volume increased by 30% quarter-over-quarter to reach $77 billion in Q1, with a surge in January and early March due to a banking crisis. However, trading volume declined in late March after Binance removed trading incentives for zero-fee BTC.
Bitcoin Outperforms Traditional Assets
Bitcoin emerged as the best-performing asset in Q1 2023 with a 72.4% quarter-over-quarter gain, followed by NASDAQ (15.7%) and gold (8.4%). All major assets saw growth except for crude oil, which fell by -6.1%. The US dollar index and other fiat currencies remained relatively flat throughout the period, as inflation data came in cooler than expected. Crude oil initially fell by -17.2% due to a decline in demand as indicated by US inflation reports, but managed to recover losses by the end of March. In the first quarter of 2023, BTC reached a low of $16,540 and a high of $28,516, levels not seen since June 2022 after the Terra collapse. BTC has skyrocketed 72.4% since the start of 2023, with the highest increase seen in March 2023, triggered by a banking crisis in the US. Additionally, the launch of the Ordinals protocol has also attracted more investors to the BTC network.
Rise in Spot Trading Volume
Amid increased enforcement against centralized cryptocurrency exchanges (CEX), decentralized cryptocurrency exchanges (DEX) have seen a two-fold growth. The volume of spot trading on the top 10 cryptocurrency exchanges reached $2.8 trillion in the first quarter of 2023, a 18.1% increase from the previous quarter. Monthly trading volume has been steadily increasing since December 2022. In the first quarter of 2023, DEX growth reached 33.4%, while CEX only grew by 16.9%. However, the ratio of CEX and DEX trading volume is still highly skewed at over 90%.
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