Investors of virtual digital currencies, popularly known as cryptocurrencies, experienced a roller-coaster ride in the year 2023. However, cryptocurrencies have given profitable returns this year. The grand old cryptocurrency, Bitcoin price jumped 160% this year, which is the second best to more than 350% generated during 2020.
This year, the crypto space has witnessed a myriad of regulatory attacks that have tested the nerves of investors. But, this hard-to-categorize asset class has literally dwarfed any other asset category in comparison to the returns it has generated and rewarded investors in moneymaking.
At the beginning of this year, the sector was plagued by many obstacles. Whether it is FTX, TerraLuma deterioration, inviting regulatory wrath, lawsuits filed against many leading exchanges, several countries closing their doors fearing the consequences – losing or rather handing economic power into the hands of private currencies, etc.
Read also: Bitcoin’s 160% rebound in 2023 is a gamble on ETF ‘Demand Shock’
These concerns filled the air of negativity in market prices. It is this situation that has caught the attention of smart investors – the large asset backed institutional investors.
BlackRock, Fidelity, Valkyrie, many others jumped in with spot bitcoin exchange traded funds (ETF), clearly indicating the huge institutional appetite waiting to grab their share.
According to a private surveyor, it is expected that about $60.6 billion could flow into Bitcoin from the combined stock and bond ETFs, and about $9.9 billion from the gold market, totaling about $70.5 billion in potential new capital flow
Currently, the total market capitalization of cryptocurrencies stands at $1.66 billion.
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Year 2024 holds many promises for crypto assets. Artificial intelligence or AI is set to take off, which will create huge potential for the blockchain ecosystem. The decentralized ledger technology (DLT) will play a crucial role in the financial sector. Therefore, building an appropriate regulatory environment will be a top priority.
These are some of the areas that have been inhabited during 2023 and are slowly and surely being dealt with.
In fact, the discussions on several key issues during the World Economic Forum held in India and around the world helped alleviate some concerns. There is consensus on building a global framework to regulate cryptocurrencies.
Meanwhile, the CEO of the bitcoin mining company Micrastrategy, Michael Saylor, continued to accumulate bitcoins and he now believes that he is sitting on profits. Saylor started buying the crypto more than three years ago and in the end a check held more than 158,000 bitcoins, worth about $4.7 billion.
Read also: Bitcoin rose on rumors in 2023. How to predict what will come next?
His company has sold only once so far – A 708 bitcoin sale in December 2022, worth $ 11 million at the time.
There are a number of reasons behind Saylor accumulating bitcoin. Securities Exchanges Commission (SEC) ETF approval and bitcoin halving in April.
According to Saylor, mainstream investors lacked a “high bandwidth” compliant channel for investing in Bitcoin, a gap that the spot Bitcoin ETF is poised to fill.
Following the approval of the bitcoin ETF, the next major event is a supply shock during the April halving, reducing the daily production of Bitcoin from 900 to 450.
Cryptocurrencies are still in early stages of growth. There are things that must be addressed immediately such as investment security, while some others, mainly fixing the final responsibility in case the protocol or the private virtual currency explodes.
Read all Cryptocurrency market news here
Disclaimer: The opinions and recommendations made above are those of individual analysts or trading companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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Published: 26 Dec 2023, 11:22 IST