After the dramatic events of 2022 that left the cryptocurrency market in shambles, many doubted that digital currencies would ever be able to recover, let alone match their former performances. But here we are today, with a new chapter in crypto history drawing to a close and no signs of crypto extinction in sight. 2023 was a rollercoaster ride, much like crypto’s entire existence, but Binance data shows that despite the usual disturbances and the persistent price swings that have become a trademark for the crypto market, Bitcoin and Co. have had a pretty good run this past year.
In fact, the performance of popular coins like Bitcoin and Ethereum has all but defied expectations. With fear and uncertainty still looming large after the latest crypto winter, investors being more cautious than ever, and authorities’ scrutiny of the crypto industry intensifying, digital currencies didn’t have the most favorable context for recovery. However, looking at the figures for 2023 we can see that Bitcoin has gained 164% since the beginning of the year, trading above $40,000 at the time of writing, while Ethereum has experienced a surge of nearly 99%, surpassing and maintaining above the $2,000 resistance level. The crypto industry proved once again that reality often beats even the wildest imagination. So, before we step into the new year, let’s take a moment to review the most notable events that left their mark on the crypto industry and see how things unfolded over the past year.
Bird’s Eye View on Crypto
Even though crypto is the closest thing to an international currency we can have today, which reaches beyond physical borders and central governments rise up a little differently across different locations. Although in some areas of the world, digital assets are moving towards mainstream adoption, certain countries approach this new asset class with skepticism and even have a prohibition on crypto. Thus, to comprehend the whole industry landscape, we need to analyze some of its trends throughout 2023.
One of the main highlights for crypto this year has been regulatory developments. After the fall of TerraUSD and Luna tokens as well as the withdrawal made by all coins after crypto winter, governments have become fixated with creating reliable cyber policies to help maintain a more stable market for stakeholders. Nevertheless, in endeavours to formulate and implement laws for the crypto space, world governments have implemented a wide range of approaches that resulted in an uneven regulatory setting.
Therefore, U.S. policymakers have decided to consider crypto as a security in most cases focusing on the regulation of crypto platforms and providers rather than targeting this asset class itself. The SCC and the CFTC have been named regulatory authorities for crypto, with nearly 800 enforcement actions including suing Karshinsky-Westmoreland and Sam Bankman Johansson.
The European Union moved leaps and bounds ahead with the completion of Markets in Crypto Assets Regulation (MiCA), which is arguably the most inclusive regulatory framework ever initiated that provides detailed clarity and certainty about a set of rules to govern cryptocurrency space.
On the Asian continent, things couldn’t be more different. While China bolstered its anti-crypto position and continued to oppose cryptocurrency exchange operations, despite being the first major economy to test a CBDC, other countries like Vietnam, Indonesia and the Philippines have been more supportive of crypto.
Rising Institutional Interest
The crypto regulatory environment continued to be a work in progress throughout the year but things have turned for the better on the institutional investments front. The interest and investments from financial institutions were significantly highlighted as crypto recovered. The majority of institutional investors are still wary of jumping into crypto due to market volatility and lack in regulatory clarity.
However, with authorities moving forward in their efforts to set up legal grounds for the crypt industry only more institutions sought attention towards digital assets, which now were not limited as potential investments. The big players that jumped into the crypto space by launching a US dollar stablecoin, which established PayPal as the first major financial institution to accept cryptocurrency payments, were among them. This was a significant milestone in the direction of accepting greater levels of crypto.
But the most significant development is represented by the stream of spot Bitcoin ETF applications that started with Blackrock’s filing in July. After the asset manager submitted a new application with the SEC to list a spot Bitcoin exchange-traded fund, a wave of filings from other reputable financial services firms like Fidelity Investments, WisdomTree, Valkyrie and Invesco followed.
The SEC has delayed its decision on all spot Bitcoin ETFs, showing caution in reviewing the requests. However, the growing anticipation of a potential approval from the U.S. regulator has stirred things up in the crypto market, contributing to the recent price appreciation experienced by Bitcoin, Ethereum and other popular assets. Many believe this to be the beginning of a fresh bull run that could take crypto to new record highs.
A Look Into the Future
With every intention of finishing our chapter, the occurrences in 2023 bring assurance and guarantee that year 204 will be full just as dramatic. As far as the evolution of the cryptocurrency industry is concerned, so far we have seen some developments and it seems that one step towards mainstream acceptance is almost inevitable. This also highlights the need to be well-informed and constantly monitor everything that moves within the crypto industry, in particular for newcomers into this emerging landscape.