Market Deep Dive: Crypto Market in Review: 2023’s Triumphs, Turmoil, and Anticipated Shifts for 2024

Who would have thought that after all the scandals last year, the crypto market would recover so spectacularly in 2023? The crypto industry in 2022 was thoroughly shaken by the collapse of Do Kwon’s Luna, Three Arrows Capital, Celsius, Voyager, and BlockFi. The year 2022 then culminated in a sad climax with the end of FTX. Let us now assess the year 2023 through the lens of “The Good, The Bad, and the Unknown”.

The Good:

Reflecting on 2023, what were the positive drivers for the market? The first rally began early in January with BTC surging by 43%. This rally mirrored a typical market recovery; however, while the achieved levels found support, momentum waned quickly. In July, Ripple Labs achieved a partial victory against the US Securities and Exchange Commission (SEC), ruling that in certain cases, XRP might not be considered a security. The most significant driver of the spectacular year-end rally, which commenced in late fall and propelled BTC to impressive yearly gains of +155%, was undoubtedly the positive news surrounding Bitcoin ETF applications from reputable players like BlackRock. Currently, the market is eagerly anticipating the approval of the first Bitcoin ETF in early January 2024. If this becomes reality, it will certainly mark a milestone in the institutional adoption of bitcoin.

The Bad:

In 2023, the crypto industry encountered setbacks. The sharply rising US dollar interest rates in the United States brought local banks to the brink of collapse, nearly impacting Circle’s USDC as well. The SEC continued to press major players like Coinbase and Kraken, dealing heavy blows to Binance and its CEO Changpeng Zhao. This pressure led Zhao to step down after pleading guilty, while Binance agreed to a USD 4.3 billion settlement.

The Unknown:

In 2024, we will gain more clarity on the new regulatory framework from the European Union known as MICA. If the implementation is done reasonably, it will give much-needed regulatory clarity and drive institutional adoption in Europe. Similar developments are expected in the US, with each new court ruling and, hopefully, positive decisions from the SEC having a significant impact.

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