Bitcoin's wild ride in 2023: Rebound, turbulence, and gaining legitimacy

The year kicked off on a high note, with Bitcoin posting its best quarterly performance in over two years, gaining 68 percent in the first three months.

The year 2023 has been a roller-coaster ride for Bitcoin, the world’s largest cryptocurrency by market capitalisation, which posted a spectacular rebound after falling for the last two years.

This impressive performance was a testament to the growing acceptance and adoption of Bitcoin as a legitimate financial asset.

The year kicked off on a high note, with Bitcoin posting its best quarterly performance in over two years, gaining 68 percent in the first three months.

However, the journey was not without its challenges. Bitcoin experienced a decline of 10.9 percent over the third quarter.

This decline was attributed to a variety of factors, including regulatory concerns and market volatility. Despite this setback, Bitcoin’s year-to-date performance remained strong, with a gain of 125 percent, according to information from Barchart.

The top cryptocurrency started the year around $16,500 levels and touched $31,500 levels on July 14 and is currently trading around $37,050.

One of the most significant developments in the cryptocurrency market this year was the potential approval of Bitcoin spot exchange-traded funds (ETFs). The US Securities and Exchange Commission (SEC) is currently reviewing several applications for Bitcoin spot ETFs.

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An approval would open cryptocurrency investing to a broader range of institutional and retail investors. The anticipation surrounding the approval of Bitcoin ETFs has generated considerable hype, leading to an increase in transaction fees for Bitcoin.

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Binance controversy

The year also witnessed some controversies, notably involving Binance, the world’s largest cryptocurrency exchange. Binance and its CEO, Changpeng Zhao, agreed to pay about $4.3 billion to resolve investigations by the US Department of Justice. The charges included money laundering, unlicensed money transmitting, and sanctions violations. Despite these challenges, the resilience of Bitcoin and the broader cryptocurrency market has been noteworthy.

In the words of Peter Thiel, co-founder of PayPal, “I do think Bitcoin is the first [encrypted money] that has the potential to do something like change the world”. This sentiment was echoed by Bill Gates, who stated, “Bitcoin is exciting because it shows how cheap it can be. Bitcoin is better than currency… for large transactions, currency can get pretty inconvenient.”

Also Read | Ex-Binance CEO Zhao urges judge to allow him to leave US before sentencing

What lies ahead?

As we look forward to 2024, the future of Bitcoin remains promising yet unpredictable. As Naval Ravikant, an entrepreneur and angel investor, puts it, “Bitcoin is a tool for freeing humanity from oligarchs and tyrants, dressed up as a get-rich-quick scheme”. This encapsulates the dual nature of Bitcoin – a revolutionary financial instrument and a speculative asset.

2023 has been a year of significant milestones and challenges for Bitcoin, whose performance and regulatory developments have further cemented its position as a major player in the global financial system.

As we move into 2024, the world will be watching closely as Bitcoin continues to evolve and shape the future of finance.