How's the Crypto Market doing? Overview of the First Half of 2023

Explore an in-depth analysis of the cryptocurrency market's performance in the first half of 2023. Uncover the trends and what to expect in the future.

Jul 27, 2023 - 12:08
Oct 19, 2023 - 16:26
How's the Crypto Market doing? Overview of the First Half of 2023
Reading time - 18 Min

As we approach the two-year mark since the crypto market peak in late 2021, it's timely to examine the state of the market and the developments that have unfolded. 

The first half of 2023 has definitely not been smooth sailing for the industry, but the market has shown resilience, with crypto market capitalization ending the period in positive territory on a quarterly, half-yearly, and annual basis.

Total crypto market capitalization has risen by 30.3% on a year-on-year basis, closing at $1.17T on June 30, 2023, compared to $0.90T a year earlier. This highlighted a remarkable period of recovery following a turbulent 2022 with the depegging of UST and the shutdown of a few centralized entities.

Despite the ongoing regulatory and macroeconomic uncertainties that reverberated through the first half of 2023, total market capitalization has enjoyed a huge upswing, with an impressive 47.0% growth in Q1. This came on the back of the strong performance of risk assets across the board in the first quarter. 

Q2 was yet another positive quarter, although regulatory overhangs weighed on performance. Markets were met with much relief in the latter part of Q2 as traditional firms signaled their commitments to the space. 

Notable traditional finance managers have filed their applications for spot Bitcoin ETFs, and technology giants have announced various initiatives involving blockchain technologies. Overall, on a year-to-date basis, the total crypto market cap rose 47.6%.

Bitcoin's Performance and Dominance

It has been an eventful first half of the year for Bitcoin. Driven by technical developments, including the advent of Ordinals, Inscriptions, and BRC-20 tokens, a new era for Bitcoin emerged in 2023. 

While headlines over the last few years have often focused on smart contract behemoths like Ethereum, BNB Chain, and Solana, this year, Bitcoin has done well to reclaim its place, both in the headlines and in market dominance. 

As we can see, through the first half of the year, Bitcoin increased its market dominance from 40.4% to 50.5%, once again commanding over half of the total crypto market capitalization.

When looking at the top crypto assets, Ethereum and Ripple showed slight increases in market dominance. However, the majority of other top assets declined. Combining this with the fact that the overall crypto market cap grew across H1 2023, it would indicate that money moved from alternative assets into Bitcoin.

Bitcoin Metrics and Sentiment Analysis

The financial metrics are the simplest illustration of the bullish six months we have experienced for Bitcoin. Its market cap increased 87.7% over the half-year, nearly double the total crypto market cap, which increased by 47.6%. Trading volume for the biggest crypto asset also demonstrated a significant increase of 185.4%.

The impact of Ordinals, Inscriptions, and BRC-20 tokens is most evident when looking at how Bitcoin’s network metrics have evolved over the past half-year. 

The number of transactions, as measured by a 7-day moving average, is up by over 58%, while the number of active addresses is up 10.7%. This is indicative of previously inactive or new users interacting with Bitcoin, as well as an increased volume of interactions by previously active users.

From a Bitcoin mining perspective, both key metrics have also been on a notable uptrend. The average hash rate, which is a measure of the combined computational power dedicated to Bitcoin mining, is up nearly 40% this year. This can be seen as a positive development, as the hashrate is an important metric to measure blockchain security.

Bitcoin's Correlation to Traditional Finance

Bitcoin’s relationship with TradFi markets has been consistent but dynamic. In the past, the correlation between Bitcoin and the S&P 500 fluctuated between -20% and 20%. However, in mid-2020, the correlation experienced a significant surge, eventually reaching an all-time high in May 2022 at approximately 75%. This increase occurred as central banks worldwide began raising interest rates.

Previously, Bitcoin was often considered a potential diversification tool for investment portfolios because its price movements were largely independent of traditional risk markets. However, this perception changed last year. 

Nevertheless, in 2023, the correlation has returned to its previous pattern. Bitcoin’s correlation with the S&P 500 is currently at its lowest level in over three years, revitalizing the argument for Bitcoin as a portfolio diversifier.

The Emergence of Ordinals and BRC-20

One of the key drivers for Bitcoin this year has been the rise of Ordinals. Ordinals work by running ORD, an open-source software that can run on top of any Bitcoin full node, which enables the tracking of individual Satoshis (“sats”) based on what founder Casey Rodarmor termed “Ordinal Theory.” 

This attributes a unique identifier to every single "sat" on Bitcoin. Going one step further, these individual sats can be “attributed” with arbitrary content such as text, images, or video to create an “Inscription,” i.e., a Bitcoin-native digital artifact, or what can also be called an NFT.

First conceptualized in March 2023 by pseudonymous Crypto Twitter user Domo, BRC-20 is an experimental token standard that enables the deployment, minting, and transferring of fungible tokens on the Bitcoin blockchain. 

Between BRC-20s and Inscriptions, both fungible and non-fungible tokens can now be created on the Bitcoin blockchain, marking a significant evolution in Bitcoin's capabilities.

DeFi on Bitcoin

The advent of Ordinals and BRC-20 tokens has also opened the door for decentralized finance (DeFi) on Bitcoin. While DeFi has been a significant trend in the crypto space, it has largely been confined to Ethereum and other smart contract platforms. However, with the introduction of these new technologies, we are beginning to see the emergence of DeFi on Bitcoin.

This development has the potential to significantly impact the crypto market. Bitcoin, with its large market cap and widespread adoption, could provide a substantial boost to the DeFi sector. Furthermore, the security and stability of the Bitcoin network could make it an attractive platform for DeFi applications.


Ethereum, the second-largest cryptocurrency by market capitalization, has also had an eventful first half of 2023. The Ethereum network has seen significant developments, particularly in the area of staking. 

Ethereum's transition from Proof of Work (PoW) to Proof of Stake (PoS) has been a major focus, with the network's liquid staking reaching new highs. This transition is part of Ethereum's upgrade to Ethereum 2.0, which aims to improve the network's scalability, security, and sustainability.

Liquid staking is a process that allows users to stake their Ethereum tokens and receive a tokenized representation of their staked assets. This token can then be used in DeFi protocols, providing liquidity and earning additional yield for the staker. The rise of liquid staking on Ethereum has given birth to a new financial instrument known as LSTfi.

Ethereum's performance in the first half of 2023 has been impressive, with its market capitalization and trading volume showing significant growth. The network has also seen an increase in the number of transactions and active addresses, indicating a growing user base and increased network activity.

BNB Chain

BNB Chain, formerly known as Binance Smart Chain, has focused on scalability during the first half of 2023. As a blockchain platform built for running smart contract-based applications, BNB Chain aims to ensure that developers can build decentralized applications (dApps) that can handle high transaction volumes without compromising speed or security.

BNB Chain's focus on scalability has resulted in several improvements to the network's performance and capacity. These improvements have helped to attract more developers and users to the platform, contributing to the growth of its ecosystem.


Solana has bounced back after a tumultuous 2022, releasing a Web3 phone and demonstrating its commitment to innovation and user experience. 

The Web3 phone is a significant development as it integrates blockchain technology into a device that is widely used by people worldwide. 

This integration makes it easier for users to interact with blockchain-based applications and services, thereby promoting the adoption of blockchain technology.


Tron's USDT dominance continued to grow in the first half of 2023. Tron is a blockchain that has always aimed at decentralizing the internet, and USDT (Tether) is a stablecoin that is pegged to the US dollar. 

The growth of USDT on Tron indicates a growing demand for stablecoins on the platform, which can be used for various purposes such as trading, lending, and remittances.

Polygon PoS

Polygon, a layer-2 scaling solution for Ethereum, has also seen significant developments in the first half of 2023. Polygon's Proof of Stake (PoS) chain has been particularly notable, providing a scalable and secure solution for Ethereum dApps. 

The Polygon PoS chain operates alongside the Ethereum mainnet, allowing dApps to run faster and cheaper while still maintaining a high level of security.


Avalanche has made progress on subnets and corporate partnerships in the first half of 2023. Subnets, or subnetworks, are a unique feature of Avalanche that allows anyone to create their own blockchain with custom rules and validators. 

This unique feature increases the flexibility and scalability of the Avalanche network, making it an attractive platform for developers and businesses.


Cosmos has advanced on shared economic security models in the first half of 2023. Cosmos is a network of independent blockchains that are interconnected through the Inter-Blockchain Communication (IBC) protocol. 

The development of shared economic security models on Cosmos allows different blockchains in the network to share security, thereby enhancing the overall security of the Cosmos ecosystem.

The Layer-2 (“L2”) Space

The Layer-2 landscape has been a hotbed of activity in the first half of 2023, with a significant focus on scalability solutions. These solutions aim to increase the transaction throughput of blockchain networks without compromising their security. 

The two primary types of Layer-2 solutions are Optimistic Rollups and Zero-Knowledge Rollups, both of which have seen significant developments in the past six months.

Optimistic Landscape

Optimistic Rollups are a type of Layer-2 solution that scales Ethereum by moving most computation off-chain and pushing only the results to the Ethereum mainnet. This significantly reduces the load on the Ethereum network, allowing it to process more transactions per second.

One of the most prominent Optimistic Rollup solutions is Arbitrum. 

Launched by Offchain Labs, Arbitrum has seen significant adoption in the first half of 2023. It has attracted a wide range of DeFi applications, including Uniswap, SushiSwap, and Aave, which have launched on the platform to take advantage of its scalability benefits. 

Arbitrum's total value locked (TVL) has grown exponentially, indicating the growing trust and adoption of the platform by users and developers.

Another notable Optimistic Rollup solution is the Optimism Protocol Mainnet (OP Mainnet). Like Arbitrum, OP Mainnet aims to scale Ethereum by moving most computation off-chain. It has also seen significant adoption, with several major DeFi projects launching on the platform.

Zero-Knowledge Landscape

Zero-Knowledge Rollups (ZK-Rollups) are another type of Layer-2 solution that scales Ethereum by moving computation off-chain and using Zero-Knowledge Proofs to verify the correctness of these computations. 

This approach offers the dual benefits of scalability and privacy, as the details of the off-chain computations are not revealed on-chain.

The Zero-Knowledge landscape has seen significant developments in the first half of 2023, with the launch of the first fully functional Zero-Knowledge Ethereum Virtual Machines (zkEVMs). 

These zkEVMs allow developers to build scalable and private applications on Ethereum using the familiar Solidity programming language.

One of the most notable zkEVMs is zkSync, developed by Matter Labs. zkSync aims to bring Visa-scale throughput to Ethereum while keeping the security properties of the Ethereum mainnet. It has seen significant adoption, with several projects launching on the platform.

Another notable zkEVM is StarkNet, developed by StarkWare. StarkNet aims to scale Ethereum by using a novel Zero-Knowledge Proof system called STARKs. It has also seen significant adoption, with several projects launching on the platform.

The Layer-2 landscape is expected to continue evolving in the second half of 2023, with several upcoming launches and developments. These include the launch of Polygon's zkEVM and several other Layer-2 solutions. 

The continued development and adoption of Layer-2 solutions are expected to play a crucial role in the future of blockchain and cryptocurrency, enabling scalable and efficient decentralized applications.


Stablecoins, digital currencies pegged to a stable asset like the US dollar, have been a significant part of the cryptocurrency ecosystem. They provide a bridge between the traditional financial system and the digital economy, offering the benefits of cryptocurrencies, such as fast transactions and global accessibility while mitigating their price volatility.

USDT Fortifies Its Market Dominance

Tether (USDT), the largest stablecoin by market capitalization, has further solidified its dominance in the first half of 2023. Despite a 7.0% decline in the global stablecoin market value, USDT has experienced a remarkable 25.8% increase in market share year-to-date, resulting in its departure from the major trio of stablecoins. This growth can be attributed to the increasing adoption of USDT in various blockchain ecosystems and its use in DeFi applications.

USDC in Spotlight Amidst Banking Failures

USDC, the second-largest stablecoin, has also been in the spotlight, particularly amidst banking failures when $3.3B of its reserve was put at risk due to the collapse of Silicon Valley Bank in March 2023. The stablecoin, backed by the US dollar on a 1:1 basis, has seen a surge in adoption due to its transparency and regulatory compliance. It has become a preferred choice for investors looking for a stable and secure digital asset amidst the volatility of the crypto market.

BUSD, DAI, and Regulatory Impacts

Binance USD (BUSD) and DAI have also been significant players in the stablecoin market. BUSD, a USD-denominated stablecoin issued by Binance in partnership with Paxos, has seen substantial growth due to the increasing user base of the Binance exchange. 

DAI, on the other hand, is a decentralized stablecoin pegged to the US dollar and backed by collateral assets. It has been a popular choice in the DeFi space due to its decentralized nature.

Regulatory impacts have also played a crucial role in shaping the stablecoin market. Regulatory scrutiny has increased globally, with authorities expressing concerns about the potential risks associated with stablecoins. This has led to significant changes in the market composition and has influenced the strategies adopted by stablecoin issuers.

Emerging Stablecoin Models

The first half of 2023 has also seen the emergence of new stablecoin models. These include algorithmic stablecoins, which maintain their peg through algorithms that automatically adjust the stablecoin's supply based on market conditions. 

Another emerging model is the collateralized stablecoin, which is backed by other cryptocurrencies. These new models are providing more options for users and contributing to the growth and diversity of the stablecoin market.

Despite the decline in the global stablecoin market value, the market has been reshaped by shifts in adoption trends, regulatory landscapes, and the strategies adopted by stablecoin issuers. 

The emergence of new stablecoin models has also added to the diversity and complexity of the market. As we move forward, it will be interesting to see how these trends evolve and what impact they will have on the broader cryptocurrency ecosystem.

Decentralized Finance

Decentralized Finance (DeFi) has been a significant driver of the crypto industry's growth, and the first half of 2023 has been no exception. DeFi has continued to evolve and expand, with new protocols, platforms, and financial instruments emerging regularly. 

This growth has been driven by the increasing recognition of the potential of blockchain technology to democratize access to financial services and create a more inclusive and efficient global financial system.

The state of DeFi in 2023 is characterized by a remarkable ascent of liquid staking, which has become the largest sub-sector, alongside the increasing migration of users towards decentralized exchanges (DEXes). 

Despite unlocking newer use cases, DeFi's dominance experienced a 0.5% decline compared to the global crypto market. However, this slight decline does not undermine the significant strides that the sector has made.

Liquid staking has emerged as a prominent trend in the DeFi space. It allows users to stake their tokens in a proof-of-stake (PoS) network and receive a tokenized representation of their staked assets. These tokens can then be used in other DeFi protocols, enabling users to earn rewards from staking while simultaneously accessing liquidity.

This trend has been driven by the increasing adoption of PoS consensus mechanisms by major blockchain networks. Ethereum's transition to Ethereum 2.0, which uses a PoS mechanism, has been a significant catalyst for the growth of liquid staking.

LSTfi is a new development in the liquid staking space. It represents a new high in Ethereum's liquid staking, which has been a major driver of growth in the DeFi sector. The rise of LSTfi has been driven by the increasing demand for yield in the DeFi space, with users seeking innovative ways to maximize their returns.

Another significant development in the DeFi space in 2023 has been the emergence of restaking. Restaking allows users to compound their staking rewards by automatically restaking them. This can significantly increase users' returns over time, making it an attractive option for long-term investors.

Decentralized exchanges (DEXes) have continued to grow in popularity in 2023. DEXes allow users to trade cryptocurrencies directly with each other without the need for an intermediary. This can offer several advantages over traditional, centralized exchanges, including increased privacy, lower fees, and reduced reliance on a single point of failure.

DeFi lending platforms have also seen significant growth in 2023. These platforms allow users to lend and borrow cryptocurrencies directly without the need for a traditional financial institution. 

This can offer several advantages, including the ability to earn interest on idle assets, access to credit without a credit check, and the ability to leverage existing assets to increase investment returns.

The DeFi derivatives market has also seen significant growth in 2023. DeFi derivatives allow users to speculate on the future price of cryptocurrencies or hedge against potential price movements. This can provide users with additional ways to profit from the crypto market and manage their risk.

From the rise of liquid staking and the emergence of restaking to the continued growth of DEXes, lending platforms, and the derivatives market, DeFi continues to push the boundaries of what is possible in the financial world.

Non-Fungible Tokens (NFTs)

The first half of 2023 saw a significant uptick in the trading volume of Non-Fungible Tokens (NFTs) compared to the second half of 2022. This surge was largely driven by increased activity on the Blur marketplace in the earlier part of the year. 

However, despite the increased trading volume, NFTs have underperformed the broader crypto market as the floor prices of many NFT collections have declined year-to-date.

The competition among NFT marketplaces has intensified, with OpenSea Pro emerging as a strong contender in response to Blur's growing popularity. 

OpenSea Pro has implemented several features to attract users and artists, including lower transaction fees and a more user-friendly interface. This has resulted in a significant increase in the platform's user base and trading volume.

The concept of NFT lending has also gained traction in 2023. This involves lending NFTs to other users for a specified period, allowing the borrower to use the NFT while the lender earns interest. 

This has opened up new possibilities for NFT owners to monetize their assets without selling them outright.

Blend, a new platform that allows users to create and trade NFTs, was launched in 2023. The platform has gained popularity due to its user-friendly interface and the ability to create NFTs with just a few clicks. 

Blend's launch has made it easier for artists and creators to enter the NFT space and monetize their work.

The first half of 2023 also saw the rise of Bitcoin NFTs. This was made possible by the introduction of Ordinals and BRC-20 tokens, which enabled the creation of NFTs on the Bitcoin blockchain. This development has sparked excitement and innovation within the Bitcoin community, leading to an increase in the number of Bitcoin NFTs.

Despite some challenges, such as declining floor prices for many NFT collections, the market has shown resilience and continues to evolve. The introduction of new platforms and technologies, such as OpenSea Pro, Blend, and Bitcoin NFTs, has opened up new possibilities for artists, creators, and investors in the NFT space.

Gaming and Metaverse

The gaming industry and the metaverse have seen significant growth and development in the first half of 2023. The integration of blockchain technology into these sectors has opened up new opportunities for innovation and has led to the creation of unique digital experiences for users.

State of Gaming

The gaming industry has been a significant beneficiary of the advancements in blockchain technology. Blockchain-based games have seen an increase in popularity, with more than 67% of games now being built on BNB Chain, Ethereum, and Polygon. These games offer players the ability to truly own their in-game assets, which can be traded or sold on various marketplaces.

The rise of Play-to-Earn (P2E) games has also been a significant trend in the gaming industry. These games allow players to earn cryptocurrency rewards through their in-game activities, which can then be converted into real-world money. This model has been particularly popular in developing countries, where it has provided a new source of income for many individuals.

In addition to P2E games, the integration of Non-Fungible Tokens (NFTs) into games has also been a significant trend. NFTs have allowed for the creation of unique in-game items that can be owned and traded by players. This has added a new layer of depth to games and has created a more immersive gaming experience.

State of the Metaverse

The concept of the metaverse has gained significant traction in the first half of 2023. The metaverse refers to a collective virtual shared space that is created by combining virtually enhanced physical reality and physically persistent virtual reality. This space is typically populated by avatars that are controlled by individual users.

The development of the metaverse has been driven by advancements in technologies such as virtual reality (VR), augmented reality (AR), and blockchain. These technologies have allowed for the creation of immersive digital worlds where users can interact with each other in real time.

Several major tech companies have announced plans to build their own versions of the metaverse, indicating a strong institutional interest in the concept. These companies are investing heavily in the development of the necessary infrastructure and are working on creating engaging and interactive experiences for users.

The metaverse has also seen significant fundraising activity, with several startups raising funds to develop their own versions of the metaverse. These startups are exploring various use cases for the metaverse, ranging from social networking to e-commerce.

The integration of blockchain technology into these sectors has opened up new opportunities for innovation and has led to the creation of unique digital experiences for users. As these sectors continue to evolve, they are expected to play a significant role in shaping the future of the digital world.

Fundraising Activity

The first half of 2023 has seen a decline in overall crypto deal activities with a fall in venture capital funding. However, a clear area of interest has surfaced, with the infrastructure sector attracting the most investments, followed by gaming/entertainment and DeFi.

Despite the overall decline, the crypto fundraising landscape remains dynamic and diverse. The fundraising activity in the crypto space is a reflection of the broader trends in the industry. 

The infrastructure sector, which includes projects focused on building the underlying technology and platforms for the crypto ecosystem, has attracted the most investments. This indicates a strong interest in the foundational aspects of the crypto industry, such as blockchain technology, smart contract platforms, and interoperability solutions.

The gaming and entertainment sector has also seen significant investment, reflecting the growing interest in the intersection of blockchain technology and gaming. This includes the development of blockchain-based games, NFTs, and the metaverse. 

The DeFi sector, which includes projects focused on decentralized lending, borrowing, and trading, has also attracted considerable support, indicating the continued interest in the potential of blockchain technology to disrupt traditional financial systems.

Institutional Adoption

Institutional adoption of cryptocurrencies has been on the rise, with a number of significant developments taking place in the first half of 2023. Institutions are building infrastructures and expanding access to trading cryptocurrencies, signaling a growing acceptance and integration of cryptocurrencies into the traditional financial system.

Institutions are building infrastructures to support the growing demand for cryptocurrencies. This includes the development of custody solutions, trading platforms, and other services that make it easier for institutions to hold and trade cryptocurrencies. 

These infrastructures are crucial for the continued growth and maturation of the crypto market, as they provide the necessary tools and services for institutions to participate in the market.

In addition to these developments, institutions are also exploring the use of blockchain technology for the tokenization of real-world assets. This includes the tokenization of assets such as real estate, art, and other valuable assets. 

This trend is opening up new opportunities for investment and ownership, further expanding the potential applications of blockchain technology.


In conclusion, the first half of 2023 has been a period of significant growth and development for the crypto market. Despite the challenges, the market has shown resilience and adaptability. 

With a focus on infrastructure development, gaming and entertainment, DeFi, and institutional adoption, the trends indicate a maturing industry that is continuously developing and integrating with traditional financial systems. 

The second half of the year promises to be just as exciting, so whether you're a seasoned crypto user or just learning about the industry, it's worth keeping your eyes open for what's to come.

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