Cryptocurrencies saw significant growth and development in the year 2023, despite being plagued by fraud and scandals. The primary cryptocurrency, Bitcoin, experienced a staggering annual increase of 160%. While the year was marked by scandals, bankruptcies, fraud, and regulatory issues, it also presented opportunities for the industry to thrive. Notably, industry leaders such as Sam Bankman-Fried, Changpeng Zhao, Alex Mashinsky, Heather “Razzlekhan” Morgan, and Ilya Lichtenstein became associated with deceit. However, amidst the negative coverage, the cryptocurrency sector made significant progress.
Bitcoin emerged as the top cryptocurrency with a year-to-date gain of 160%. It managed to showcase its resilience amidst the challenges faced by the industry. Additionally, the sector achieved victories in two high-profile court disputes, adding to its credibility. Furthermore, the year held promise for the approval of a traditional investment product in January, potentially attracting a wave of new investors.
The macroeconomic landscape also contributed to the growth of digital assets and global financial markets. Factors such as inflation easing, economic growth, and the possibility of the Federal Reserve halting interest rate rises all played a role in bolstering cryptocurrencies. Kyla Curley, a crypto specialist and partner at worldwide consulting firm StoneTurn, described 2023 as the “year of crypto resilience,” highlighting its ability to withstand challenges. The influence of US authorities, particularly the Department of Justice, despite the lack of explicit rules, demonstrated their commitment to regulating the market. Curley explained that fraud would always exist due to human nature, but the industry continues to move forward.
However, amidst the industry’s progress, there were notable cases of deceit. Sam Bankman-Fried, once hailed as a billionaire, was convicted in November for running a multibillion-dollar scam through his FTX trading platform over several years. This trial became the most publicized event of the year, providing insights into the short-lived scam that attracted millions of conventional investors. While skeptics used this as evidence against cryptocurrencies, supporters hailed the conviction as a necessary cleansing of the industry.
Shortly after Bankman-Fried’s conviction, US officials achieved another significant victory. Changpeng Zhao, also known as CZ, agreed to a $4 billion settlement and admitted guilt to charges of money laundering. Binance, the cryptocurrency trading platform associated with CZ, was one of the most popular in the market. Faryar Shirzad, the chief policy officer of Coinbase, regarded 2023 as a good year for builders and a bad year for scammers. The industry’s ability to address fraudulent activities showcased its progress.
Investors remained hopeful for positive developments, and bitcoin’s price surged by 23% to reach $44,000, its highest level in 18 months. The potential approval of the first spot bitcoin exchange-traded fund (ETF) in the US market became a highly anticipated event for the cryptocurrency industry in 2024. A spot bitcoin ETF would allow investors to track the price of bitcoin without directly holding the cryptocurrency. This approach appeals to mainstream investors looking for a low-risk entry point into the market. Furthermore, the possibility of regulatory control adds an additional layer of security.
In addition to the ETF’s potential impact, the bitcoin halving event in 2024 also contributed to the positive outlook for the industry. Halving refers to the reduction in the supply of bitcoin tokens, which occurs every four years. This limited supply, combined with the anticipated approval of the ETF, led experts like Antoni Trenchev, co-founder of crypto lender Nexo, to predict that bitcoin’s value could surpass $100,000. However, they acknowledge that the road to this milestone will not be without its challenges and volatility.
Prominent figures such as Anthony Scaramucci, creator of SkyBridge Capital, believe that bitcoin could reach even higher levels. Scaramucci predicted that bitcoin could conclude the year at $140,000, showcasing his optimism for the future of digital assets.
Overall, despite the challenges and scandals faced by the cryptocurrency industry in 2023, significant progress was made. Bitcoin emerged as the top cryptocurrency, court disputes were won, and the potential approval of a spot bitcoin ETF offered new opportunities for mainstream investors. With the halving event on the horizon, industry experts and supporters have a positive outlook for the future, expecting further growth and value appreciation in the years to come.
