The state of crypto and Bitcoin. Market trends and new narratives. Top L1 and L2 chains. Liquidity pools and yield aggregators. AI crypto trading performance.
The bulls are back.
Cryptocurrencies thrived in January, as prices regained most losses incurred from the FTX collapse in Nov 2022. The global crypto market cap embarked on a steady upward trend, reaching the $1.00T level.
Bitcoin leading the way with its best yearly start since 2013, helped investors to regain confidence. The market sentiment shifted from extreme fear towards a more neutral state.
The crypto industry has been unaffected by negative events, as the efforts made during the bear market are beginning to pay off. New narratives and projects are pivoting the way into a more bullish quarter.
Between Jan 1 and Jan 15, the total crypto market cap grew exponentially, reaching $948B, an increase of +25.13%. Afterward, the market’s growth pace slowed, with prices gradually stabilizing at higher support levels in narrower ranges.
The industry recorded its best month since October 2021, with Bitcoin closing at $22,848 (+38.08%). Some of the notable monthly gainers were Solana (+141.38%), Aptos (+361.22%), dYdX (+178.85%), Optimism (+175.14%), and Fantom (+158.28%).
The BTC halving is set to take place on April 20, 2024. This event, which will see the reduction of mining rewards from 6.25 to 3.125 BTC per block, has historically led to price spikes in the past. Analyzing past halvings through the stock-to-flow ratio, we can see that the impact on price has decreased with each halving, but the pattern remains.
According to analysts, we could see a price rise to $36k before the halving and potentially even higher, to $149k post-halving. While past performance is not a guarantee of future results, this event is certainly one to keep an eye on.
Over $495M in short futures contracts have been liquidated in three waves with a declining scale (left table). The short squeeze in mid-Jan caused long liquidation dominance to reach an all-time low of 15%.
Exchanges have seen a continuous trend of coins flowing out since March 2020, resulting in a multi-year low of 11.7% BTC balance held in exchanges. Daily exchange flows are in a balanced state with $20M net daily flows, which is a significant contrast to the November-December outflows of $200M to $300M per day (right table).
The difficulty of Bitcoin mining has reached a new pinnacle, recording a +4.68% increase from 37.59 EH/s to 39.35 EH/s. As more miners join the network, the mining difficulty, which determines the computational power required to extract a single Bitcoin, adjusts bi-weekly, making the process increasingly challenging.
Despite this, the hash rate, which gauges the computational power dedicated to Bitcoin mining, remains at 305.81 EH/s, an impressive figure that has not quite hit its historic high of 348.7 EH/s seen on January 6, 2023.
January saw a boost in the stock markets, with the US S&P 500 growing by an impressive +7.72%, the Asian SSE Composite rising by +5.43%, and Euronext 100 climbing by +6.06%. However, these gains pale compared to the bull run demonstrated by Bitcoin, which showed its strength by skyrocketing by +43.13%.
As the traditional markets regain their footing, Bitcoin continues to prove its resilience and dominance in the world of finance.
Ethereum showed its network strength in January 2023, with a peak of 650k active addresses on Jan 8th. The average active addresses for the month were 405.77k, demonstrating a consistent level of network engagement.
Furthermore, an average increase of +5.76% has been since December 2022, indicating a growing interest in the Ethereum network.
In January, Ethereum’s gas prices remained between 18.04 and 33.56 gwei on average, slightly higher than in December.
Gas fee prices are driven by multiple factors, including network demand, leading to congestion and higher demand for ETH and tokens used to pay gas, and bull market conditions where increased demand for the underlying cryptocurrency or token drives up prices.
Ethereum grew by $5.08B in TVL in January, with a steady increase among its top protocols. Among the frontrunners on the network, Lido boasts a +38.59% growth in TVL, solidifying its position as a leading player in front of MakerDAO, which now sits at over $1B behind.
Meanwhile, another top protocol in liquid staking — Coinbase Wrapped Staked ETH (“cbETH”), surged by +43.09% in TVL as well.
Total Value Locked
In January, the DeFi market grew from $38.96B to $47.94B in TVL.
Decentralized exchanges’ volume grew to an average of $17.98Bn in January, an increase of +56.23% from December.
Top Layer 1s
Ethereum kept a market share of around 60% throughout the bear market, while Tron and BSC fight for the second spot at around 10–11% share each. Despite regaining over 150% of its market cap, the Solana network still struggles to hold onto more than 1% of TVL's share in DeFi.
Aptos, which grew by nearly 400% in price, is still at 0.13% in terms of TVL, while Celo and Algorand are marching toward a top 10 spot. The Cardano network grew substantially in January thanks to the recently launched Djet stablecoin but is still tiny compared to the Mcap it has.
Top Layer 2s
The new L2 players — Arbitrum and Optimism, continued attracting investors both in and outside DeFi. While their native tokens grew alongside all other cryptocurrencies, the L2 networks showed even more promising statistics.
At the end of January, Polygon was no longer the dominant L2 in TVL. At a rough 0.01% market share, the first place went to Arbitrum, with Optimism slightly falling behind since November.
According to DefiLlama data, the top yield pools with a TVL above $150M continued producing higher average APY in the last 30 days, with USDC-WETH (0.05%) on Uniswap v3 having the highest 30d average at 40.25%.
Overall, there were eight pools with a 30d average APY above ~12%, with four belonging to the Ethereum chain, 2 to the BSC and Arbitrum, and DefiChain having one each.
Yearn Finance and Beefy remained the two most dominant yield aggregators in TVL, growing by over +25%. The third place with the highest monthly increase in the top 10 was Idle Finance, which, as of the end of January, was sitting at $83.18M in TVL.
[Jan 5, 2023] AVAX’s DEX Trader Joe's expands to BNB
[Jan 11, 2023] AWS Partners With Avalanche
[Jan 13, 2023] Tron Founder Willing to Spend $1B on DCG Assets
[Jan 17, 2023] Polygon Undergoes a Hard Fork
[Jan 19, 2023] Fantom Releases On-Chain Vault to Support Ecosystem
[Jan 19, 2023] 1inch Launches Crypto Hardware Wallet
[Jan 20, 2023] Aave V3 Ethereum Mainnet Governance Proposal (executed)
[Jan 24, 2023] Cardano-Based Overcollateralized Stablecoin Djed Launch
[Jan 24, 2023] Compound III WETH Market Is Now Live
[Jan 24, 2023] dydx Postpones Token Unlock From February to Dec 1, 2023
The month of January saw robust investment activity in the crypto space, with multiple companies raising significant funds. Blockstream raised the most with $125M through convertible note issuance, while other notable raises include QuickNode ($60M), Candy Digital ($38M), and PLAI Labs ($32M).
The majority of the investment went towards infrastructure, with Web3 infrastructure, blockchain security, and NFT companies attracting the most attention from investors.
The cryptocurrency market continues to show bullish sentiment, with assets like Bitcoin maintaining recent gains, as indicated by the Crypto Fear & Greed Index reaching new highs of 61 as of Jan 30, 2023.
This reading of greed reflects a significant shift in the market towards confidence in the future performance of cryptocurrencies, as seen through the composite measure of various indicators such as volatility, momentum, social media activity, and trading volume.
Investors are demonstrating increased confidence in the cryptocurrency market by putting more money into crypto funds. Last week, digital asset investment products saw a record inflow of $117M, pushing the total assets under management to $28B, a +43% increase from Nov 2022 lows.
Investors seem to be focusing on Bitcoin, with $116M in inflows and are selective in their approach as multi-asset investment products continue to experience outflows, at least for now.
Ethereum Layer 2s are becoming a prominent topic in 2023 due to the arrival of Shanghai and the sudden increase in tokens and LSDs. Here is a network comparison of the leading protocols by crypto analyst DeFi Mochi.
A narrative that is still debatable if it has an explosive growth potential is DeFi options. Here is a look by crypto analyst Ignas:
DeFi Liquidity Optimization
Liquidity optimization is crucial in the world of DeFi as it allows for smoother and more efficient transactions between users. Currently, the narrative is gaining traction with platforms working on various LP optimization solutions like the Osmozis’ LIOD:
A recent narrative that has gained a lot of controversy in the crypto community is Bitcoin NFTs. For nearly a decade, sidechains or layer-2 solutions have been used for NFTs, but the new project Ordinals has proposed an alternative. The development of NFTs on Bitcoin has been hindered by its limited support for smart contracts, which are required in the NFT minting process to assign and update the ownership of digital assets.
A theme that gained pace in mid-2022 is ZK-rollups like Starknet and zkSync. Some of these projects still don’t have native tokens, and crypto analysts are lurking for opportunities. Here is a breakdown of the narrative by Miles Deutscher.
January 1CC vs. BTC vs. ETH
In the January crypto rally, the One Click Crypto trading AI gained, on average, +12.98% for all strategies that ran throughout the month.
January Top AIs
The top 3 trading AIs with the highest average returns in January were Explorer (+27.71%), Performer v2 (+24.88%), and Clipper (+21.32%).
January Top Market Pairs
Performer v2 had the biggest average return in the GALA: USDT market pair in which the AI gained +213.68%, while Explorer profited +140.68% in the same pair and a +103.12% ROI in FTM: USDT.
As for the long-term performance of 1CC against Bitcoin and Ethereum, the trend continues to favor the AI-powered portfolio, with a total outperformance of +51.34% against BTC and +157.72% against ETH over a trading period of 799 days (since Jan 15, 2021).
In January, we conducted the following research:
Top 6 AI Crypto Trading Bots 2023
A review of the top 6 crypto trading bots on the One Click Crypto trading application that generated an average ROI of +58.26% — with a detailed breakdown of each.
Analyzing 59 DeFi Yield Aggregators.
The emergence of Decentralized Finance (DeFi) enabled a new generation of financial products to be built on blockchain. Learn the features and flaws of top DeFi yield products
9 Hidden Web3 Trends To Watch In 2023
7 Ways To Invest In Artificial Intelligence
The Greatest Cryptocurrency Trades and Their Success Stories
Top 7 Artificial Intelligence Investments For The 2023 Recession
AI Crypto Trading Bot With 100% Accuracy
Top 5 Crypto Trading Bots For December 2022: Performance Review
Can AI Trading Bot Beat ETH By +0.23% Daily?
AI Trading Bot: Understanding Its Behavior And Decision-Making Patterns
15 Crypto Funds 2021–2022 Performance
How Computers Became Better Wealth Managers Than Humans
Will Regulations Kill Decentralized Finance Or Save It?
World’s Richest Gamblers (Investors) — Making Billions With Mathematics
How Did AI Respond To The Terra (LUNA) Meltdown?
Explorer AI Is Now Available
The Explorer AI is now available to all One Click Crypto users after 6-months of beta testing. With an impressive average ROI of +24.25% during the January crypto rally, the AI has performed well on top pairs such as SOL: BUSD and XRP: USDT. Explorer also demonstrated great risk aversion during the FTX market crash.
$100,000 Token Buyback Program
One Click Crypto has announced a $100,000 token buyback program to strengthen its market position and ensure token price stability, boost company treasury holdings, increase market liquidity, drive token demand, and prepare for the upcoming 1CC launch.
Reputation is key.
While the crypto market has shown signs of recovery, regaining its lost value from Q4, it is essential to remember that the industry as a whole must focus on rebuilding its reputation.
Narratives can be an effective way to find the next moonshots, but gaining a positive image in the public’s eye (regulators as well) will benefit the Web3 revolution the most in the upcoming years.
The long-lasting bull market will be that in which users are attracted not just for the “getting rich quick” opportunities but the benefits of using a decentralized blockchain system that does not devalue by 90% in a week.
The best DeFi yields are hidden.
Unlock access to the upcoming One Click DeFi app, with exposure to 60+ protocols and personal AI Robo-advisor for free.
This is not financial advice. This newsletter is strictly educational and does not provide investment advice, solicit the purchase or sale of any assets, or encourage readers to make financial decisions. Please use caution and conduct independent research.
We regularly prepare insightful reports and case studies about crypto trading and the blockchain industry.
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