There was a lot of potential for Bitcoin to change in 2023. After it suffered tremendous losses in 2022, with the prices plummeting quite severely, investors expected things to improve quite remarkably in the following year. And indeed, BTC performed exceptionally well in 2023, managing to regain quite a lot of value. According to Binance, digital gold had a stellar comeback, climbing by 154.37% during the course of the last twelve months. The growth contributed to a market capitalization that reached $530 billion. Yet, many investors have noticed that the prices didn’t consolidate very well, and there were still losses along the way.
Now that the new year has just started, it’s time to have a recap of the highs and lows of BTC in 2023 and where it might go in 2024.
ETFs
Exchange-traded funds have been discussed in depth over the past months, mainly because they have a lot of potential to change the marketplace forever. Their approval could, hypothetically, mean that the prices will climb to previously unseen levels. The reason is relatively straightforward. The ETFs allow both individual and institutional investors to deal with cryptocurrencies without actually owning the assets, mediating some of the risks. Retailers and businesses typically bring a lot of capital to any market, so their addition could help bring Bitcoin more into the mainstream.
However, there have been several challenges to this scenario becoming a reality so far. The fundamental one is that the Securities and Exchange Commission refuses to come with an official announcement of the asset class. So far, the announcement has been delayed several times. While some investors were looking forward to getting an answer in the first few days of 2024, it seems now that they still have to wait a little longer. The constant anticipation has turned the SEC into something of a party popper within the crypto community.
New announcements are expected in 2024, but investors must remain patient and ready for the changes in the market.
Bull market
In 2023, the Bitcoin ecosystem laid the groundwork for a bullish market, and the trend is expected to continue in 2024. There are several events set to impact the price of BTC in the new year. First of all, there will be the next halving. Set to occur in April, it will reduce block subsidies and cut rewards by 50%. This means the coin supply will become tighter. The scarcity is precisely what allows Bitcoin to maintain its value and why none of the altcoins have managed to surpass it, no matter what new features their blockchains provide.
The potential approval of ETFs will likely help the price climb as well but might remove some of the value initially. Historically, after a slowdown period in which major downswings have been recorded, bitcoin tends to climb and begin consolidating gradually. This is exactly what happened now as well. The natural movement of the coin points toward growth and evolving prices. In 2022, BTC went through one of the most severe crypto winters in its history under the influence of bearish tendencies.
While it’s incorrect to base all future predictions on historical movements because the market is never that predictable, there are still indicators that repeat themselves over time, providing hints of the direction the market will take in the near future.
Pop culture
Bitcoin is not yet on par with traditional asset classes such as stocks, real estate or precious metals, but that doesn’t mean that it isn’t evolving. In fact, over the past few years, Bitcoin has taken huge strides toward entering the mainstream. Several businesses have started including the option to pay for goods with cryptocurrencies, something that shows increasing trust in BTC’s abilities, purchasing power and safety. Its relative novelty has also meant that people of various demographics are interested in BTC, and it has become a part of pop culture.
2023 was the year that showed precisely how appealing Bitcoin is to the general public. During Macy’s Thanksgiving Day Parade, designs from the crypto space were featured in balloon form. The high-profile case of the exchange FTX took a turn for the worse during 2023, and many people followed the progress with a lot of attention. Even those who don’t care about crypto and never invested or owned Bitcoin know quite a lot about the particulars of the case, as it was covered extensively. It’s not just the news anchors that discussed FTX; late-night comedians also included it in their shows.
The popular sitcom Futurama also featured an episode centered on an alternate future in which Bitcoin rules the world. In the episode, mining experienced a considerable boost, and crypto experiences growth like never before. However, the show also parodied the emissions that come with the mining process, saying that miners were using so much electricity to cause the ionization of the atmosphere.
Price crash
2023 started strong, with the prices climbing seemingly overnight from the low lows of December 2022. But 2024 told a different story altogether. Bitcoin went down seemingly out of the blue. The number of Bitcoin ATMs has also shrunk by 11% compared to the same time in 2023. However, the ETF denial hasn’t been connected to the 8% price drop that took BTC below the $42K level that was widely considered firmly consolidated.
Even if the price weakness is merely momentary, and a natural step in further growth, it nonetheless resulted in half a billion worth of dollars in long liquidations. The latest reports say there’s no reason to legitimize Bitcoin ETFs as an alternative store of value through approval. Some have even said that exchange-traded funds might not be as successful as many predict and instead cause more losses than gains.
However, the official window during which the Commission can develop an official ruling opens on January 4th and will remain that way until January 10th.
If you’re an investor, you must be very cautious during this time. Don’t make any impulsive decisions, even if there seem to be a lot of gains in them, just waiting to be claimed. First impressions can be deceiving.
