Crypto Industry in 2023 and What's Next for 2024

After a turbulent 2022, 2023 brought a hopeful rebound for the cryptocurrency industry. The total crypto market value has doubled, starting at about 850 million and reaching $1.7 trillion by the year's close. Bitcoin's price surged by over 162%,  Ethereum's price climbed by 90% and Solana skyrocketed by around 557%.

But what drove this significant upswing? And, most importantly, will his trend continue into 2024? Let's try and get to the bottom of it.

Crypto Industry in 2023

Summary

In 2023 the crypto industry saw steady growth fueled mostly by institutional activity and structural market conditions. Meanwhile, retail investors remained relatively passive, possibly due to the burden of increasing costs of living and limited media attention on cryptocurrencies throughout the year. This resulted in a calm market with low volatility and shallow trading volumes. Notably, 2023 marked the least volatile year for BTC over the past decade.

Key Events

Silicon Valley Bank Collapse and USDC Depegging

In March 2023 the Silicon Valley Bank (SVB) was forced to shut its doors after a series of setbacks that culminated in a bank run. This became a problem for the crypto industry as SVB was a custodian of USDC reserves, totaling $3.3 billion. As a result, USDC lost its value, dropping to as low as $0.87. This instability raised widespread concern as USDC holds a large market share and is extensively used in various crypto ecosystems. Fortunately, within three days, USDC regained its peg to the U.S. dollar. Circle, USDC’s issuer company, confirmed that it had found a way to move its funds out of SVB.

SEC’s lawsuit against Binance and Coinbase

In June 2023, the U.S. Securities and Exchange Commission (SEC) filed lawsuits against Binance and Coinbase for unlicensed exchange operations and offering unregistered securities. Although significant, this event as well as the collapse of SVB, did not significantly hinder the cryptocurrency market's overall growth trend.

Blackrock filing for Spot Bitcoin ETF

A pivotal event that positively influenced the upward trajectory of the crypto market occurred when Blackrock, one of the world's largest investment managers, filed for a Spot Bitcoin ETF (exchange-traded funds) with the U.S. Securities and Exchange Commission on June 15th, 2023. If approved, these ETFs would enable investors to trade Bitcoin directly via traditional brokerages, potentially broadening its accessibility and substantially impacting its market value.Following BlackRock's initiative, numerous other reputable companies followed suit, which signals a broader trend toward legitimizing Bitcoin within traditional financial markets.

Grayscale’s winning appeal against SEC

Further reinforcing this upward momentum, in August 2023 another large American digital currency asset management company Grayscale, convinced an appeals court that the SEC’s rejection of its Bitcoin ETF application was baseless. This successful appeal suggests a higher probability that the SEC will approve Spot Bitcoin ETF applications from all companies that filed by the next deadline set for January 10th, 2024.

What Can We Expect in 2024?

Many experts agree that the cryptocurrency market is expected to continue its upward trajectory in 2024, driven by several factors, including:

Possible imminent approval of Spot Bitcoin ETFs

As mentioned above, the crypto space is buzzing with anticipation over the potential approval date for Bitcoin spot ETFs. Between Grayscale’s successful court case and applications from a lot of other mainstream financial institutions, such as BlackRock, WisdomTree, and Fidelity, the approval appears to be very probable.If the SEC decides to grant these applications it could have a major impact on the cryptocurrency market, since it will pave the way for increased institutional participation.

Bitcoin’s Halving

Bitcoin's next halving, scheduled for April 2024 is another factor that is expected to drive the cryptocurrency market higher in 2024. This event reduces the supply of newly mined Bitcoins by half, creating scarcity and potentially leading to elevated demand.

Better Macroeconomic Conditions

As the global economy heals from 2022's troubles, a more supportive environment is emerging for crypto. Reduced inflation and stabilizing interest rates are creating more favorable conditions for the industry’s growth.

Conclusion

While no one can say with absolute certainty what is in store for the crypto industry in 2024, numerous indicators suggest a highly promising and productive year ahead. Continued institutional interest, the diminishing impact of the global economic crisis, and the anticipated effect of Bitcoin's halving collectively set a robust stage for potential price appreciation.