March saw significant increases for cryptocurrencies, nearly doubling trade volumes to an all-time high as the top coins reached previously unexplored heights and altered the dynamics of the market.
In a research report, JPMorgan (JPM) stated that the capitalization of the cryptocurrency market increased by 19% in March, indicating that growth is still occurring, albeit more slowly than in February. Although the market capitalization growth of altcoins exceeded that of established assets such as Bitcoin and Ethereum, the ecosystem as a whole experienced double-digit growth.
Following the mid-month Dencun upgrade, the DeFi industry also saw growth, driven by an increase in Total Value Locked (TVL) across Ethereum Layer 2 solutions.
March’s trading volumes almost doubled from the previous month, bringing the first quarter of 2024’s performance into line with that of the last quarter of 2023. The average daily volume (ADV) for the whole cryptocurrency market increased by 87% month over month, according to TradingView. Even more significant surge was seen, according to data from CCData, particularly in cryptocurrency volumes as trade is starting to pick back up.
According to the research, “the ecosystem rallied +19% in March, and the total crypto market capitalization remained above the $2.0tr threshold throughout the month and even eclipsed $2.6tr mid-March before settling towards month-end at ~2.5tr.”after Dencun’s mid-month upgrade.
According to TradingView, overall volumes increased more sharply in March. The whole crypto market capitalization saw an increase in average daily volumes of 87% MoM and +133% YoY in March. It seems that trade velocity significantly increased in March as opposed to February’s decline.
Several significant adjustments to the U.S. regulatory landscape in March kept it front and center. The month saw significant court rulings and regulatory measures pertaining to the cryptocurrency sector, despite the continuous absence of clear regulatory guidelines. These activities included lawsuits against Coinbase (NASDAQ:COIN) and other significant participants. According to JPMorgan, the SEC persisted in its “regulation by enforcement” strategy, interacting with new players in the market and changing its dynamics.
On March 13, the Dencun Upgrade was successfully deployed to increase the capacity of the Ethereum ecosystem and lower transaction costs. TVL throughout the ecosystem is increasing, and the update has already resulted in a noticeable drop in median transaction fees across a range of Layer 2 solutions. As an illustration, TVL on Base, Coinbase’s Layer 2 chain, increased from $690 million just before to the upgrade to more than $1.2 billion by the beginning of April.
Although Bitcoin reached a new all-time high of nearly $73,000 in the middle of the month, net flows into spot Bitcoin ETFs remained net positive in March but fell to $4.6 billion from February’s $6.1 billion. ETF inflows rose as a result of the initial spike in price of Bitcoin; but, after peaking, the price of Bitcoin started to move sideways, seemingly reversing the trend.
According to JPMorgan, the profitability of bitcoin mining increased by an estimated 33% in March. This was caused by an average monthly gain in Bitcoin prices of 37%, which exceeded the growth in network hashrate. But because of the impending halving, which will lower the block reward from 6.25 to 3.125 Bitcoin, profitability is predicted to drop in April.