March 2023 Market Recap

03 Apr 2023, Monday

1:38 PM

March 2023 Market Recap

We conclude the first quarter of 2023 as March draws to a close. Our January and February market recaps were filled with memorable headlines -- March is no exception. The market has been highly volatile since the start of the month with the collapse of multiple centralized financial institutions, lawsuits against crypto exchanges, and the hype around the ARB airdrop. Let's take a deep dive to explore the key narratives of the past month.

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The market has been difficult in March due to the streak of problems such as the fall of traditional banks and various lawsuits against crypto exchanges. As a result, the top 10 gainers only saw relatively small gains compared to the previous months.

Specifically, CFX continued to lead the race as the biggest winner for two consecutive months with a near triple-digit return. MASK followed at a close second with a gain of almost 67%. Apart from that, XDC and XRP rose mostly due to their involvement in product and legal cases respectively. The rest of the top 10 gainers are beneficiaries of the Silicon Valley Bank (SVB) fallout as crypto investors shifted towards safer large-cap crypto assets.

Conflux (CFX)

Claiming the number one top spot in this month after being the top performer in February, CFX saw a rise of about 88.95% in March and almost 17× since the start of the year. Conflux’s growth has been mostly driven by US regulatory lawsuits that further push the Hong Kong narrative. Conflux has also launched partnerships with more traditional companies, such as XCMG - the third largest construction machinery manufacturer in the world, to further increase the adoption of its blockchain. Conflux has been involved with building blockchain-based SIM (BSIM) cards with China Telecom, the second-largest wireless carrier in China with an estimated 390M subscribers. The pilot program will be launched in Hong Kong later this year before expanding to key mainland China states such as Shanghai. The BSIM card is expected to lower the barriers to entry for users who are unfamiliar with crypto keys, making it easier for them to access Web3 and Metaverse applications. The card provides security and convenience for users and has more storage capacity and computation power than a traditional SIM card. While the know-your-customer (KYC) processes required in some regions may compromise privacy, this could also allow such crypto wallets to be more compliant with Chinese regulations. Conflux Network claims to be the only regulatory-compliant blockchain in China and will likely play a huge role in helping Hong Kong and mainland China expand their Web3 industry.

It has received US$10M in funding from DWF labs and continues to form partnerships beyond its BSIM card initiative. Apart from the XCMG, Conflux has also partnered with Zen Spark Technology, a Singapore-based fintech company, to explore the potential of blockchain and Web3 technologies for international use cases. XCMG plans to leverage the partnership to jointly issue its first non-fungible token (NFT) collection for overseas markets in the near future. Furthermore, Conflux provides grants for the incubation of decentralized applications (dApps) in order to promote the growth of its ecosystem.

Mask Network (MASK)

Following closely as the runner-up, Mask Network is a browser extension that can be used on top of Twitter to enhance privacy and provide additional features. Some of the product features include the encryption of tweets viewable only to selected users, Initial Twitter Offering (ITO), where users can swap their MASK tokens for the newly launched tokens on Mask’s ITO, and viewing pricing data directly on Twitter. Specifically, trading is supported by routing orders through Uniswap, SushiSwap, and 0x.

In addition, Mask also includes many other NFT-related products such as NFT verification, gifting of NFT to friends, and direct purchasing NFTs from marketplaces such as OpenSea and Rarible while still being on Twitter.

MASK saw a large 395% pump in November 2022 within 7 days of Elon Musk’s announcement of the Twitter acquisition and the roadmap to integrate MASK into Twitter. Shortly after, Binance added MASK to its Bluebird Index which has been traded on the exchange ever since.

This new wave of bull rally in March was likely due to Binance’s announcement of including MASK as part of its proof-of-reserves on 7 March. Fundamentally, the project has also gained significant traction since its initial pump. From 1 November to 29 March, the number of MASK holders increased by 36.2%, going from 30.1K to 40K. Monthly transactions also saw a spike and hit an all-time high (ATH) of 20.3K.

XDC Network (XDC)

In February 2023, the co-founder of XDC Network drafted a plan to decentralize the ecosystem’s development, allowing the yearly 160M XDC to be distributed according to on-chain community votes. The XDC narrative seemed to be driven by the ETHDubai event and the messaging standard ISO20022. Majority of the XDC gains came during and after the ETHDubai event that XDC Network participated in, rallying 31.7% from 15 to 20 March.

At the same time, there was another narrative on Twitter surrounding the ISO20022 messaging standard which went live on 20 March. It aims to bring frictionless and instant settlement for all the banks that have adopted this system globally. Some suspect that XDC Network was included in the narrative since it is a payment channel. However, the XDC pump was not driven by this as the other tokens riding on this narrative did not see any price spike, as seen below.


XRP pumped on the narrative that its long-standing lawsuit against the US Securities and Exchange Commission (SEC) might be soon concluding. Some sources even cited that market consensus expects Ripple to win the case by the end of March 2023. The main driver for this narrative was the SEC's removal of Patrick Doody, who has been acting as the SEC’s primary witness. The expectation seemed to be that without Doody as the primary witness, the SEC’s argument of XRP being an unregistered security might fall flat.

On 21 March, rumors that Ripple might be winning the SEC lawsuit circulated and XRP social dominance hit a 50-week high as price rallied by 25.76% on the same day. Riding on the XRP rally, Binance has also listed the XRP/TUSD trading pair with zero maker fees. In addition, the Commodity Futures Trading Commission’s (CFTC) recent lawsuit against Binance is based on the classification of crypto assets as commodities, indirectly benefiting Ripple’s lawsuit with the SEC. If crypto assets, including XRP, are ruled as commodities, the SEC’s argument to classify XRP as a security will be automatically invalidated.

Beneficiaries of the SVB Bailout

Lastly, the remaining top 10 gainers are all beneficiaries of the SVB collapse and the Fed’s bailout. SVB, a top 20 US bank by total assets, collapsed on 10 March, initiating a ginormous wave of doubts about the financial stability of the economy. Crypto was largely hit as well, seen from USDC’s depeg. However, as the Fed bailed out SVB depositors, investor confidence was restored, resulting in an upward repricing of assets.

The fall of SVB and the depegging of USDC was a strong warning to crypto investors, highlighting the inherent risks of traditional banks and centralized entities. As such, a large sum of capital flowed into large-cap cryptos such as BTC, wBTC, and ETH, which acted as decentralized “safe haven” digital assets. Contrary to the previous months, the two mega-cap cryptos, BTC and ETH, have significantly outperformed the majority of the altcoins as most of them lost value throughout March.

Since the SVB saga, the BTC dominance rate has reached a nine-month high of 45.5%. This surge in BTC dominance coincides with a three-day surge in BTC's price, reaching US$26K for the first time since last summer after the better-than-expected consumer price index (CPI) data release for February. This surge quantitatively reflects investors' increasing interest in BTC as the fall of traditional banks such as Silvergate, Signature, and SVB reflect the vulnerabilities of the traditional financial system.

The BTC dominance rate was also driven by the stablecoin unrest in the past months. As shown in Figure 9, the supply of stablecoins has steadily declined since the beginning of 2023 – with the SEC going after Paxos’ issuance of BUSD in February, and SVB’s collapse leading to USDC’s depeg in March, although the latter has since regained its peg.

In fact, this trend towards “safe” assets is not limited to the crypto space. Similarly, in the TradFi market, the volatilities in the financial sector have caused a surge in the price of gold, seen as a physical “safe haven” asset. Since SVB’s announcement on 10 March, the price of gold has increased by over 9%. As a result, Pax Gold (PAXG), a tokenized asset pegged to gold stored by Paxos in the London Bullion Market Association (LBMA) vaults in London, saw a similar magnitude of increase as well.

The two altcoin exceptions of this narrative are XLM and IMX, both of which have yielded positive returns, similar to that of BTC and ETH. The driver of this growth comes mostly from the announcements of important developments in the projects, riding along the bullish wave from the SVB bailout.

Stellar Development Foundation, the organization behind the XLM token, announced that they are linking up with Polkadot and Kusama to provide fiat on-ramp services around the world via the Spacewalk Bridge. The bridge was built by the Polkadot parachain winner, Pendulum, which aims to connect DeFi and Forex markets in emerging markets, similar to Stellar’s partnership with cross-border payment companies like MoneyGram over the years to enable further adoption of Stellar Network for remittances across developing markets. While USDC will be the main stablecoin flowing through the bridge, there will also be a wide array of Latin American, African, and even some EUR-based stablecoins. The strong positive correlation between the price movements of Stellar's XLM token and XRP has been another contributing factor to XLM’s success. The correlation between XLM and XRP's price movements remains consistently above 0.7.

Immutable, on the other hand, has announced its partnership with Polygon to integrate the new Polygon zkEVM technology to simplify the onboarding process of blockchain game developers. This strategic partnership aims to build the best Ethereum-centric gaming ecosystem that will drive the new wave of Web3 GameFi adoptions.

Stacks (STX)

Stacks was on the top 10 leaderboards once again without much change from last month's narrative. Stacks gained popularity due to the hype of inscribing NFTs, also known as Ordinals, on the Bitcoin network. It facilitates the minting and trading of Bitcoin Ordinals, with over 650K NFTs minted on Stacks Layer-2 (L2). Despite many analysts calling its February gains speculative, STX managed to further climb around 10.53% in March.

Looking at the fundamentals, total value locked (TVL) climbed higher in March, reaching a high of US$35M in the month of March before retreating to US$26M.

Meanwhile, the number of Ordinals minted has slowed down due to a lack of trading infrastructure and increased competition surrounding Bitcoin NFTs.

Lastly, STX blockchain activity continues to fall with only about 2K unique wallets interacting with the Stacks ecosystem. Most of the dApps suffered a drop in user activity in the last 30 days, with NFT marketplace Gamma failing to keep its users.

The hype surrounding Stacks might be attributed to its upcoming Nakamoto upgrade as the team is working to make BTC more programmable. This upgrade will allow users to access full smart contracts on an L2 chain, enabling them to move BTC while their L2 transactions are secured by the BTC Layer-1 (L1) network, increasing the network’s liquidity and capacity. Currently, the main bottleneck for Stacks is users’ inability to easily move BTC into the Stacks layer. Stacks is unique in that users can run nodes on less sophisticated hardware, making it more accessible than other blockchains that require high-power hardware.


This concludes our recap of the narratives of March’s top 10 biggest winners. While it was a difficult month for the industry due to uncertainties in the macroeconomic environment and the instabilities of the central financial system, we could see a change in terminal rate trajectory as the market priced a more dovish Fed. There are multiple narratives that may boost the short-term growth of specific sub-sectors across the Web3 landscape in the next few months. Some things we are looking out for include the growth of the entire Arbitrum’s ecosystem post-airdrop, the high expectations of zero-knowledge proof on the blockchain, potential novel applications of the newly approved EIP-4337 for account abstraction, and the liquid staking derivatives vertical post-Shanghai upgrade.

Yours sincerely,
Treehouse Research 🌳

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