2023 Annual Winners & Losers in the Crypto Industry: Review the Development Trajectory of the Industry via 6 Detailed Index Charts

FX168 Financial News (North America) - In 2023, the growth of the blockchain industry is remarkable. A cornerstone of the capital market is to allow investors to bet on the emergence of new technologies. The blockchain industry has evidently matured and developed its own market to bet on winners and losers in the blockchain sector. The CoinDesk Market Index (CMI), as a benchmark for measuring the performance of the digital asset market, provides investors with a comparative return on various assets in 2023.

Returns on CMI are 5 times that of S&P 500

(Source: CoinDesk)

As CoinDesk’s extensive and inclusive digital asset market measure, the CoinDesk Market Index (CMI) is nicknamed the “crypto S&P 500.” Over the past year until December 21, the CMI has grown by 125%, precisely doubling. As shown in the chart, the majority of returns for this year were concentrated at the beginning and end, with a relatively flat period in the middle, causing considerable anxiety (and layoffs) in the entire crypto industry until signs of growth began to emerge. Bitcoin (BTC), the largest cryptocurrency by market capitalization, outperformed the benchmark index, while Ethereum (ETH), ranking second, underperformed. The year-to-date return of the CMI is approximately five times that of the S&P 500, the latter being the benchmark index for the U.S. stock market.

The Returns of CoinDesk Computing Index (CPU) Leads in the CMI Sectors

(Source: CoinDesk)

The CoinDesk Computing Index leads in the CMI sectors, with a return rate of 167% in 2023. This index corresponds to the digital computing block in CoinDesk’s digital asset classification standard.

The definition of the digital computing block is as follows: “The digital computing block consists of projects aimed at decentralizing data sharing, storage, and transmission by eliminating intermediaries and ensuring the privacy of all users. All projects designed for the decentralized sharing of data and network services, including on-chain and off-chain data transfer, social data platforms, peer-to-peer secure data transactions, open networks, free-market private computing, and decentralized file storage and sharing, are crucial elements in building the Web3 infrastructure.”

Ranking second in the industry index is the CoinDesk Currency Index (CCY) with a return rate of 150%. This index includes Bitcoin (BTC), XRP (XRP), Stellar Lumens (XLM), and Dogecoin (DOGE).

Injective, RenderToken, and Solana lead CMI token returns

(Source: CoinDesk)

Rising by almost 32 times! That’s the rate of return for Injective Protocol’s INJ token (INJ). Claiming to be the fastest among Layer 1 protocols, Injective is a financial blockchain built based on Cosmos Blockchain. In August, CoinDesk reported on its token economic model “2.0” upgrade, aiming to “significantly increase the amount of INJ burned each week,” causing some of the backlash at the time.

RenderToken (RNDR), a GPU rendering network, comes from Render. This year, it migrated from Ethereum to Solana, experiencing a surge of 972%. (It’s worth noting that RenderToken is the top performer in the digital computing industry.) Solana’s SOL token also skyrocketed by 833%.

In the volatile digital asset market, there is no guarantee that these gains are deserved or enduring. What is certain is that the digital asset market in 2023 has seen astonishing returns and high risk, attracting more traders into the crypto market.

ApeCoin, Luna, DASH, BAL, OMG, ZEC are the worst losers of CMI in 2023

(Source: CoinDesk)

In 2023, the most significant returns likely flowed towards bullish crypto traders. However, there might also be some lucky or savvy investors who profited handsomely by successfully shorting certain projects. Some of these projects ended up being traditional failures, such as Terra’s LUNA (LUNA). Other projects lost momentum along the way, like EthereumPOW’s ETHW (ETHW), which essentially collapsed as Ethereum’s main blockchain successfully transitioned to a proof-of-stake blockchain, reaching what was termed the “Shapella” upgrade earlier this year, allowing for the first time staking withdrawals. Ethereum Name Service (ENS) and Zcash’s ZEC (ZEC) represent some projects that are still considered interesting by many crypto analysts, although they had a challenging year.

Bitcoin expanded its dominance.

Bitcoin extends its dominance

(Source: CoinDesk)

Sometimes it can be hard for the average person to really understand the point, but Bitcoin(BTC) is actually considered a safe bet by many savvy cryptocurrency traders. So from a risk-reward perspective, one can hardly complain about the “old-aged” cryptocurrency’s year-to-date return of 164% as of December 16. (The chart above shows the year-to-date leaders in the CoinDesk Currency Index (CCY).)

XRP (XRP), the payment token used in the Ripple Labs network, has had a good year, rising 83% as key decisions impact it in a pending case from the U.S. Securities and Exchange Commission.

Stellar is gearing up for its major “Soroban” smart contract upgrade expected in early 2024, and its token XLM (XLM) is also seeing a decent return of 73%.

CoinDesk Smart Contract Platform Index (SMT)

(Source: CoinDesk)

The CoinDesk Smart Contract Platforms Index (SMT) covers the largest core blockchain infrastructure beyond Bitcoin, including heavy-weighted Ethereum and numerous alternative layer-1 blockchains and a growing number of layer-2 networks. They are vying for relevance. In 2023, the SMT Index return rate is 107%, slightly lower than that of the benchmark CMI, at least in part due to Bitcoin’s outperformance.

Market leaders Injective and Solana, which we have already mentioned, have performed exceptionally well, and Ethereum has also performed well, rising by 87%. Avalanche’s AVAX (AVAX) has had its big year because rumors have it that it could draw attention from institutional blockchain pressure adopters; the project has played a leading role in large proof-of-concept verification demonstrations at major Wall Street investment banks JPMorgan Chase and Apollo.

The Optimism ecosystem’s OP (OP) token gained momentum when Coinbase’s Base and several other projects chose the technology as a template for the layer-2 networks they wanted to build.

The big winner this year is Skale Network’s SKALE token, which describes itself as “a native multi-chain network built on Ethereum, aiming to scale Ethereum dApps by enabling high throughput, fast finality, and gas-fee transactions.” It rose by 151% in 2023.

Polygon’s MATIC token has shown a modest performance with a 6.2% increase. Despite positioning itself at the forefront of Ethereum layer-2 competition and being proactive in the heat of “zero-knowledge” cryptography, the project’s performance is relatively moderate.

On the other hand, the ATOM token in the Cosmos ecosystem has been somewhat disappointing, with only a 20% increase. Despite its vision of a multi-chain, interoperable blockchain universe dominating the entire blockchain space, it has also landed some significant projects, including a new layer-1 blockchain for decentralized derivatives exchange dYdX, moving away from its previous position as an Ethereum layer-2 network.

What will happen in the crypto market in 2024?

For the crypto market, historically, the Bitcoin halving that occurs every four years (as expected next year) tends to drive a four-year market cycle. However, this history only goes back 14 years.

The crypto market is one area that is entirely similar to traditional markets, and no one truly knows what will happen—everyone is just speculating. Or, as the saying goes about Wall Street stock traders in the past, if they tell you to buy, it means they’ve already bought.

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