KuCoin's Latest Research Report: Bitcoin Reaches Record Highs, $1.16 Billion Poured into 180 Crypto Projects, and Ethereum's Layer2 TVL Jumps 13.66%

2024/04/12 01:20:52

The cryptocurrency market in March 2024 showcased remarkable trends, as Bitcoin's value soared beyond the $70,000 mark, and briefly broke the high of $73,000, reflecting a bullish sentiment underscored by a surge in Open Interest for BTC futures and options. During the same period, the resilience of the U.S. economy stood out despite persistent inflation, shaping the Federal Reserve's cautious approach towards interest rate decisions. Such dynamics highlight the intricate link between cryptocurrency valuations and global economic policies, spotlighting the critical role of vigilant monitoring of future monetary policy shifts by key financial institutions worldwide. Additionally, the fusion of AI technology into various sectors alongside the emerging focus on real-world asset (RWA) concepts began to redefine competitive landscapes within public blockchain ecosystems, with pivotal developments such as Nvidia's AI conference and OpenAI's SORA creating buzz in the tech community.

Stablecoins, led by USDT and USDC, continued to dominate in March, directly influencing Bitcoin's ascent to record prices. The month also saw USDe's circulation reach a milestone, positioning it as a formidable contender in the stablecoin arena. The period was further marked by strategic moves in the AI sphere, with discussions on amalgamating projects like SingularityNET, Fetch.ai, and Ocean Protocol into ASI tokens, suggesting a new era for AI in blockchain. The investment and financing scene witnessed a bullish uptick, with an increase in both quantity and quality of projects, notably within the Ethereum and Layer 2 ecosystems, driven by active investors such as OKX Venture with a keen focus on AI innovations. Regulatory narratives also unfolded, with Binance facing scrutiny in Nigeria and the US SEC evaluating Ethereum's classification, complemented by Arizona's legislative progress towards embracing crypto in retirement funds, all painting a month rich in transformative events and regulatory developments in the crypto space.

Bitcoin's Historic Rally and Market Dynamics

March 2024 saw Bitcoin shattering previous records, surging towards and briefly surpassing the $73,000 mark, setting a new historic high. The period also recorded a spike in Bitcoin's spot ETF net inflows, peaking at $1.05 billion in a single day. This upsurge was mirrored by significant increases in futures and options' Open Interest, signaling an influx of capital into the market. However, the intense greed driving the market, highlighted by a Fear and Greed Index score of 90, suggests potential for future volatility. Concurrently, fluctuating sentiments from the Federal Reserve regarding rate cuts have underscored the cautious approach in managing expectations, reflecting the intricate relationship between the crypto market's trajectory and broader economic policies.

AI's Influence and RWA's Resurgence in Public Chains

March underscored the deep connection between the crypto sector's AI narrative and major real-world AI developments, maintaining strong momentum in the AI asset sector. Despite some pullbacks in AI assets, the month witnessed varied performances across public chains, with Solana and Base ecosystems showcasing robust growth driven by MEME assets and strategic investments. BlackRock's launch of the BUIDL fund rekindled interest in Real-World Asset (RWA) tokenization, marking a pivotal moment for the integration of traditional financial assets with blockchain technology. This shift signifies a budding competitive landscape among public chains, emphasizing the growing importance of innovative narratives and mechanisms in captivating both investors and the broader community.

Stablecoin Dynamics: USDT, USDC Continue to Lead

USDT and USDC demonstrated remarkable growth in March, with USDT's issuance soaring by 5.825 billion and USDC by 3.803 billion, according to Glassnode. This uptrend highlights the growing appetite for crypto assets, particularly from European and American investors, while other stablecoins like BUSD, TUSD, and PYUSD experienced declines, notably TUSD. An influx of USDT into centralized exchanges propelled Bitcoin to unprecedented heights early in March, underscoring the pivotal role of USDT's movements in influencing BTC prices. Amidst these shifts, USDe emerged as a formidable player, surpassing the 1.54 billion mark in issuance within just four months of its launch, positioning itself as the market's fifth-largest stablecoin. Its rapid growth trajectory sets the stage for potential competition with stalwarts like FDUSD and DAI.

TUSD and FDUSD Issuance Both Declined, TUSD Trading Volume Continues to Shrink

Despite a bullish backdrop, TUSD faced a stark decline in March, with its issuance plummeting by 61.4% from an initial 1.28 billion to 494 million, diverging from the restoration of its peg with USDT. Concurrently, TUSD's trading activity on Binance dwindled, reflecting a broader trend of reduced engagement. Similarly, FDUSD, despite its strategic importance within the Binance ecosystem and support through Launch Pool initiatives, witnessed a 21.95% decrease in issuance, retreating to early February levels. These developments paint a complex picture of the stablecoin market, where some currencies strive for dominance while others navigate challenges of diminishing issuance and market presence.

Ethereum’s Dencun Upgrade Enhances Layer2 TVL

The Ethereum network experienced a noteworthy development in March 2024 with the Dencun upgrade, leading to a 13.66% increase in Layer2's Total Value Locked (TVL) measured in ETH. Despite a slight price dip from $3530 to $3300, resulting in a 7.3% decrease in USD-measured TVL, the upgrade brought significant gas fee reductions. Concurrently, Solana's market activities remained vibrant, maintaining high engagement levels despite the ETH to BTC exchange rate's stagnation, showcasing the diverse effects of technological advancements across blockchain ecosystems.

Base and Arbitrum Witness Historic Growth; Solana Continues High Activity

March also highlighted the dynamic expansion of the Base ecosystem, achieving an all-time high and ranking third among Ethereum Layer2 solutions. Notably, Arbitrum's unlocking of 1.11 billion $ARB tokens significantly increased its TVL, demonstrating the ecosystem's growing appeal. The Solana ecosystem maintained its high activity level, driven by MEME frenzy and DeFi projects, further solidifying its position as a leading public blockchain. This period of intense activity underscores the competitive and evolving landscape of public chains and Layer2 solutions, marked by significant user engagement and capital influx.

Diverse Public Chains Experience Robust Growth

The activity within the Solana ecosystem exemplified the vigorous expansion across various public chains, with Solana leading in MEME-driven wealth creation and DeFi innovations. Additionally, the SUI and BNB Chain ecosystems witnessed substantial growth alongside their token price increases, reflecting the broader trend of emerging public chains like Base in Layer2 making significant strides. This varied performance across platforms highlights the ongoing innovation and competition within the blockchain sector, promising exciting future developments.

Revolutionizing Real-World Assets: BlackRock's BUIDL Tokenized Fund

BlackRock's BUIDL, a tokenized investment fund pegged to the US dollar, captivated the market by attracting $240 million within just a week, highlighting the burgeoning interest in Real-World Asset (RWA) tokenization. Designed to cater to cryptocurrency companies and DAOs seeking blockchain-based financial management, the BUIDL fund provides a novel approach by investing entirely in cash, US Treasury bonds, and repurchase agreements. This strategy not only offers a stable income to investors through daily dividends directly to their wallets but also serves as a groundbreaking alternative to traditional stablecoins and a foundational asset for derivative products. The substantial investment from Ondo Finance and the fund's contribution to the diversification of the RWA sector underscores the growing allure of integrating traditional financial mechanisms into the crypto landscape, promising sustained growth and innovation.

AI Blockchain Protocols Merge into ASI for Enhanced Superintelligence

In a bold move towards consolidating blockchain AI technologies, SingularityNET, Fetch.ai, and Ocean Protocol are in discussions to merge their tokens into a singular entity, Artificial Superintelligence (ASI), valued at an estimated $7.5 billion. This merger aims to form the Superintelligence Collective, uniting these projects under a unified token to foster collaborative advancements in AGI and ASI technologies. The transition to ASI tokens involves a 14-day community consultation and subsequent voting, reflecting a strategic alliance poised to accelerate the development of advanced AI solutions within the blockchain sphere. This initiative not only marks a significant step towards unified AI blockchain endeavors but also opens potential arbitrage opportunities, drawing keen investor interest in the evolving AI crypto domain.

Bitcoin Inscriptions and NFT Dynamics

In March, the interest in Bitcoin inscriptions remained flat due to a lack of innovation, overshadowed by the surging popularity of BTC Layer2 and NFTs amid intense market competition and a variety of airdrop projects capturing the ecosystem's attention.

BTC Layer2 Scenario Intensifies

Merlin Chain's dominance in BTC Layer2 with a TVL of $2.64 billion starkly contrasts with Stacks's $180 million, highlighting the competitive landscape. The upcoming Nakamoto upgrade for Stacks and potential strategic moves by Merlin Chain are eagerly anticipated, signaling a pivotal moment for BTC Layer2 solutions.

March Sees Surge in Crypto Investments

March 2024 marked a notable increase in crypto investment and financing activities, with 180 projects and a total financing scale of $1.16 billion, signaling a bullish resurgence in the primary investment market.

Shift Towards Strategic Financing

The landscape in March favored strategic financing, with a decrease in seed stage projects and a significant rise in projects securing financing between $10 million to $100 million, reflecting heightened market enthusiasm.

Renewed Interest in Ethereum and Layer 2 Projects

Post-Dencun upgrade, Ethereum and its Layer 2 counterparts, along with the BTC ecosystem, attracted increased investor attention, highlighting a shift towards technology-driven investments.

OKX Ventures Dominates Investment Scene

OKX Ventures led as the most active investor in March, focusing on AI, infrastructure, DeFi, and gaming, indicating a strong interest in advancing technological solutions within the crypto space.

Arizona Advocates for Bitcoin ETFs in Retirement Funds

The Arizona State Senate has passed a resolution encouraging state retirement fund managers to consider incorporating Bitcoin ETFs into their investment portfolios, marking a significant push towards integrating cryptocurrencies into traditional financial strategies and indicating growing acceptance among "old money" investors.

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2. This report provided by KuCoin Research does not offer advisory services related to investments, taxes, legal matters, finances, accounting, consulting, or any other similar services. The information provided should not be seen as recommendations to buy, sell, or hold any assets.

3. The information presented in this report is sourced from reliable but not guaranteed sources, and its accuracy or completeness cannot be assured.

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