Cryptocurrencies performed significantly better than other asset classes in the first quarter. As selling exhausted since the collapse of FTX, digital assets managed to rake in gains not seen in two years.

According to IntotheBlock’s latest newsletter shared with CryptoPotato, Bitcoin and Ethereum – the two largest cryptocurrencies – have realized their largest quarterly price gains since Q1 2021.

On-chain Review

Bitcoin’s market cap increased by 20% in March alone, adding to a positive change of 70% in the first quarter of 2023. Ethereum followed a similar trend with a 9% monthly and 49% quarterly surge in market cap. The ITV report noted,

“Bitcoin’s outperformance is likely indicative of its growing appeal as a digital store of value, with its correlation with gold prices increasing from -0.3 at the beginning of the year to 0.9 closing the quarter. Ether’s 49% quarterly increase also surpassed many crypto-assets (and certainly stocks), though it has lagged behind Bitcoin since the Silicon Valley debacle and the Fed’s corresponding reaction.”

Tether, the world’s largest stablecoin, also kicked off the year on an impressive note with a 12% monthly and 20% quarterly change in market cap. It was due to investors switching from Circle-backed USDC after the stablecoin was severely tested by banking sector uncertainties as well as increasing regulatory scrutiny. USDC’s monthly market cap dropped to 23%, shrinking its quarterly figure to 26%.

Where Next?

Several factors helped fuel the performance of crypto. The asset class’ 2022 concluded the failures of several major firms culminating in the implosion of exchange FTX amid fraud allegations and Terra’s collapse just a few months prior.

The change in sentiment began in January. Three months into the year, the market rallied again as three banks failed. Many in the community pointed out that Bitcoin’s use as a “safe haven” from the traditional financial system finally came to the fore. This is despite two of the three banks – Silicon Valley Bank and Silvergate – having close ties with the crypto industry