January L1 Landscape Recap

Crypto markets began 2024 with notable fanfare, marked by widespread anticipation of a Bitcoin ETF approval that resulted in significant speculation and volatility around the SEC’s eventual green light on January 10th. The day after the ETF approval, the price of BTC rose to a high of ~$48.5K before dropping to ~$38.7K just twelve days later, finally settling to ~$42.6K by the end of the month. In general, on-chain activity tends to mirror sentiment in the broader financial markets, and January was no exception. In this report, we will examine some of the major trends in the Layer 1 (L1) landscape with the backdrop of continued investor optimism and increased focus on the crypto industry. 

As we discussed last month in our L1 recap, intensive speculation over the Bitcoin ETF drove crypto valuations noticeably higher over the course of December, with some of the largest gains coming from blockchains that have embraced a modular scaling approach. This speculative fervor subsided after the ETF approval in January, with most L1s ending the month negative in terms of market cap. At the same time, the market’s attention appears to have shifted - at least briefly - from modular to integrated systems in January, highlighted by notable gains in L1s that feature parallel transaction execution.