Crypto market Q1

What has happened in the crypto market in Q1 — and what is to come?

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The first three months of 2023 have provided momentum and interesting situations for crypto investors. If you thought we saw everything last year, you’re wrong.

In this recap, we delve into what has happened in the crypto market this year and what we assume the coming months will bring.

What happened in January?

The year 2022 changed to 2023, with the crypto market in an expectant mood. The uncertainty caused by the collapse of FTX was still visible among investors, and they did not know how to react positively to the value increases of cryptocurrencies.

Let’s go through January’s most significant news regarding the crypto market.

Layoffs of the crypto winter

The market situation in January did not bring relief to the crypto winter that has been going on for almost a year now. It started to become more clear to many crypto companies that the market situation is not going to get any easier in the short term.

January saw a massive wave of layoffs when crypto lender Genesis Global Capital laid off about 30 percent of its employees, and crypto bank Silvergate Capital laid off about 40 percent of its employees.

Even at the beginning of January, it was not expected that both companies would later go bankrupt.

Large crypto exchanges such as ByBit and Kraken also had to lay off their employees as a result of the difficult market situation.

The wave of layoffs didn’t just concern cryptocurrency companies – technology companies like Meta and Stripe also had to make big layoffs.

The layoffs didn’t make the already uncertain crypto market feel any better.

Genesis bankruptcy

Cryptolender Genesis Global Capital, which laid some of its staff off earlier in January, went bankrupt later that month. Genesis’ predicament already started with the collapse of the crypto exchange FTX when it announced that it would no longer grant any new crypto loans. Bankruptcy was therefore expected to some extent.

A few days before Genesis filed for bankruptcy, more information about Genesis’ situation was revealed in the crypto news headlines: Genesis owed more than 3 billion dollars, of which 900 million were to the customers of the cryptocurrency exchange Gemini and more than 300 million to Dutch Bitvavo.

Genesis quickly announced after the bankruptcy news that it would try to repay its customers’ funds, but the investigation of the situation is still in progress.

The Rise of Bitcoin 

There were also some positive glimpses in January, such as the 12-day consecutive rise in the value of Bitcoin. Bitcoin was just three days shy of its longest streak ever, which took place in 2013.

Bitcoin’s positive value increase momentarily had a positive effect on the entire crypto market. Some altcoins experienced gains of up to a tenth of a percent during those 12 days.

However, investors were skeptical about Bitcoin’s rise, and the market turned back down after the rise.

What happened in February?

January turned into February in a rather uneasy way. The bankruptcy of Genesis raised the question of how many other crypto companies will fail and how far the consequences of FTX’s collapse will go.

Despite prejudices, February turned out to be quite an interesting month when the Finnish company Aave and Membrance Finance launched their own stablecoins.

LocalBitcoins Bankruptcy

February reportedly saw the first bankruptcy of a Finnish crypto company when the well-known LocalBitcoins marketplace announced its bankruptcy news.

LocalBitcoins did not announce the specific reasons for the bankruptcy, but one of the reasons is certainly the downward trend of Bitcoin’s trading volume in the marketplace. LocalBitcoins enjoyed high Bitcoin trading volumes until 2021, after which the trading volume began to drop and never recovered to its previous levels.

LocalBitcoins managed to be in operation for a respectable 10 years. The bankruptcy news of LocalBitcoins was received with surprise, as no signs of a possible bankruptcy were detected outside the company.

If you still have your funds in the LocalBitcoins marketplace, you can withdraw them during the next 11 months.

Read more about LocalBitcoins

Nokia’s metaverse announcement

Nokia, which previously focused on mobile phones, announced its brand reform in February. Nokia said that it already established two development centers last year to study metaverse and metaverse-related technology.

Nokia said that it aims to make use of the metaverse, for example, by connecting employees who work in different offices around the world via a remote connection.

According to Nokia, metaverses are an important part of its new strategy.

In the same context, Nokia also updated its iconic logo.

The news about Nokia’s metaverse announcement did not cause a big reaction among crypto investors, even though it is a company worth around 24 billion euros. Popular crypto news sites also didn’t pick up on Nokia’s announcement in the same way they usually report on Web3 announcements made by large traditional companies.

New stablecoins

Finnish news coverage continued when Membrance Finance announced a new EUROe stablecoin euro-based stablecoin. This was significant news because EUROe is the first stablecoin that has been fully regulated by the EU.

A euro-based stablecoin is really a long-awaited territorial conquest because, previously, the only stablecoin options for institutional investors operating in Europe have been dollar-based.

Towards the end of February, the Finnish DeFi service Aave also announced the release of its own GHO stablecoin. Unlike EUROe, GHO is pegged in value to the US dollar.

The new stablecoins have been warmly welcomed by crypto-investors, as currently, the stablecoin market is almost entirely divided between only three major dollar-based stablecoins (USDT, USDC & BUSD).

Bitcoin Ordinals 

Bitcoin’s Ordinals protocol brought a glimmer of joy to the NFT market. The new Ordinals protocol allows users of Bitcoin nodes to include files such as videos, audio or smart contracts in each satoshi (Bitcoin’s smallest unit).

The Ordinals protocol was a hit right from its launch and brought thousands of new users to the Bitcoin blockchain.

The popularity of the Ordinals protocol is also indicated by the fact that Yuga Labs, the company behind the most popular NFT collections, released its own NFT collection, which utilized the Ordinals protocol.

The NFT market received new energy from this announcement, and the sales volume of Ethereum-based NFT collections also increased as a result of the Ordinals hype.

Learn more about Bitcoin Ordinals

The Battle of the NFT Marketplaces

OpenSea has been, by far, the most popular NTF marketplace for a long time. The situation may change this year as an NFT marketplace called Blur temporarily surpassed OpenSea in NFT trading volume during February.

This made many NFT collectors interested in Blur and trying it out. OpenSea responded to this immediately by temporarily waiving all of its trading fees.

We look forward to seeing if Blur manages to take the top spot from OpenSea or if OpenSea’s aggressive defensive measures work.

What happened in March?

The crypto market moved into March with positive signs, as a lot of interesting projects had been announced during the previous month, and the NFT market, in particular, had received a boost.

However, the NFT market did not enjoy the market recovery for long because right at the beginning of March, we saw the biggest NFT dump & pump sale of all time.

Jeffrey Hwang’s NFT sales

Major investor Jeffrey Hwang sold about 1 010 different NFTs from his own collection over the course of two days in March. The NFTs were worth a total of about $18.6 million.

The NFTs sold by Jeffrey Hwang included at least 90 Bored Ape Yacht Club NFTs, 191 Mutant Ape Yacht Club NFTs, and 112 Azuki NFTs.

The NFT market reacted strongly to a large sale, and the price of several well-known NFT collections momentarily dropped significantly. Indeed, this was probably Jeffrey Hwang’s wish, as he bought 991 NFTs for himself at significantly less than what they cost before his massive sell-off.

Although the NFT market panicked for a while, it also recovered from the sell-off very quickly. At the time of writing this article, the floor price of almost every popular NFT collection has already returned to pre-Hwang sale price levels.

Silvergate, Silicon Valley Bank & Signature Bank bankruptcies

Silvergate Bank, known as a crypto bank in the United States, announced last week its intention to close all its operations. Silvergate plans to liquidate its assets and repay its customers’ deposits in full.

The announcement in itself was not a surprise, as Silvergate’s stock has fallen by almost 99% in the last 12 months. The announcement was still a big blow to the traditional banking industry, as Silvergate was a significant banking player. 

The crypto market didn’t even get around to reacting properly to the news of Silvergate until another bank also announced its bankruptcy. This time it was Silicon Valley Bank (SVB), which was considerably larger than Silvergate.

SVB became the target of a bank run: a term that has become familiar in the crypto market and collapsed. In practice, bank-run means that investors withdraw their funds from the bank so quickly that the bank cannot react and pay all their withdrawal requests.

SVB’s collapse was so massive in its class that the US Federal Reserve (FED) issued a $25 billion emergency package to prevent the deposit flight from spreading to other banks.

Just days after SVB’s collapse, crypto-friendly Signature Bank also closed its doors. The reason for the closure is said to be to protect the US economy and strengthen public confidence in the banking system.

What’s in store for the crypto market in the coming months? 

A lot has happened in the last three months. The news of SVB’s collapse continues to affect investors’ confidence in traditional banks. At the time of writing this news article, Credit Suisse’s stock is in a wild decline. The stock in question fell by almost 22% during the day.

The coming months will show whether the deposit flight will spread to other banks as well or whether the US central bank’s measures will be enough.

Uncertainty about the traditional banking system has had positive effects on the crypto market. From the beginning of the week, almost all cryptocurrencies experienced increases in their value. The biggest increase in value was among certain altcoins, such as Conflux and Stacks, both of which increased in value by more than 40% in a day.

There are also a lot of rumors about Amazon’s own NFT marketplace, which will most likely be published in April. It is believed that this marketplace will bring a large number of traditional investors to the NFT market, as Amazon’s marketplace only accepts traditional payment options, at least initially.

Other interesting topics to keep an eye on in the coming months include: 

  • Various AI projects – Especially the recently released ChatGPT4, which should be significantly more advanced than the previous ChatGPT3
  • NFT Marketplaces – The OpenSea vs. Blur battle is heating up. OpenSea has also hinted in its communications about a possible release of its own token. We believe that this token will be distributed to OpenSea users in the form of an airdrop
  • Decentralized Social Media – Services like Lens, Orb, and Phaver continue to grow. New updates are actively and frequently published for all the above-mentioned projects, which you should keep an eye on
  • Uncertain market situation – Investors are currently very uncertain regarding both the traditional and the crypto markets. Uncertainty will be reflected in cryptocurrency price changes

As a result of the events of the last three months alone, we dare say that the coming months will be anything but boring. Without a crystal ball, a more accurate prediction is challenging.

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The views, thoughts, and opinions expressed in the text belong to the author and not necessarily to the author’s employer, organization, committee, or other group or individual.


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