In Q4 of 2023, the global cryptocurrency market experienced a substantial increase in market capitalization, surging by 54.4% quarter-over-quarter (QoQ), as reported by Binance Research in their latest report titled “Q4 State of Crypto: Market Pulse.”
Crypto Market Dynamics in Q4 2023
The market’s robust performance during this period was attributed to growing optimism and anticipation surrounding the potential approval of a spot Bitcoin (BTC) Exchange Traded Fund (ETF). Additionally, macroeconomic tailwinds, including expectations for rate cuts in 2024, contributed to positive growth for risk assets like cryptocurrencies.
Among the top 10 cryptocurrencies, Solana emerged as the standout performer, recording an impressive 923.1% gain in 2023. This surge was supported by significant developments such as the v1.16 client release in September and the successful testnet launch of Firedancer during the Breakpoint conference. Bitcoin outperformed Ethereum, driven by increased anticipation for the approval of spot BTC ETFs and heightened activity in Ordinals trading.
BTC dominance saw a slight increase of 1.2% QoQ, with a shift in focus towards Bitcoin due to greater institutional adoption and expectations surrounding the Bitcoin halving. Ethereum’s dominance declined, but potential dynamics may unfold with the upcoming Ethereum Dencun upgrade and discussions about spot ETH ETFs.
Developer activity in the cryptocurrency space experienced an overall decline for the third consecutive quarter. However, certain projects such as Starknet and zkSync witnessed growth in weekly developers, highlighting pockets of activity. Solana stood out with over 50% developer retention in December, fueled by positive sentiment around its ecosystem.
Q4 2023 witnessed a rejuvenation in fundraising activities, with over $2.5 billion raised, marking the strongest quarter of the year. Notable fundraising projects included Wormhole’s $225 million raise and MapleStory Universe’s $100 million raise.
Infrastructure-related projects secured the most funds in Q4, with notable deals like Wormhole’s $225 million raise indicating a growing demand for cross-chain interoperability solutions. Gaming also continued to attract investment, exemplified by Shrapnel, a fully on-chain AAA FPS game that raised $20 million.
The Crypto Fear & Greed Index rose by 25.7 points in Q4, reflecting increased optimism in the market as participants anticipated the approval of spot BTC ETFs. Airdrops, such as Celestia and Jito, contributed to heightened market activity and on-chain engagement.
The report also delves into various aspects, which show growth, including monthly transactions by chain, average daily active addresses, hash rate vs. miners’ block revenue, GBTC premium, balance on exchanges, and others. Notably, the NFT market witnessed a turnaround in Q4 2023, with a 150% sales increase driven by heightened activity across Bitcoin, Ethereum, and Solana.
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