What Happened in Bitcoin and Crypto in 2023: Quick Overview

The price of Bitcoin rose from $16,680 at the beginning of 2023 to $$44,200 in December.

PayPal launched its stablecoin, PYUSD while Arbitrum introduced the ARB token in 2023.

The price of bitcoin may reach $100,000 in 2024.

Introduction

2023 was an eventful crypto year, with many positive and negative developments in the sector. There were many legal battles, crypto crimes, innovations and crypto firm collapses. It was also a good crypto year as many cryptocurrencies like Solana, Bonk and Bitcoin performed well. This analysis will look at key negative and positive events that occurred during 2023.

Crypto Chronicles 2023: Bitcoin Hit an Annual Low of $16,680

The year began with prices of major cryptocurrency falling as a result of unstable global macroeconomic conditions. Bitcoin was heavily affected as its price dropped to $16,680 on 2 January. That was a significant price fall considering that it was trading above $20,000 in October 2022.

Bitcoin closed 2022 when its value was fluctuating around $16,600. From that low, its value rose remarkably, closing January, February and March with higher values of $22,840; $23,500 and $28,000, respectively. Notably, its value increased by over 100% year-to-date (YTD) despite the economic problems that prevailed during the period. By the end of December 2023 its price was fluctuating around $42,380.

Regulatory Battles: SEC against Kraken

From the beginning of 2023 the United States Securities and Exchange Commission (SEC) made several lawsuits against crypto firms. As a result, in February the SEC became victorious against Kraken, forcing it to close down its staking program. In addition Kraken crypto exchange paid $30 million in settlements.

Basically, the SEC charged Kraken for failing to provide accurate disclosures to its users. Also, the regulator accused the crypto exchange of operating the staking investment program without registering with it. In addition, in November the SEC filed a lawsuit against Kraken for carrying out unregistered crypto operations.

Collapsing of Silicon Valley Bank

One of the saddest developments was the collapse of Silicon Valley Bank which provided crypto-related services. Silicon Valley Bank, established in 1983, collapsed following a bank run that occurred on 10 March 2023.

Apart from Silicon Valley Bank, with an asset base of $209 billion, Signature Bank in New York also closed down. These two banks were well-known in the crypto sector as they offered financial services to crypto firms. Due to its closure, Circle, the issuer of the stablecoin USDC, lost $3.3 billion of its reserves when the bank collapsed leading to the depegging of the stablecoin.

Arbitrum Launched its ARB token

Notably, one of the most positive developments in the crypto sector during 2023 was Arbitrum’s launch of a governance token, ARB on 23 March. The introduction of the Ethereum layer-2 scaling solution token was followed by a large airdrop, amounting to 12.75% of its supply.

As a fact, early supporters and the developers got 11.62%, and 1.13% respectively. On average each supporter got 625 ARB valued between $625 and $1,250. Since the launch of the ARB token turned Arbitrum into a Decentralized Autonomous Organization (DAO), it entitles its holders to participate in its decision making process.

SEC Filed Lawsuits against Both Binance/CZ and Coinbase

2023 witnessed several SEC lawsuits as the regulatory authority tried to instil discipline in the sector. On 5 June 2023, the SEC filed a lawsuit against Binance and Chanpeng Zhao, its CEO and founder. On 16 June, the SEC also filed several charges again Coinbase, one of the leading crypto exchanges.

The SEC’s charges against Binance include “operating unregistered exchanges, broker-dealers, and clearing agencies; misrepresenting trading controls and oversight on the Binance.US platform; and the unregistered offer and sale of securities.”

Specifically, the SEC alleges that although Binance claimed that it restricted United States citizens from transacting on Binance.com, it was actually allowing them to trade various cryptocurrencies.

The other charge against Binance and Zhao was that they had control over the customers’ assets which enabled them to divert them to other uses. For example, at one time Binance diverted the customer fund to Sigma Chain, Zhao’s company located in Europe. In all, the SEC leveled 13 charges against Binance and CZ.

On the other hand, the SEC charged Coinbase for operating an unregistered cryptocurrency trading platform. It stated that “Coinbase intertwines the traditional services of an exchange, broker, and clearing agency without having registered any of those functions with the Commission as required by law.”

However, towards the end of the year Binance reached a settlement with the Commodity Futures Trading Commission (CFTC), the U.S. Treasury Department, and the Justice Department (DoJ). It agreed to pay a $4.3 billion settlement for the various charges that include money laundering and sanctions violations.

On the other hand, Zhao resigned from his position as Binance CEO following the exchange’s settlement with the regulators. After his resignation, Richard Teng who was previously Binance’s Global Head of Regional Markets took over as the CEO.

BlackRock Filed for a Spot Bitcoin ETF

During 2023, BlackRock, the world’s largest asset manager, took an interest in the crypto world when it applied for a spot bitcoin exchange traded fund (ETF) in June. The crypto news 2023 was well-received by both traditional and crypto investors.

By the end of 2023, however, the SEC had not yet approved the BlackRock ETF and anticipation is high that it will do so in January 2024. The SEC took much time to approve the BTC ETF because of several issues which include the means of redemption. Recently, BlackRock amended its application to incorporate the use of the cash creation model which the SEC prefers.

Bitcoin ETFs

BlackRock is not the only asset manager that has applied for the spot BTC ETF. Valkyrie Funds, Wisdom Tree Funds, Invesco, Grayscale and Galaxy Digital are the other hopefuls that applied for spot bitcoin ETFs in the United States in 2023.

Although the United States has not yet approved a single spot bitcoin ETF, other countries like Dubai, Brazil, Canada and Germany have done so. Previously, the SEC rejected the bitcoin ETFs due to fear of market manipulation. However, in December Gary Gensler, the SEC chair, said that the regulator was “taking a new look” at the spot BTC ETF applications under its assessment.

The SEC’s approval of spot bitcoin ETFs is likely to bring many new investors in the crypto sectors which will bring much financial inflows. Also, the approval of the ETFs will lead to the maturation of the crypto market.

Ledger Hack

In December Ledger, the manufacturer of digital hardware wallets, was compromised leading to the loss of cryptocurrencies worth more than $600,000. The attacker put a malicious javascript code into the Ledger dApps Connect Kit which enables web3 dapps to connect with decentralized applications.

Soon after observing the hacking incident Ledger and its partners including MetaMask, Blockaid and Sushiswap alerted their users about the malicious incident. They encouraged them to avoid connecting with any decentralized applications until the issue was resolved. After Ledger removed the malicious code from its Connect Kit it advised its users that it was safe for them to connect with the Dapps.

Solana Spike

Solana was one of the leading cryptocurrencies that performed very well in 2023, attaining a 600% YTD. Nonetheless, at the beginning of the year some analysts believed that 2023 would be a bad year for Solana due to its high exposure to FTX, the exchange that collapsed in 2022.

As if that was not enough, in June the SEC listed Solana as a crypto security which should have been registered before trading. It designated SOL as a security when it sued Coinbase for offering unregistered crypto assets.

Nonetheless, the price of SOL started rising after Ripple’s partial victory over the SEC. Much of its gain, though, came during the last quarter of 2023 when the news of a possible spot bitcoin ETF approval in the United States created a bullish momentum for most leading cryptocurrencies. As a result, on 31 December Solana was trading around $104.

PayPal Launch PYUSD Stablecoin

In August 2023 PayPal, one of the leading payment processors, launched its stablecoin, PYUSD. The stablecoin, pegged against the US dollar, was immediately available to PayPal users in the United States.

For someone to access the PYUSD he/she should meet some key eligibility criteria. As a result, the eligible customers are able to make online payments using the stablecoin. It is important to note that the PYUSD is an ERC20 since it exists on the Ethereum blockchain.

The users can also convert the PYUSD to any cryptocurrencies which PayPal offers to its customers. Soon after its launch several cryptocurrency exchanges listed the PYUSD making it available for trading.

Bitcoin Recovers the $44,000 Price Level

Although bitcoin started the year with a price below $20,000 and attained a trading low of $16,680, its price rebounded to $44,200 on 9 December. However, the bitcoin value declined again after that yearly peak. For much of December the value of bitcoin was fluctuating around $43,000. Basically, Its bullish performance was connected to the potential approval of spot bitcoin ETFs in the United States.

Sam Bankman-Fried Trial

The other notable issue during 2023 was the trial of Sam Bankman-Fried, the FTX founder and former CEO. His trial came after the unceremonious collapse of FTX, which was one of the leading cryptocurrency exchanges at that time. The SEC accused Bankman-Fried of misappropriating millions of customer funds through investing in unrelated risky businesses, purchasing properties and sponsoring political campaigns.

At the end of the trial, Bankman-Fried was found guilty of several charges that include criminal conspiracy and conspiracy to commit wire fraud against FTX customers. Bankman-Fried is awaiting the sentence for his misconduct. The judge will deliver Bankman-Fried’s judgement on 28 March.

In short, Bankman-Fried faces a sentence of up to 115 years in prison. It is important to note that Bankman-Fried’s case highlights the need for crypto firms to comply with national crypto legislations in the jurisdictions they operate in.

Ripple Vs. SEC Legal Battle

The legal battle between the SEC and Ripple affected the performance of many cryptocurrencies. Primarily, the SEC vs. Ripple lawsuit created uncertainty in the crypto sector. As a result, when the Ripple had a partial victory over the SEC in July the prices of most cryptocurrencies started rising.

As a fact, Analisa Torres, the US presiding judge over the SEC vs. Ripple case, ruled that the secondary sale of digital assets like cryptocurrencies does not constitute an investment contract. After that ruling several crypto exchanges that had delisted XRP relisted it. That victory was one of the catalysts for the boom in cryptocurrency performance in the second half of 2023.

Conclusion

2023 was generally a good year for the crypto market as many cryptocurrencies fared very well during the period. As an example, Bitcoin gained by over 100% while Solana by over 600%. Other positive developments include PayPal’s launch of its stablecoin, PYUSD and the filing of around a dozen spot bitcoin ETF applications in the United States.

FAQs about Crypto Developments in 2023

What is the highest rising crypto in 2023?

Lido DAO (LDO) is one of the fastest rising cryptocurrency in 2023. Its value rose by more than 100% within the first half of the year before gaining by over 225% during the second half. During December the value of LDO fluctuated around $2.80.

Which crypto will Boom in 2024?

Many crypto analysts agree that bitcoin will boom in 2024 due to the on-coming halving event. The SEC approval of spot bitcoin ETFs will help to push its price up. The current price forecast is that the value of bitcoin may reach $100,000 in 2024.

Will crypto recover in 2025?

The crypto market is likely to boom in 2025 due to a confluence of factors like the bitcoin halving event and a favourable economic outlook. Several cryptocurrencies like ETH, Bitcoin, BNB, LTC, XRP, Solana and Avalanche are examples of cryptocurrencies that gained much during that year.

Author: Mashell C., Gate.io Researcher

*This article represents only the views of the researcher and does not constitute any investment suggestions.

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