1. Approval of BTC Spot ETF
BTC outperformed many leading assets and indices in 2023, both traditional and cryptocurrency. BTC market capitalization exceeded 160% during the year and with the emergence of the Ordinals protocol, Bitcoin NFTs gained popularity. While Bitcoin ETFs await, many traditional institutional investors began to pay attention to the cryptocurrency ecosystem.
Although the potential for exchange-traded BTC funds (ETFs) in the US existed before, it was not until 2023 that significant positive developments in this area could be observed. In August, a US court ruled in favor of Grayscale in a dispute with the US Securities and Exchange Commission (SEC) over the conversion of Grayscale Bitcoin Trust (GBTC) into a BTC spot ETF.
This ruling also prompted other asset managers (BlackRock, Fidelity, Invesco, etc.) to submit their own BTC ETF applications. Currently, the SEC is reviewing a total of 13 BTC ETF applications, with final review dates between January and August 2024.
2. Halving BTC mining
The amount of BTC mining is limited to 21 million units, and approximately every four years, its mining is halved, creating an additional shortage and an increase in the price of BTC. When the Bitcoin blockchain launched in 2009, the block reward was 50 BTC per block. BTC mining was halved in 2012, 2016 and 2020, currently the reward per block is 6.25 BTC. The next halving is expected to take place in April 2024, after which the reward will drop to 3.125 BTC per block.
3. Ordinal Protocol and Bitcoin NFT
One of the most significant developments in Bitcoin in 2023 was the launch of the Ordinal Protocol at the beginning of the year, which made it possible to identify every smallest unit of BTC (sats). There are 100,000,000 such units in each BTC, and the Ordinal protocol allows each sat to be assigned a unique identifier and content (text, image, video, etc.), thus paving the way for Bitcoin NFT and BRC-20 tokens. These innovations in the Bitcoin ecosystem shook the entire market at the beginning of the year, then subsided, but again experienced a new wave of demand in November.
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4. Demand for stablecoins
The supply of stablecoins is an indicator of the amount of capital that indicates the interest and willingness of potential buyers to purchase cryptocurrencies in a given period of time. For the first time since Q1 2022, the supply of the five largest stablecoins turned positive in Q4 2023. It is worth keeping an eye on this indicator in the coming months to see if this change is temporary or if it will be confirmed as a persistent trend.
5. Return of NFT
In 2023, NFT trading saw a significant decline, with each month from February to September posting a new annual low. However, October marked the turning point of the trend and in November NFT experienced an already significant increase in trading volumes. Among them, Bitcoin NFTs were the most popular in November, reaching more than 375 million USD in trading volume.
After a long period of price decline and pessimism, the increase in trading volumes in November can be seen as a positive development in the market and the revival of the NFT sector. Therefore, it will be important to watch NFT trends in 2024 to see if this market segment will continue to grow.
6. Protocol usage fee
As the industry evolves and protocols move into the monetization phase, it will be important to keep an eye on the payments generated by the top crypto projects. The cost of using protocols increased throughout 2023. In November, the commission income of the top 20 crypto projects increased by more than 88% compared to January.
By far the highest costs can be seen in the Ethereum network, where commission revenue is twice as high as any other protocol. The second largest generator of payments was decentralized finance (DeFi) protocols, with Lido and Uniswap as market leaders. Although DeFi projects and Level 1 (L1) projects dominated in 2023, NFTs also accounted for a significant share of the total payment flow. OpenSea was the clear leader in this sector with almost twice the revenue of Manifold and Blur.
2023-12-29 13:17:48
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