BTCs comeback in 2023
If 2022 was the year that left Bitcoin feeling battered and bruised, 2023 has been the year it bounced back. Despite gloomy crypto prices, sluggish trading, and economic challenges, Bitcoin has shown resilience, especially with its resurgence in October after a summer slump.
2023 has been surprisingly fruitful for Bitcoin. The top cryptocurrency has surged by 170% since January 1st, now trading above $40,000. It has even outpaced traditional assets like gold, which rose 10%, and the S&P 500, which gained 20%. Bitcoin has also expanded its dominance in the cryptocurrency market, climbing from 36% to over 50%. The overall crypto market cap has swelled to $1.7 trillion from $871 billion in 2022, with Ether’s price skyrocketing by 95%.
Much of Bitcoin’s gains came later in the year amid hopes of a potential U.S. spot Bitcoin exchange-traded fund (ETF) and expectations of looser monetary policies, which reinvigorated investor interest.
Trading volumes have also rebounded, with combined spot and derivatives trading volume on centralized exchanges hitting $3.63 trillion in November, up from about $2.92 trillion in January.
Additionally, stablecoins, cryptocurrencies tied to real-world assets like the dollar, have seen significant growth. Tether, the largest stablecoin, hit an all-time high market cap of over $100 billion.
Frauds
After chaotic 2022 that witnessed the downfall of FTX and Sam Bankman-Fried, 2023 saw more crypto heavyweights face challenges.
Binance CEO Changpeng Zhao pleaded guilty to violating U.S. anti-money laundering laws, part of a multi-billion dollar settlement with regulators. Voyager Digital’s co-founder also faced U.S. regulatory action, while Celsius founder Alex Mashinsky was arrested in July, pleading not guilty to criminal charges, including securities fraud.
In a brighter turn, Ripple’s XRP token soared by 82% for the year following a significant legal victory when a U.S. judge ruled that Ripple Labs’ token sales did not violate securities law.
2024 Outlook
Much of Bitcoin’s 55% surge in the fourth quarter is attributed to expectations of a spot Bitcoin ETF approval in the U.S., anticipated to attract both retail and institutional investors seeking regulated exposure to the digital asset.
Leading asset management firms like BlackRock and Fidelity are among the 13 companies vying for approval from the U.S. Securities and Exchange Commission for this multi-billion dollar product.
Forecasts predict that the fund could draw in as much as $3 billion from investors in its initial days of trading, with billions more to follow.
However, not everyone shares the same optimism.
J.P. Morgan expects the crypto market recovery to continue post-expected approval in early 2024 but remains cautious about the extent of adoption that the broader market anticipates.
While some optimistic projections suggest a 10% asset pull-in, J.P. Morgan foresees a more conservative figure in the low to mid-single digit percentage range compared to the $1.7 trillion crypto market.
If adoption falls short of expectations, crypto markets could reverse their recent gains, warned J.P. Morgan. Despite the optimism, some analysts believe that Bitcoin’s current rebound is still in its early stages.
The net dollar realized profit locked in by Bitcoin investors remains relatively low at $324 million per day, far from the peaks seen during the later stages of the 2021 bull market, which exceeded $3 billion a day. This suggests that Bitcoin’s current performance is more aligned with an early-stage bull market than a late-stage one.
