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For A Good Slide Into The New Year: Crypto 2023 Recap

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2024-01-04
For A Good Slide Into The New Year: Crypto 2023 Recap

As we see more and more signs of a new bull cycle, let's take a look back at the decent 2023, which leads us right out of 2022's utter chaos.

More Favourable Economic Regulatory Environment

Cryptocurrencies are categorised as a risky investment type, just like stocks, and higher borrowing costs a.k.a. higher interest rates did have some negative effects on crypto prices. That, on top of the bloodbath we witnessed first-hand in 2022, pushed Bitcoin to US$16,521 - its record low since the DeFi Summer 2020. That is also equivalent to a drop of 76% from its all-time high in November 2021.

The FED has been aiming for a 'soft landing', that is, to successfully curb inflation without wrecking the economy. But it wasn't until June 2023 that the stubborn core CPI began to move below 5%, whereas the headline CPI already shows significant declines since September 2022. So the FED pressed the pause button on their hawkish interest rate policy, maintaining a 5.25-5.5% range for borrowing since July 2023. That allows Bitcoin price to reverse its course and top US$30K, US$40K and US$44K in less than three months of Q4 this year.

It's important to acknowledge the global race for crypto regulation as jurisdictions make the efforts to open doors for crypto - and crypto ETFs as well. The rising stars of the year include Hong Kong and Singapore as the two biggest crypto hubs in Asia and Dubai in the Middle East. Meanwhile, EU and UK companies are expected to comply with MiCA and FSMA to begin providing crypto investment products to more people.

The crypto market was poised with two court wins this year: one from Ripple Labs and one from Grayscale, both setting historical precedent for the entire industry. Though Ripple's victory is only partial, at least it keeps the SEC's hands out of crypto sales to retail investors because the ruling says that sales of XRP on exchanges, or by executives, or XRP transfers to developers, employees and charities don't constitute securities. In the case of Grayscale, their win almost guarantees the launch of an ETF tracking the spot price of Bitcoin in the U.S., which is already way behind other countries in terms of institutional access to crypto.

The Recovery We Needed

Last year was brutal, but as K33 Research has pointed out, this might be the shortest bear market in crypto history. Bitcoin is back to US$44,000 on December 21, Ethereum back to US$2,300 on December 05, but the global market cap already returned to the US$1 trillion mark in January 2023.

We have seen XRP flipped BNB to become the fourth largest cryptocurrency by market cap for a brief two weeks then Solana on the rise. However, the spotlight (still) belongs to the flagship cryptocurrency Bitcoin with the inception of NFTs on this network, one collection of which was recently sold by the prestigious auction house Sotheby's . as well as the emergence of BRC-20 (fungible) tokens.

To learn more about Bitcoin Ordinals (Bitcoin NFTs) and BRC-20 tokens, check out many of our takes on the theme:

BRC-20 Tokens: A Primer

What Are Bitcoin Ordinals? Everything You Need to Know About Bitcoin NFT

Top 5 Most Valuable Bitcoin Ordinals Collections That Are Leading the Market

BRC-20 Tokens Market Cap Reaches $3.3 Billion: Why How

Ordinals on Bitcoin: Disruptive Innovation or a Challenging Dilemma?

Exploring Bitcoin NFTs: The Journey from Counterparty to Ordinals

Behind The Hype: Bitcoin NFTs and the Rise of Ordinals - Top 5 Questions Answered

Also worth mentioning is the death of one big stablecoin - BUSD - as part of the continuous regulatory crackdown on Binance. The latest to join the game is payments giant PayPal with PYUSD, a stablecoin fully backed by U.S. Dollar deposits and consequently the buy and sell of PYUSD on PayPal . On the other hand, the issuer of the dominant stablecoin USDT Tether shows their determination to cooperate with law enforcement agencies by onboarding the FBI and the U.S. Secret Service. Stablecoins are mainstream's gateway into the digital space, hence stablecoin regulations and compliance are extremely vital for a thriving crypto market.

Countdown To January 10, 2024

Not yet mentioned is the prospect of a spot Bitcoin ETF approval in the U.S. So far, Wall Streets only get their hands on ETFs that offer exposure to Bitcoin futures contracts on the CME, with the ones of highest liquidity being ProShares Bitcoin Strategy ETF (BITO) and ProShares Short Bitcoin Strategy ETF (BITI). The SEC's most progressive steps this year were, first of all, the approval of a leveraged (futures) Bitcoin ETF (Volatility Shares 2X Bitcoin Strategy ETF under the ticker BITX) then recent discussions with applicants of spot Bitcoin ETFs, including Grayscale, 21Shares Ark, BlackRock, VanEck, Fidelity, Valkyrie, Hashdex, and Franklin. The earliest deadline for a spot Bitcoin ETF decision is January 10, 2024 for 21Shares Ark Bitcoin ETF (ARKB), followed by Bitwise Bitcoin ETF (BITB) on March 14 and BlackRock's iShares Bitcoin Trust (IBIT) on March 15, 2024, which are already listed on DTCC website. DTCC is one of the biggest providers of securities clearance and settlements, therefore these listings imply the start of these funds' launching procedure.

On top of that, there are only more than 110 days until the fourth Bitcoin halving. Are there enough reasons for buoyancy in crypto in 2024? We believe it's inevitable. Fasten your seatbelt, cuz it gon' be upward from here: Bitcoin Halving: Will We Land on the Moon?

Disclaimer: The opinions expressed in this article are for informational purposes only. This article does not constitute an endorsement of any of the products and services discussed or investment, financial, or trading advice. Qualified professionals should be consulted prior to making financial decisions.