Fall of Crypto Giants
While 2023 has witnessed bitcoin’s recovery, it has also seen the downfall of several cryptocurrency giants. Binance chief Changpeng Zhao pleaded guilty to breaking U.S. anti-money laundering laws, resulting in a multi-billion dollar settlement with regulators. Voyager Digital’s co-founder also faced regulatory action in the U.S., and Celsius founder Alex Mashinsky was arrested and pleaded not guilty to criminal charges, including securities fraud. However, Ripple’s XRP token recorded gains of 82% for the year after a crucial legal victory, with a U.S. judge ruling that Ripple Labs’ sales of the token on public exchanges did not violate securities law.
The Outlook for Bitcoin in 2024
The recent fourth-quarter surge of bitcoin, which amounts to 55%, is mainly attributed to expectations that a spot bitcoin ETF will receive approval in the U.S., attracting retail and institutional investors. Asset management giants like BlackRock and Fidelity are among the 13 companies that have submitted applications for this multi-billion dollar product to the U.S. Securities and Exchange Commission. It is anticipated that the approval of such a fund could bring in as much as $3 billion in the early days of trading and potentially even more thereafter.
However, not everyone shares the same bullish sentiment. J.P. Morgan remains skeptical of the extent of success in adoption that the broader market is pricing in, despite expecting the crypto market recovery to continue after the anticipated ETF approval in early 2024. J.P. Morgan predicts that bitcoin ETFs will attract assets at a low to mid-single digit percentage range of the $1.7 trillion crypto market, in contrast to more optimistic projections of around 10%. The report suggests that if adoption falls short of these expectations, the crypto market’s recent gains could be reversed.
Some market observers, though, believe that the current recovery of bitcoin is still in its early stages. Glassnode, an analytics platform, indicates that the net dollar-denominated realized profit per day from bitcoin investors is currently at $324 million, significantly lower than the peaks experienced during the latter stages of the 2021 bull market, which exceeded $3 billion per day. This suggests that bitcoin’s performance is more characteristic of an early-stage bull market rather than a late one.