With less than two weeks until the new year, it is high time to round up 2023. As we did a year ago, we will start by checking out how much the broader crypto market changed. Which cryptocurrencies joined the top 10 by market cap and which ones were left behind, and why? What awaits these assets come 2024? Make yourself comfortable and read our article to find out.
The Top 10 Cryptocurrencies By Market Cap — 2022 and 2023
What were the top cryptocurrencies by market capitalization at the end of 2022 (December 25, 2022, per CoinMarketCap) and how do the top ten look now? Before diving deeper into what caused these shifts, let’s compare the rating with what it was a year ago.
What can we see from the get-go? Firstly, 80% of cryptocurrencies in this list are the same ones. Secondly, stablecoins are as popular as ever but in quality, not quantity. Thirdly, L1s have cemented their position as the most popular type of blockchain platform.
Let’s now go through each major change in more detail to see how 2023 changed the crypto industry.
Bitcoin and Ethereum
For the umpteenth year in a row, BTC and ETH kept the first and second places by market cap respectively. The flippening debate is lukewarm at most, and this placement seems to have become a fact of life by now. This does not mean that 2023 has been uneventful for either of them.
The Bitcoin protocol has seen one of the most peculiar developments in its history this year. We are talking about ordinals and inscriptions: a system of attaching media and content to individual satoshis. It was built up with years of Bitcoin protocol improvements, 2022’s Taproot upgrade being the final piece to pave the way. Since their introduction, Bitcoin ordinals have significantly increased block space usage and miner fees, were picked up by the Sotheby’s auction house, added to the US National Vulnerability Database, and even reintroduced a threat of a hard fork in Bitcoin.
The Ethereum merge, having started in 2022, was finalized this year with a Shapella upgrade, which made unstaking possible. As expected, this did not end the liquid staking industry but reinvigorated it: running a validator solo still requires a 32 ETH minimum. In contrast, liquid staking protocols and services offer lower entry barriers and boosted yields.
The prices of both Ethereum and Bitcoin were rocked in 2023 by another topic: the prospects of ETFs. More specifically, spot ETFs approved by the United States. There are already futures ETFs for these crypto assets and in other countries but due to the sheer volume of traditional markets in the US, a US SEC-approved spot ETF is seen as an endgame of institutional adoption. There are currently about eight to twelve Bitcoin spot ETF applications under consideration with a decision expected in early 2024.
A bear market that dominated 2022 caused many crypto users to opt for stablecoins to hedge against declining prices. In contrast, now the stablecoin demand is shrinking, as the crypto market enters a more greedy phase.
In our last year’s comparison, it was still up to debate and circumstances, but by 2023 it became clear that Tether USD (USDT) has solidly become the number three crypto asset on the market. By trading volume, however, USDT is still number one.
Not much has changed for Tether this year but its competition has weakened throughout 2023 for the reasons we will now get into.
Binance USD (BUSD) (7⬂56)
Early 2023 was shaping up to be fine for the Binance-branded stablecoin: in late 2022 it blasted up into top cryptocurrencies by market capitalization thanks to the exchange’s Auto-Conversion feature.
Nevertheless, in February, BUSD’s issuer Paxos was hit with a Wells notice from the SEC and ordered to suspend the minting of the new BUSD. The notice also described BUSD as an unregistered security, and the sum of the news caused a capital flight from Binance USD. As became clearer later, this was the beginning of a probe into Binance and the lesser of its problems.
With the entrance of the new BUSD into circulation denied, it had no other future than to be discontinued. Even though the remaining circulating supply is redeemable and works as intended, it still dropped to the lower half of the top hundred cryptocurrencies.
USDC (previously USD Coin) (4⬂7)
Let us get it out of the way first: in September, Circle renamed their stablecoin USD Coin to USDC. This change was not anything major at least in terms of the market capitalization and was made to simplify the brand.
Even though the new stablecoin assessment by S&P Global Ratings evaluated USDC higher than Tether USD in terms of risk and stability, it still failed to come close to its trading volume and market capitalization. A possible reason for this could be that over 50% of USDT is on TRON, according to DefiLlama, and USDT currently dominates the stablecoin market with a 70% share. At the same time, Circle went on record denying any ties to Justin Sun, TRON, or HTX.
Another reason USDC is not holding up as well as USDT is their US jurisdiction. While Circle goes to great lengths to operate a stablecoin fully compliant with US laws, USDT is an offshore entity. It makes USDC less resistant to domestic legal action and crackdowns and even led to a brief near-crisis moment earlier this year. In March, tech-friendly Silicon Valley Bank (SVB) declared bankruptcy, and USDC reserves were partially kept with SVB, which caused a liquidity crunch.
At the end of 2023, USDC arrives in this weird situation when it is favored more by institutions and businesses but users remain faithful to USDT. 2024 can change things around if Circle succeeds after going public and Tether’s pledge to cooperate with the US government changes its preexisting image.
Last year, we wrote that despite ditching the name “Binance Coin” in 2022, BNB still has the backing of the exchange. Now, however, this statement can be called into question, as Binance tries to recover from the legal trouble of late 2023, while BNB still oscillates between the fourth and fifth places as if nothing has happened.
Nevertheless, the BNB price still reacted to some of the most impactful news about Binance. For instance, it momentarily lost 11% after the news of Changpeng Zhao (CZ) stepping down as the Binance CEO as a part of the settlement with the US Department of Justice. CZ pleaded guilty to failing to comply with the US anti-money laundering laws and is awaiting a trial that will take place in February 2024.
Meanwhile, the BNB Chain was making its own advancements. 2023 saw the mainnet launch of opBNB, a Layer-2 for BNB Chain built on the Optimism stack. BNB Chain core client released several upgrades with new features: Fast Finality and on-chain asset reconciliation, to name a few. Unfortunately, this was not enough to prevent the capital flight caused by the negative news about Binance and CZ.
2023, just like 2022, saw BNB mostly hopping between 4th and 5th place. However, in 2024 it could be overtaken for good by the next asset on our list.
XRP and BNB have been going toe to toe for years but in 2023, for the first time in a while, XRP has overtaken BNB a couple of times, and the gap is narrowing. Aside from some troubles with the parent brand, BNB has had a productive year. So why is it under the threat of being flipped by XRP now?
In last year’s edition of this rating, we mentioned the SEC vs. Ripple legal battle. In 2020, the US Securities and Exchange Commission sued Ripple’s Brad Garlinghouse and Christian Larsen alleging the offering of unregistered securities. The securities in question are, of course, XRP.
This year, the case has come as close to the conclusion as possible: the U.S. District Court of the Southern District of New York judge Annalisa Torres ruled that the sale of the XRP token does** not constitute a security** in certain cases. Traders and XRP holders have interpreted the news as bullish and caused XRP to overtake BNB to the fourth place. Not once but twice: when the SEC’s appeal was rejected in November, it pumped once again.
With this new outlook, 2024 looks bright for XRP, and Ripple is not too shy to admit it. They believe that next year the paradigm in crypto is going to shift more toward mass adoption, and XRP is poised well to benefit from it massively. As for more concrete predictions, in 2022 Ripple CEO publicly pondered going public after the case reached its conclusion, and in late 2023 the rumors were reignited with a job posting.
In 2022, Solana lost its position as a top 10 cryptocurrency due to the FTX implosion fallout. We predicted that in 2023 things could turn around for it and it turned out true.
One of the factors that kept Solana in the spotlight is the long-anticipated launch of their crypto-oriented smartphone Saga. The hype surrounding the release of Solana Saga has somewhat died down but right now, they are a sought-after commodity, selling for eight times the price. At the same time, the decentralized exchange (DEX) volume on Solana has overtaken Ethereum’s. What is happening?
The meme coin craze has got to Solana this time. Token BONK, which was launched almost a year ago, suddenly picked up the pace and gained 585% in a month (according to CoinGecko). U.Today reasons that this mirrors the ETF-induced greedy sentiment on the broader crypto market, as well as confidence in Solana’s ecosystem. Next, an airdrop for Saga owners was announced and made once underperforming crypto-smartphones a hot commodity. And all of this was happening as recently as December!
As for the rest of the year, it was as eventful. A February outage, Solana Spaces shutdown and reopening, Certik’s report alleging a vulnerability in Sagas, and FTX’s selloff during its bankruptcy proceedings kept it down somewhat but other than that, it was back on its trajectory of growing steadily. On a yearly scale, SOL is up 450.6% according to CoinGecko.
In their 2024 crypto prediction, investment manager VanEck highlighted that Solana might be one of the assets to join the spot ETF race. They also predict it is going to become the third-largest blockchain by total value locked (TVL). Let’s wait and see!
Judging by the change in top cryptocurrencies between 2022 and 2023, tokens are out and L1s are in! Avalanche has started 2023 with a rally fuelled by the announcement of a partnership with Amazon Web Services. Since then, they have been joined by Tencent Cloud, Alibaba Cloud, and JP Morgan among others.
The Avalanche protocol was upgraded with better optimization, Evergreen subnets capable of replacing cross-chain bridges, and off-chain asset tokenization. Even though instead of the public mainnet the JP Morgan Onyx tokenization pilot used a permissioned version of the blockchain, it generated enough confidence in AVAX for it to flip MATIC, TRX, and BCH.
The final push into the top ten seems to have been due to ASC-20, or Ordinals-like standard on Avalanche. In case it was not made clear in the section about Bitcoin, inscriptions are as controversial as they are helping to balloon network activity and the fee economy. Love them or hate them, without it, AVAX would not be as hot as it is at the time of writing.
Unlike we speculated last year, NFTs were not the thing to save ADA. Instead, it was carried throughout most of the year by the organic growth of DeFi on Cardano. It opened in 2023 boldly by adding 20% to its TVL and 15% to ADA’s value.
Cardano has received quite a few updates and upgrades since then. Most of them, like the Hydra solution, were meant to further the scaling capabilities of Cardano. Others have built up to move the network into the next phase of its development: governance-focused Voltaire. Admittedly, Cardano’s performance hasn’t been perfect, with an occasional outage here and there.
In June, when the US SEC sued Binance, Cardano (ADA) was mentioned as an unregistered security. This has significantly curbed the growth of DeFi and shrunk ADA’s price. Due to both positive and negative developments, Cardano has been circling the same position in 2023 as well. It has grown by 114% in comparison to a year ago but so has the rest of the top cryptocurrencies and the crypto market at large.
Not all top cryptocurrencies have been winners in 2023. Dogecoin (DOGE), for example, was even less hype than a year ago, although it had its moments this year.
As usual, Elon Musk’s tweets have caused DOGE price action on more than one occasion. However, it really went through the roof when the logo of the social network Twitter, bought out by the billionaire in 2022, was one day replaced by the Doge meme. Just a couple of weeks before the stunt, the New York court registered a class action lawsuit against Musk alleging he manipulated the price of the cryptocurrency.
Of course, not all news related to Dogecoin was exclusively related to Musk. Ordinals have found their way to Dogecoin, too: community members have proposed to call them “Doginals”. For a while, these digital artifacts have caused the Dogecoin blockchain to process more transactions than Bitcoin and Ethereum. Curiously enough, Dogecoin is also one of the few crypto assets listed on the regulated exchange Bakkt — potentially meaning that its legal status is not as shaky as of more “serious” coins.
In November, the meme coin celebrated its tenth anniversary. The fact that it is still around and among the top cryptocurrencies tells us volumes about the value that the crypto community sees in DOGE.
Finally, let’s talk about another token that lost its place near the top. It has not been due to some glaring faults of the L2 Polygon but rather a symptom of the change in sentiment.
While more L1s have made their way into the top, Polygon, the only L2 in the rating as of 2022 has been shuffled out to 14th place by the end of 2023. The news surrounding Polygon has been mostly bullish: new brand deals, partnerships, and integrations galore. A concurrent project, zkEVM rolled out smoothly to high anticipation. All seemed well but at the same time, Polygon Labs laid off 100 employees in February.
Meanwhile, its competitors Optimism and Arbitrum were taking off, too. It seems that the “Ethereum L2 wars” did not propel one participant to the top but redistributed resources between them. Although OP and ARB were not hit with the security allegations, MATIC was, costing it some listings.
The Polygon developers remain hopeful: they have announced Polygon 2.0, a network of ZK-powered chains that would feel like a single environment. The Polygon PoS sidechain is due for an upgrade as well, becoming “ZK validium” in early 2024. As a part of the upgrade, MATIC tokens are to become POL, ending a somewhat confusing naming convention.
Comparing what the top cryptocurrencies are at any given point can give us a lot of clues about the state of the crypto industry. Coins and tokens win and lose based on their merits and the global sentiment alike, and peering behind numbers reveals many interesting facts.
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