Bitcoin is unstoppable this year.
Countless bearish scenarios have played out that could have left a significant dent in the property department. After the FTX scandal erupted last year, sending a death spiral to the crypto market, some asked if Bitcoin could recover.
Later, the banking crisis hit, with tech and crypto-friendly banks such as Silicon Valley Bank, Silvergate, Signature and Prime Trust closing shop. Until they were shut down, Silvergate and Signature Institutions provided critical payment methods to settle crypto transactions with each other.
Then the US Securities and Exchange Commission and the Department of Justice hit Binance, the world's largest crypto exchange, with lawsuits and criminal charges. It wasn't directly exposed to Bitcoin, but questions swirled about whether the crypto industry was about to lose an institution that handled many of its transactions — including 8 percent.
No other exchange offers that much Bitcoin trading volume. This is double the amount of BTC traded on the next major exchange and four times the amount of Bitcoin Coinbase has seen in the last 24 hours.
But, Bitcoin wins.
The asset is now trading at $41,850, according to CoinGecko, a 148% increase from its price of $16,824 at this time last year.
Despite the negativity surrounding the industry, regulatory enforcement, failing banks, tight currency exchanges, investors seem undeterred.
So what makes investors interested in Bitcoin?
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ToggleSpot Bitcoin ETF buzz
Perhaps one of the biggest stories of the year was the hype around Bitcoin Exchange Traded Funds (ETFs). In the year 2023 was the year when the long-awaited investment vehicle seemed to be approved.
After a decade of rejection from the US Securities and Exchange Commission, BlackRock—the world's largest asset manager—filed an application with the regulator for iShares Bitcoin Trust in June. This has made analysts more optimistic about the product's approval. This caused the price of Bitcoin to skyrocket.
Despite the scams and scams this year and last, there is still interest in the big cryptocurrency by market capital – especially from institutions – as BlackRock CEO Larry Fink has officially given his blessing. He called it a “global asset” and predicted it would “surpass any currency”.
Bitcoin as “Digital Gold”
Investors have flocked back to Bitcoin this year as “digital gold” — something Bitcoiners have long described the asset as.
In fact, cryptocurrency even experienced the decoupling of technology stocks and the success of the banking industry with the precious metal.
As a volatile “at-risk” asset, bitcoin has behaved largely like stocks over the past year as investors shunned such assets and instead focused on the greenbacks and gold due to the Federal Reserve's interest rate hikes.
But despite rising prices this year, the collapse of tech-friendly banks and broader macroeconomic uncertainty have led investors to view the asset as a safe haven, experts told Decrypt. Top tech investor Kathy Wood said this month that Bitcoin is both a “risky and non-risky asset” due to its transparency and decentralized nature.
The question is: will it last?
Blow the turns
The most important—and perhaps most divisive—innovation in high-end cryptocurrency happened this year: bitcoins.
Ordinaries are NFT-type writings based on individual satoshis (the lowest denomination of bitcoin). They allow arbitrary, non-financial data to be included in the Bitcoin blockchain and have led to the mushrooming of all kinds of protocols and projects.
From bitmaps that allow users to own selected blocks of Bitcoin to the FRENCH protocol friend.Tech Mirror, Ordinals have been on a tear, raising rounds and launching projects.
But all is not rosy in Bitcoin hybrid NFTs.
Controversy has clouded Ordinal's appearance as it has caused significant congestion on the network and raised transaction costs.
At one point, the cost of sending Bitcoin was the highest it had been in more than two and a half years. Fees fell through the nose. According to Bitinfocharts, they currently stand at an average of $13.70, down from $31.78 a week ago.
The sheer craze has divided Bitcoiners – with some saying it's a boon for the world's largest blockchain and others, like developer Luke Dashjar, describing it as “spam”.
But turns are still all the rage. According to CryptoSlam, Bitcoin leads the way for all blockchains in NFT sales. It made $21.6 million in the 24-hour time frame, and $169 million in the week. Bitcoin also commands the highest position in the last thirty days, it was traded at $804 million.
What comes next? ETF expectations and halving
It is now expected – analysts think – Bitcoin ETF will be approved in January. The SEC is believed to be asking more applicants to file their applications before the end of the year. Hot topic now? Permitted participants and how the investment vehicle will be returned.
In the world of ETFs, an authorized participant is a firm that works with an ETF issuer—like BlackRock—to create shares of the fund so that an investor can withdraw money. In this case, those authorized participants will be other big Wall Street banks like JP Morgan and Goldman Sachs.
Bloomberg Intelligence analysts say the SEC is already sticking to the last bit of the filing process. If the SEC goes ahead and actually approves the Bitcoin ETF space, depending on who you ask, it could lead to capital inflows or no burgers.
Although there's another highly anticipated event next year, well: the half. The expected halving in April was widely seen as a big indicator for the market. This is due to the fact that miners' rewards will be halved, reducing the supply of Bitcoin in the market and increasing its price.
Edited by Stacy Elliott.
