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The first half of the year saw major Bitcoin developments, including the launch of Ordinals, Inscriptions, and BRC-20 tokens, marking a new phase for Bitcoin. In late 2023, the market saw positive shifts as traditional companies like MicroStrategy, BlackRock, and Fidelity showed strong crypto commitment through actions like applying for Bitcoin ETFs, expanding BTC investments, and introducing blockchain initiatives.
Evolution of Bitcoin: Major Milestones
1. The Rise of Ordinals
The most groundbreaking addition to the Bitcoin blockchain this year was the implementation of the Ordinals protocol, a Layer1 protocol that allots a unique number to each satoshi minted and inscribes additional data in a satoshi in the form of text, video, images and more allowing developers to create NFTs and fungible tokens on top of the Bitcoin blockchain.
Ordinals – Inscriptions Overtime
After the first inscription on December 14, 2022, it took over a month to reach 100 inscriptions. However, between February 2 and February 15, the number surged from 1,000 to 100,000 and there has been no looking back. As of mid-December, a staggering 47.5 million inscriptions have been made generating a total fee exceeding ~ 3556 BTC.
Avg. Bitcoin transaction fee
In 2023, Bitcoin’s daily transaction fees, driven by increased Ordinals-related activity, surpassed that of Ethereum. Bitcoin’s average fee surged to $38.4 in mid-December, which reflects heightened market interest in Ordinals-inscribed assets. This surge in fee doesn’t favour mass adoption of Bitcoin as a blockchain (a problem that yet needs to be solved).
2. Institutional Commitment and ETF Aspirations
Bitcoin’s price saw an upward trajectory following the submission of a spot BTC ETF application by BlackRock (AUM ~ $9.4 trillion) to the Securities and Exchange Commission in June ‘23. Subsequently, over a dozen major U.S. asset management firms, including Fidelity (AUM ~ $4.5 trillion), and Invesco Galaxy (AUM ~ $1.5 trillion) have filed similar proposals. While ongoing discussions between these firms and the SEC continue, a final decision has been deferred to January 2024.
Towards the end of 2023, BlackRock revised its ETF model by introducing an in-kind redemption “prepay” model to allow financial institutions to create new ETF shares using cash, rather than holding bitcoin directly and increase institutional participation. This move can pave the path for other firms and will boost institutional involvement in the sector.
Institutional firms increased their BTC holdings and participation in the ecosystem throughout 2023. For instance, MicroStrategy increased their BTC holdings to 174.5K at an average price of ~ $30.3K, which were at a ~ 32% profit as at the date of writing. Nomura, Japan’s largest investment bank, launched a Bitcoin Adoption Fund targeting institutional investors and providing long exposure to Bitcoin.
3. Key Market Indicators
Market Capitalization:
The year-to-date performance of Bitcoin remained strong as it gained ~ 153% YoY. The market cap surged from ~ $318 billion to $860 billion (as of mid-December) which was majorly driven by the anticipation around the Bitcoin ETFs.
Hash Rate, Mining Rewards, and Difficulty:
Amidst the price increase and network activity, the hash rate almost doubled from 253.2 to 470.3 that implies higher computing power is required to produce new blocks and validate transactions
Subsequent to the rise in prices and excitement among the masses, Bitcoin mining rewards also soared to new highs crossing over ~ $44 million in Nov ‘23, surpassing the previous record of $41 million in May ‘23, while the mining difficulty increased from 35.4 to 64.
Cumulative number of transactions:
There was a significant surge in network activity due to the emergence of the Ordinals Protocol. The cumulative transactions surged to ~ 135 million, with a 131% growth in 7 day MA.
Future Prospects: What Lies Ahead?
ETF Approval Anticipation:
The fervor surrounding Bitcoin ETFs has played a pivotal role in shaping market sentiment. With the expectations of the SEC approving the first US Bitcoin ETF in the month of January ’24, we can expect BTC to continue its upward trend.
Bitcoin Halving Event:
The bitcoin halving event, a quadrennial event (once-every-four-years) that halves the reward earned by miners for adding a new block to the chain, is likely to take place in April ’24. Historically, past Bitcoin halving events were followed by a bull run. Prior to the 2020 halving, there was an ~ 83% increase in BTC’s price and post-halving, it experienced a ~ 46% surge. However, with the markets maturing and becoming efficient, we believe that the current price should have already factored in the Halvening effect but we may still see some activity due to the historical analogies.
Institutional Influx and Market Dynamics:
With institutional firms like MicroStrategy holding considerable BTC holdings, institutions will infuse more capital. We can expect more startups working towards Crypto ETF investment, monitoring, and analysis tools.
Expert Opinion: Shaping Bitcoin’s Trajectory
Jad Chahine, Founding Member, Superscrypt
Bitcoin continues to prove itself as a differentiated asset unlike anything else there is in the world, which is why we are seeing some of the world’s most influential funds working very hard at bringing Bitcoin access to the masses via ETFs. I don’t think it’s a question of if, but when, an ETF(s) will get approved. The market cap of gold is currently just shy of $14T, and the market cap of Bitcoin is just shy of $1T, I think there’s room to grow – and this isn’t taking into consideration the possibility of Bitcoin becoming a legitimate protocol to build applications and new use cases. I think we will see many attempts here in 2024.
Ankur Garg, Director, TDMM
In 2024, there are several key events that could shape the future of the cryptocurrency industry. These events include the potential approval of a Bitcoin Exchange-Traded Fund (ETF) by the SEC, the Ethereum Cancun upgrade, potential interest rate cuts in the US, Circle’s IPO, the Bitcoin halving, and regulatory clarity surrounding the FTX case. The approval of a Bitcoin ETF could attract more traditional investors to the market, while the Ethereum Cancun upgrade and increased token issuance could drive further growth. Potential interest rate cuts may make cryptocurrencies more attractive as alternative investments. The Bitcoin halving event, which occurs approximately every four years, is expected to increase the scarcity of Bitcoin and historically has led to price increases. Regulatory clarity is also important for investor confidence and market stability. Also, the equity markets have been on the bull run after covid-19 and investors are expected to book their profits freeing a lot of money which again is a positive for digital assets investments. Most of the factors are suggesting a sharp bull run for Bitcoin and more likely than not, it should break it’s all-time high level.
Crypto Outlook 2024
2023 was a roller-coaster ride for the crypto sphere, marked by dynamic shifts, innovative advancements, and transformative trends that reshaped the industry’s landscape. Our Crypto Outlook Report for 2024 reflects on the highs, lows, and pivotal moments that defined the past year, while also peering into the horizon to forecast the exciting potential and emerging patterns set to influence the year ahead, with insights from industry leaders at Stepn, Enjin, Hacken, SuperScrypt, and more.
Click here to read the full report!
The first half of the year saw major Bitcoin developments, including the launch of Ordinals, Inscriptions, and BRC-20 tokens, marking a new phase for Bitcoin. In late 2023, the market saw positive shifts as traditional companies like MicroStrategy, BlackRock, and Fidelity showed strong crypto commitment through actions like applying for Bitcoin ETFs, expanding BTC investments, and introducing blockchain initiatives.
Evolution of Bitcoin: Major Milestones
1. The Rise of Ordinals
The most groundbreaking addition to the Bitcoin blockchain this year was the implementation of the Ordinals protocol, a Layer1 protocol that allots a unique number to each satoshi minted and inscribes additional data in a satoshi in the form of text, video, images and more allowing developers to create NFTs and fungible tokens on top of the Bitcoin blockchain.
Ordinals – Inscriptions Overtime
After the first inscription on December 14, 2022, it took over a month to reach 100 inscriptions. However, between February 2 and February 15, the number surged from 1,000 to 100,000 and there has been no looking back. As of mid-December, a staggering 47.5 million inscriptions have been made generating a total fee exceeding ~ 3556 BTC.
Avg. Bitcoin transaction fee
In 2023, Bitcoin’s daily transaction fees, driven by increased Ordinals-related activity, surpassed that of Ethereum. Bitcoin’s average fee surged to $38.4 in mid-December, which reflects heightened market interest in Ordinals-inscribed assets. This surge in fee doesn’t favour mass adoption of Bitcoin as a blockchain (a problem that yet needs to be solved).
2. Institutional Commitment and ETF Aspirations
Bitcoin’s price saw an upward trajectory following the submission of a spot BTC ETF application by BlackRock (AUM ~ $9.4 trillion) to the Securities and Exchange Commission in June ‘23. Subsequently, over a dozen major U.S. asset management firms, including Fidelity (AUM ~ $4.5 trillion), and Invesco Galaxy (AUM ~ $1.5 trillion) have filed similar proposals. While ongoing discussions between these firms and the SEC continue, a final decision has been deferred to January 2024.
Towards the end of 2023, BlackRock revised its ETF model by introducing an in-kind redemption “prepay” model to allow financial institutions to create new ETF shares using cash, rather than holding bitcoin directly and increase institutional participation. This move can pave the path for other firms and will boost institutional involvement in the sector.
Institutional firms increased their BTC holdings and participation in the ecosystem throughout 2023. For instance, MicroStrategy increased their BTC holdings to 174.5K at an average price of ~ $30.3K, which were at a ~ 32% profit as at the date of writing. Nomura, Japan’s largest investment bank, launched a Bitcoin Adoption Fund targeting institutional investors and providing long exposure to Bitcoin.
3. Key Market Indicators
Market Capitalization:
The year-to-date performance of Bitcoin remained strong as it gained ~ 153% YoY. The market cap surged from ~ $318 billion to $860 billion (as of mid-December) which was majorly driven by the anticipation around the Bitcoin ETFs.
Hash Rate, Mining Rewards, and Difficulty:
Amidst the price increase and network activity, the hash rate almost doubled from 253.2 to 470.3 that implies higher computing power is required to produce new blocks and validate transactions
Subsequent to the rise in prices and excitement among the masses, Bitcoin mining rewards also soared to new highs crossing over ~ $44 million in Nov ‘23, surpassing the previous record of $41 million in May ‘23, while the mining difficulty increased from 35.4 to 64.
Cumulative number of transactions:
There was a significant surge in network activity due to the emergence of the Ordinals Protocol. The cumulative transactions surged to ~ 135 million, with a 131% growth in 7 day MA.
Future Prospects: What Lies Ahead?
ETF Approval Anticipation:
The fervor surrounding Bitcoin ETFs has played a pivotal role in shaping market sentiment. With the expectations of the SEC approving the first US Bitcoin ETF in the month of January ’24, we can expect BTC to continue its upward trend.
Bitcoin Halving Event:
The bitcoin halving event, a quadrennial event (once-every-four-years) that halves the reward earned by miners for adding a new block to the chain, is likely to take place in April ’24. Historically, past Bitcoin halving events were followed by a bull run. Prior to the 2020 halving, there was an ~ 83% increase in BTC’s price and post-halving, it experienced a ~ 46% surge. However, with the markets maturing and becoming efficient, we believe that the current price should have already factored in the Halvening effect but we may still see some activity due to the historical analogies.
Institutional Influx and Market Dynamics:
With institutional firms like MicroStrategy holding considerable BTC holdings, institutions will infuse more capital. We can expect more startups working towards Crypto ETF investment, monitoring, and analysis tools.
Expert Opinion: Shaping Bitcoin’s Trajectory
Jad Chahine, Founding Member, Superscrypt
Bitcoin continues to prove itself as a differentiated asset unlike anything else there is in the world, which is why we are seeing some of the world’s most influential funds working very hard at bringing Bitcoin access to the masses via ETFs. I don’t think it’s a question of if, but when, an ETF(s) will get approved. The market cap of gold is currently just shy of $14T, and the market cap of Bitcoin is just shy of $1T, I think there’s room to grow – and this isn’t taking into consideration the possibility of Bitcoin becoming a legitimate protocol to build applications and new use cases. I think we will see many attempts here in 2024.
Ankur Garg, Director, TDMM
In 2024, there are several key events that could shape the future of the cryptocurrency industry. These events include the potential approval of a Bitcoin Exchange-Traded Fund (ETF) by the SEC, the Ethereum Cancun upgrade, potential interest rate cuts in the US, Circle’s IPO, the Bitcoin halving, and regulatory clarity surrounding the FTX case. The approval of a Bitcoin ETF could attract more traditional investors to the market, while the Ethereum Cancun upgrade and increased token issuance could drive further growth. Potential interest rate cuts may make cryptocurrencies more attractive as alternative investments. The Bitcoin halving event, which occurs approximately every four years, is expected to increase the scarcity of Bitcoin and historically has led to price increases. Regulatory clarity is also important for investor confidence and market stability. Also, the equity markets have been on the bull run after covid-19 and investors are expected to book their profits freeing a lot of money which again is a positive for digital assets investments. Most of the factors are suggesting a sharp bull run for Bitcoin and more likely than not, it should break it’s all-time high level.
Crypto Outlook 2024
2023 was a roller-coaster ride for the crypto sphere, marked by dynamic shifts, innovative advancements, and transformative trends that reshaped the industry’s landscape. Our Crypto Outlook Report for 2024 reflects on the highs, lows, and pivotal moments that defined the past year, while also peering into the horizon to forecast the exciting potential and emerging patterns set to influence the year ahead, with insights from industry leaders at Stepn, Enjin, Hacken, SuperScrypt, and more.
Click here to read the full report!
