The year 2023 saw the digital asset community reach 580 million investors. This figure marked a 34 percent increase throughout the year, according to Crypto.com’s “Crypto Market Sizing” report.
“Crypto adoption in 2023 achieved new milestones, with the number of cryptocurrency owners reaching 580 million (December 2023) in spite of macro headwinds, namely the further monetary tightening by Western central banks to try to tame inflation, protracted kinetic conflict in Europe and a new one in the Middle East, and longer-term consequences of the pandemic,” the report says.
Crypto user base increased from 432 million in January 2023 to 580 million in December. Bitcoin and Ethereum were the most commonly owned or used blockchain assets.
Bitcoin experienced significant growth in April and May due to the momentum of Bitcoin Ordinals. Over 54 million Ordinals inscriptions have been made on the Bitcoin network, and the total inscription fees paid have surpassed 5,473 BTC ($257 million).
Bitcoin ownership grew by 33 percent, reaching 296 million people by December from 222 million in January. This represents 51 percent of global Bitcoin owners.
“The main catalyst behind BTC’s adoption growth was the development in Bitcoin exchange-traded funds (ETFs) and the introduction of the Bitcoin Ordinals protocol, which enabled non-fungible tokens (NFTs) and fungible tokens to be minted on the Bitcoin network. Strong interest from institutional investors also contributed to the increase in BTC’s adoption,” the report says.
Ethereum saw a notable increase, as 39 percent of crypto owners added smart contract-powered assets to their portfolios. The number of Ethereum owners grew from 89 million at the start of 2023 to 124 million by the end of the year, representing 21 percent of global owners.
“ETH’s adoption growth was mainly driven by liquid staking after Ethereum’s Shanghai Upgrade, which allowed the withdrawals of staked ETH after the transition to the Proof of Stake (PoS) blockchain,” the report reads.
The crypto industry had earlier declined in 2022, losing over 50 percent of its $2.9 trillion valuation. Likewise, in 2023, the digital asset ecosystem faced significant challenges, influenced by inflation-curbing actions by central banks, including the Federal Reserve.
Nevertheless, BTC and ETH adoption surged in Q4 2023 due to heightened excitement about developments in Bitcoin and Ether ETFs. Prices for BTC and ETH experienced a notable surge, briefly reaching $44,000 and $2,400 levels, respectively.
The crypto world operates with decentralization and openness, but centralized exchange (CEX) platforms have been the main driver for increasing adoption over time.
The Crypto.com report reveals that many new crypto owners bought Bitcoin and Ethereum CEX. The report includes on-chain market data analysis from over 20 exchanges, including Binance, Crypto.com, Bitfinex, Bittrex, Gemini and 18 others.
Per the same report, 40.9 percent of Bitcoin owners also have ETH in their wallets, while 42 percent of investors own neither Bitcoin nor ETH but other digital assets. The adoption rate for crypto exchanges is significantly high at 89 percent, emphasizing the strong appeal that Web2-like trading platforms have for Web3 investors.
“When analysing the composition of cryptocurrency owners, we found that the shares of both BTC and ETH were flat due to the growth of the denominator (the total number of cryptocurrency owners),” the report reads.
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