Looking back at the Bitcoin market in 2023

In 2023, the crypto asset (virtual currency) Bitcoin (BTC) achieved growth of more than 160% and established a new position in the investment market. This year saw significant movement in the digital asset market, including Bitcoin, as interest from mainstream investors increased.

Amid the economic uncertainty as a whole, Bitcoin behaved differently from other major stocks, and there were also changes in market correlation. According to Kaiko’s analysis, Bitcoin price trends were uncorrelated with the stock market in the first half of the year, but have been correlated since the summer. This shift means that while Bitcoin has unique characteristics that set it apart from traditional financial assets, it has also begun to show connections to broader market trends.

In this article, we look back at the major events and trends in the Bitcoin market during this transformative year.

January: US debt problem emerges

In January 2023, the U.S. government’s debt exceeded the legal limit of approximately $31.4 trillion, and special measures were taken to avoid default. In addition, the failures of Silicon Valley Bank and Signature Bank in March contributed to Bitcoin’s reputation as a “safe haven.” Bitcoin’s decentralized nature allows it to be disconnected from national affairs and may be seen as having low correlation with other financial assets such as stocks.

US President Joe Biden signed the Fiscal Responsibility Act on June 3, 2023, suspending the federal debt ceiling (currently $31.4 trillion) until January 1, 2025. .

connection:“X-Day” approaching US debt ceiling issue, possible scenarios and their impacts

February: Bitcoin version of NFT “Ordinals” launched

Ordinals, a new feature that creates digital assets like NFTs on the Bitcoin blockchain, has been launched, bringing new use cases on top of Bitcoin.

Unlike traditional NFTs, there is no metadata file, so the structure of NFTs is achieved by embedding Calldata directly into the block space and relies on off-chain tools for loading.

The Ordinals (inscription) boom is expanding. Toward the second half of 2023, similar activity surged on the Ethereum Virtual Machine (EVM) blockchain. This is because the issuance fees are lower than NFTs. Not only Bitcoin, but various chains such as Avalanche were affected by a sharp increase in network transaction fees.

connection:“Altcoin season” has arrived, with meme coins BONK, ORDI, PoW-based KAS, etc. achieving record increases

March: US banking crisis

Just two days after California authorities shut down Silicon Valley Bank (SVB), the New York State Department of Financial Services (NYDFS) also shut down Signature Bank to protect depositors. This is not a relief to individual financial institutions, but an emergency measure to avoid system-wide risks.

The US dollar-linked stablecoin USDC, issued by Circle Inc. (Circle) in the US, has suffered liquidity problems after wire transfers worth approximately 445 billion yen held at a Silicon Valley bank were not processed. . As a result, the market price of USDC fell 10% below the standard value, causing a “depegging” phenomenon, which spread confidence concerns throughout the market.

connection:U.S. Signature Bank shuts down, with successive bank failures impacting the virtual currency industry

April: MiCA is approved in Europe

The European Parliament has approved the MiCA (Markets in Crypto-Assets) Regulation, which aims to unify regulations regarding virtual currencies across the EU. This is expected to strengthen the security and transparency of virtual currencies and improve consumer protection.

The MiCA regulation stands for “Market in Crypto Assets” and aims to protect users and investors by unifying the regulation of virtual assets that are not regulated by current EU law. It focuses on regulating stablecoin and other digital asset transactions, including licensing and consumer protection requirements.

connection:European Parliament approves MiCA regulation, unifying regulations on virtual currencies across the EU

June: SEC sues Binance and Coinbase

In early June, the U.S. Securities and Exchange Commission (SEC) sued major overseas crypto asset (virtual currency) exchanges Coinbase, Binance US, and others for allegedly violating securities laws. Coinbase called the SEC’s decision “arbitrary and impulsive.” They are asking the court to instruct the SEC to make rules.

On June 17th, Binance.US and the SEC reached an agreement to avoid freezing all assets of the trading platform, and the dispute with the SEC continues as of December 2023.

connection:June: SEC lawsuit between Binance and Coinbase | Sorting out the current state of virtual currency regulation and industry reaction

June: Hong Kong launches licensed cryptocurrency trading platform

Starting June 1, the Hong Kong government implemented new regulations for virtual currency exchanges and began granting licenses to platforms that meet certain conditions. Individual investors will also be allowed to trade virtual currencies, but a licensing system will be introduced to ensure investor protection.

connection:Hong Kong will implement new rules for virtual currency exchanges from June, stipulating stocks that can be listed, etc.

June: BlackRock applies for BTC spot ETF

Since June, a number of financial institutions, including BlackRock, Invesco, and Franklin Templeton, have submitted applications for Bitcoin spot ETFs. In particular, BlackRock has applied for 575 ETFs, all but one of which have been approved by the SEC (as of June 2023), and expectations are high for its high approval rate.

connection:What is the exchange-traded fund “Bitcoin ETF”? | Why BlackRock’s application is attracting attention

July: Ripple Labs v. SEC ruling

On July 13, U.S. District Judge Annalisa Torres ruled that regarding the lawsuit filed by the U.S. SEC against Ripple and its virtual currency XRP in December 2020, the sale of XRP to retail investors on virtual currency exchanges is prohibited. , the court ruled that they are not considered securities. Additionally, in October, the US SEC asked the court to dismiss charges against Ripple CEO Bradley Garlinghouse and former Ripple executive Christian Larsen.

connection:Summary of the “Ripple lawsuit” filed by the US SEC (December 2020 to October 2023)

July: U.S. House of Representatives committee submits important bill regarding virtual currencies

Five Republican members of the U.S. House of Representatives have formally submitted a bill to Congress that aims to clarify regulations in the field of crypto assets (virtual currencies). It aims to “give both the CFTC (Commodity Futures Trading Commission) and the SEC (Securities and Exchange Commission) a seat at the table” and establish clear principles that the crypto industry is looking for.

connection:Submission of virtual currency bill aiming to clarify regulations

August: Grayscale wins SEC lawsuit

Leading cryptocurrency investment firm Grayscale Investments has won a legal dispute with the US SEC over its application to convert the Grayscale Bitcoin Trust (GBTC) into a physical Bitcoin ETF. This victory prompted the SEC to change its criteria for Bitcoin ETFs.

In its written opinion, the court concluded that “Even though Bitcoin spot ETFs and Bitcoin futures ETFs are similar financial products, it is insufficiently explained and arbitrary that the SEC’s criteria for judgment are so different.” Grayscale’s “challenge” to the SEC’s decision to deny the conversion was approved.

connection:SEC not appealed in Grayscale Bitcoin ETF conversion lawsuit

October: BlackRock makes significant progress in BTC spot ETF application

It has been revealed that the US SEC is in ongoing dialogue with multiple ETF issuers. Circumstantial evidence increases acceptance of Bitcoin spot ETFs among analysts. BlackRock has begun making amendments to its filing in consultation with the SEC.

I’ve gotten a lot of questions regarding my current view on Spot #Bitcoin ETFs over the last couple weeks. This is the first section of the note I put out yesterday with @EricBalchunas.

TLDR: Our view hasn’t changed much https://t.co/dRAm5IsdQf pic.twitter.com/Htsi3n2XxV

— James Seyffart (@JSeyff) October 13, 2023

connection:“Predicting Bitcoin ETF approval in January 2024” What is the basis for Bloomberg analyst’s opinion?

October: BTC dominance reaches 30-month high (54%)

connection:Funds flow into altcoins as Bitcoin rises pause, BTC dominance declines slightly

November: Binance.com withdraws from the US

Binance withdrew from the country in November and December after paying billions of dollars in fines to settle with the US Department of Justice (DOJ) and the Commodity Futures Trading Commission (CFTC). However, Binance US has no plans to withdraw from the US market.

connection:Overseas version of Binance settles with CFTC, faces fines and strengthens compliance system

connection:SEC Crypto Mom and Coinbase CEO comment on Binance’s settlement with the US Department of Justice and CZ’s resignation

November: U.S. interest rate increase cycle pauses

In November, the global interest rate hike cycle came to a temporary halt. The US Federal Reserve (Fed) has decided to stabilize the overnight benchmark interest rate in the range of 5.25% to 5.50% at the end of the policy period from October 31st to November. The decision reflects central banks around the world refraining from raising interest rates further as inflation subsides. This situation raised expectations that monetary easing would begin next year, boosting the Bitcoin market.

connection:Cryptocurrency Solana returns to $50 level; US stocks rebound as concerns about further interest rate hikes recede | 11th Financial Tankan

December: Mt Gox repayment begins

Regarding Mt Gox, a crypto asset (virtual currency) exchange that went bankrupt in 2014, progress is being made in repaying the cash portion to creditors.

The Mt Gox Rehabilitation Trustee is required to complete repayments to creditors, including 141,686 BTC, 142,846 BCH, and 6.97 billion yen in cash, by October 31, 2024. The repayment deadline was originally set for October 31, 2023, but has been postponed. As of November 30, 2023, these cryptocurrencies are estimated to be worth approximately $5.2 billion and may be distributed over the coming months.

The rehabilitation trustee has already started making cash payments to creditors, and it appears that 200,000 yen has been paid to each creditor. Furthermore, the trust administrator may need to sell some cryptocurrencies to accommodate creditors who have opted for full cash repayment.

connection:Cases where Mt. Gox has started repayment or cash payments have been made to creditors reported on SNS

Bitcoin will further expand in 2024

In 2024, Bitcoin physical ETFs (if approved) are expected to provide an avenue for capital inflows to a new group of investors. Additionally, Bitcoin’s next halving, scheduled for April, is expected to increase the BTC price by increasing the scarcity of the token and improving technical aspects of supply and demand.

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