After a tumultuous 2022 for the crypto industry, 2023 provided some much-needed relief for its participants.
From GBTC’s narrowing discount to Binance’s loss of market share, a USDC squeeze, the rise of Bitcoin NFTs and the crypto market recovery, here are five charts to show how the industry changed last year.
GBTC’s narrowing discount to NAV
The Grayscale Bitcoin Trust (GBTC) discount fell to its lowest level in over two years following Grayscale Investments’ victory in August against the Securities and Exchange Commission over the conversion of its flagship GBTC product to a spot bitcoin ETF.
The GBTC discount to net asset value (NAV) — meaning how much lower the market price of each share is than the value of the bitcoin it represents — is trading below 10% for the first time since July 2021.
GBTC trades at a discount as the shares currently cannot be redeemed, so the only option is to sell them to other prospective buyers. However, it historically traded at a premium until 2021’s crypto credit crunch.
The narrowing trend — seeing the discount shrink from over 40% before BlackRock and others filed spot bitcoin ETF applications in June — is likely a sign of increased optimism the SEC will approve a spot bitcoin ETF in the U.S., including the potential conversion of GBTC.
GBTC is up over 320% in a year compared to bitcoin’s 160%, according to TradingView.
Binance’s declining market share
Binance had a disastrous 2023 on the legal and regulatory front.
In November, U.S. authorities, including the Department of Justice, Department of the Treasury and the Commodity Futures Trading Commission settled with Binance, concluding a criminal investigation into allegations of money laundering and sanctions violations — marking one of the largest corporate settlements in U.S. history. The settlement involved $4.3 billion in penalties and included criminal charges against its former CEO Changpeng Zhao. Zhao agreed to step down as CEO as part of a plea deal with the DOJ. Zhao pleaded guilty to violations of the Bank Secrecy Act and will pay a $50 million fine, with his sentencing hearing set for February.
In the U.S., the SEC also filed a lawsuit against Binance in June, alleging it had violated U.S. securities laws, which the regulator argues should result in prohibiting the company and Zhao from doing further business in the U.S. The civil suit followed a similar one filed by the Commodity Futures Trading Commission in March.
In Europe, Binance announced it was exiting the Netherlands after failing to acquire regulatory approval. It also applied to deregister its local entity in Cyprus and is reportedly under investigation in France for alleged money laundering.
Binance.US cut staff numbers in the wake of the SEC’s suit against the company, which also saw its business shrink with the firm’s customers no longer able to use U.S. dollars to purchase crypto on the platform. In September, the firm laid off one-third of its remaining employees, with Binance.US president and CEO Brian Shroder also exiting the company amid uncertainty and declining business.
Binance itself reportedly laid off at least 1,500 staff and made headlines last year for high-profile executive exits, including global head of product Mayur Kamat, Asia-Pacific head Leon Foong, chief strategy officer Patrick Hillman, general counsel Hon Ng and chief business officer Yibo Ling.
As a result, Binance’s market share among non-USD exchanges slipped from over 70% at the start of 2023 to around 46% by the end of it, according to The Block’s data dashboard.
USDC gets squeezed
USDC, issued by Circle, started 2023 with a 32% share of the stablecoin market, according to The Block’s data. That amounted t0 $48.1 billion of the $153.1 billion total supply on Jan. 1, with the Tether-issued USDT at 50% ($75.7 billion) and the decentralized DAI stablecoin the third largest at 4% ($5.8 billion).
Fast forward to March, and USDC significantly depegged from the U.S. dollar — dropping to as low as $0.88 following Circle’s announcement of holding $3.3 billion in reserves at the failed Silicon Valley Bank. The disclosure prompted a significant sell-off, with investors turning to other stablecoins, like Tether’s USDT, or exiting the crypto market entirely — leading to a 15% drop in USDC’s market cap in just 24 hours. The situation was further complicated by major exchanges like Coinbase and Binance halting USDC conversions amidst the turmoil.
Since then, USDC’s market share has continued to be squeezed, falling to $26.2 billion (19%) of the now $138.8 billion total stablecoin supply as holders either reallocated to other crypto assets or exited into fiat last year.
USDT strengthened its domination both in terms of percentage and value, reaching 71% of the…
Read More: The year in data: 5 charts that show how crypto changed in 2023