2023 Crypto Year Review: Triumphs, Trials and the Road to 2024
Summary:
2023 in the cryptocurrency world was marked by both difficulties and significant developments. Despite residual impacts from the bear market and regulatory confusion fueled by the US Securities and Exchange Commission, optimism rose with the potential approval of a Bitcoin ETF in the US and substantial price increase. However, several legal troubles involving high-profile figures such as Do Kwon, Sam Bankman-Fried and Changpeng "CZ" Zhao cast shadows over the industry. Yet, as the year ended, the upcoming Bitcoin halving event, potential ETF approvals, and price growth made a promising case for a new bull cycle into 2024.
Entering 2023, remnants of the bear market from the previous year hung over the cryptocurrency world. This was exacerbated by the US Securities and Exchange Commission creating a sense of instability and fear within the US crypto circle as calls for regulatory clarity were made. Nevertheless, hopes began to rise as the first Bitcoin exchange-traded fund (ETF) was potentially due for approval in the US. While geopolitical problems consumed traditional markets, Bitcoin provided a haven for long-term investors. With a Bitcoin halving event fast approaching, the conditions for a bull market seem ideal. Summarizing the year from a Chinese philosophy perspective, it appeared to be a balance of yin and yang. Let's delve into how 2023 unfolded in the crypto universe where Bitcoin's behavior determines the industry's dark or light tendencies.
As the fireworks of the New Year celebrations subsided, Bitcoin provided a pleasant surprise that signaled a potential upswing. Bitcoin's price ascended almost 50%, going from $16,600 to nearly $24,000, in the first month of 2023. On-chain data showed signs of whales collectively buying, stimulating hope for Bitcoin's price bottom.
Contrary to the common viewpoint among crypto enthusiasts, Goldman Sachs ranked Bitcoin as 2023's best-performing asset in January. The leading global bank previously championed gold as a better portfolio diversifier than Bitcoin. However, Bitcoin undoubtedly won this duel in 2023, rallying 157% as opposed to gold's modest 13%.
However, this optimism took a blow when the US Securities and Exchange Commission (SEC) targeted staking-as-a-service programs, creating a cloud over the cryptocurrency scene's revival. On February 9, the SEC charged Kraken with failure to register their offering and sale of staking-as-a-service, claiming it as securities within its jurisdiction. The company agreed to halt its US staking program and paid $30 million in penalties and disgorgement.
The following month, Coinbase received a formal notice of enforcement action from the SEC, a situation Coinbase CEO Brian Armstrong committed to contesting. The SEC has been significantly criticized for its perceived regulatory ambiguity and enforcement over guidance approach. Coinbase took a stand for the crypto industry, urging the SEC to provide clear regulations for cryptocurrency being utilized as securities, in spite of the SEC's dismissal of their plea.
The SEC faced further internal criticism from Commissioner Hester Pierce over Gary Gensler's regulatory style. The SEC's actions raised uncertainty amongst crypto users and companies over the legal status of staking in the United States.
However, a new hero emerged, turning the tide; BlackRock filed for a Bitcoin ETF. BlackRock, the world's biggest asset manager, has an exceptional ETF application record (575 approvals vs. one denial). This sparked anticipation for the when, not if, a spot Bitcoin ETF would gain approval. BlackRock's filing also triggered other players like ARK Invest, 21Shares, and Franklin Templeton to submit their applications. An important component of BlackRock's filing was their choice of Coinbase as their custodian, infusing more confidence in the market.
The SEC continued its legal proceedings against Ripple and its co-founders for allegedly selling XRP, an unregistered security. A series of Ripple's legal victories sparked hope amongst crypto enthusiasts.
Nevertheless, shadows of the bear market from 2022 hung over 2023 as former Terraform Labs CEO Do Kwon was arrested following a manhunt after the collapse of Terra's ecosystem; the once-influential figure Sam Bankman-Fried was found guilty of seven fraud charges; and the now-former CEO of Binance, Changpeng "CZ" Zhao, resigned after facing accusations of running an unlicensed money-transmitting business, violating the International Emergency Economic Powers Act, and posting a $15 million bond.
However, despite these setbacks, the prospects for Bitcoin seem bright for 2024. With the reward halving event and potential approval of BlackRock’s spot Bitcoin ETF and several other applications on the horizon, and the price growth causing naysayers of El Salvador's Bitcoin adoption initiative to quiet down, the conditions seem ripe for a new bull cycle in the crypto market. Famous analyst PlanB suggests in his stock-to-flow and market cycle model that Bitcoin is passed a point of no return, predicting a value of $532,000. As Mark Twain famously said, "History doesn't repeat itself, but it often rhymes." We hope for a prosperous Bitcoin year in 2024.
Published At
1/3/2024 4:30:00 PM
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