Let’s be honest. After the huge fails of 2022, the challenge for the crypto industry in 2023 was clear: to survive before we can thrive. While this can be said for most mid-cycle years, this year counted more than others, with some regulators looking to cripple the industry and new favorites like artificial intelligence (AI) taking all our shine as the future of technology.
Looking back across the battle fields of 2023 now, the objective has been achieved, and then some. Nearly triple its $16,500 price tag on January 1st at present, Bitcoin and others like Solana (started at under $10, now $105) have shown that we’re back. Of course, some of us never left!
It wasn’t an easy year, of course. Court cases, sell the news events, and trading sideways tested the patience of everyone as we awaited the next Bitcoin halving event and new narratives like the Bitcoin spot ETF and Ethereum sharding to wake up the crypto markets and send them parabolic. So congratulations, you are likely about to be awarded with a 2024 bull market, IF things go to plan. But before you fully invest your portfolio in alt coins and animal pictures, let’s look back on 2023 and observe how it will influence one of the most important years in crypto, 2024.
Here are the key events that defined 2023 and will shape the next year in the worlds of Web3, blockchain and crypto.
Before we begin, a quick warning:
Don’t be another crypto victim in 2024.
Scammers and hackers are flocking back into crypto like vultures, just as they do with every bull(ish) market before, looking to rob you blind. Please protect your assets. Top tips to start with: Use cold storage if you can afford it, be careful which sites and Dapps you interact with, don’t blind sign any transaction, , watch out for phishing scams, use a wallet that screens Web3 transactions, protect your private key or recovery seed (don’t store digitally) and spread your risk across a few different wallets if you can.
Of course it goes without saying that at least one of them should be a CoolWallet Pro (for serious users), a CoolWallet S (for HODLers) or CoolWallet App (includes a free hot wallet). Everything should come in three, so why not get one of each? Not financial advice.
The Bitcoin Juggernaut is Back, despite AI
The crazy AI narrative driven by OpenAI’s ChatGPT ascent took crypto by surprise in the early part of the year, and also took most of its VC funding. The AI crypto narrative was compelling, and while crypto and AI are fundamentally different (just ask Cronje), it provided an impetus for digital asset markets to get moving again. However, with every month revolving around new factors like the United States’s CPI inflation reading and FOMC interest rates announcements, markets remained subdued while investors waited out the quantitative tightening and resulting recession.
If you took Bitcoin’s pulse over the summer or even early fall, you would have assumed it was on life support. Bitcoin struggled to first creep over $20,000, then spluttered at $28,000 while many altcoins and meme tokens were being hoarded by traders hoping to generate short-term gains before the bull market began.
But something happened in mid-October this year. As if Bitcoin was waiting for the moment Sam Bankman-Fried’s trial began, Bitcoin sprang back to life and took almost everyone by surprise.
Not everyone though. Enter the new crypto catalyst, BlackRock, an asset manager with over $9 trillion in managed assets globally, has been in a legal battle with the United States government to create a spot Bitcoin ETF. The creation of a federally-approved ETF could create an avenue for millions of people to direct investments straight into Bitcoin. Other ETFs would likely follow once BlackRock has ironed out the fine details. Altcoins have been following BTC, which currently sits around $42.000.
With the current rate-cuts forecasted for next year, Bitcoin is in a unique position to have one of the most volatile halving events yet, which is scheduled to happen at block 840,000 this April. With how dramatic previous halvings have been, we are in for a wild ride in 2024 as we watch the charts.
SBF Is Found Guilty and CZ of Binance Steps Down
Crypto bogeyman Gary Gensler lived rent-free in the minds of crypto holders all year-long, with his SEC and other Operation Chokepoint 2.0 agencies going after everyone from Coinbase to Richard Heart to Kraken, but it seems that once BlackRock stepped in, things got cleared up pretty quick. Or was that always the plan?
In any case, the two top players in last year’s FTX drama both had an inevitably bad year.
Last year’s scourge on crypto has officially been convicted on multiple charges by the United States government, and SBF will have to watch the bull market from behind bars while we enjoy ourselves.
Chengpeng Zhao from Binance, known as CZ for short, has stepped down as CEO of Binance as he faces charges from the SEC. CZ has been accused of violating the Bank Secrecy Act by allowing locations sanctioned by the US government to conduct crypto transactions and faces a 10-year prison sentence. Besides a $4.3 billion dollar fine for Binance, the details of the settlement with the SEC is not yet known and still ongoing.
Overall, the conclusion of these negative storylines is a good thing. Cleaning up the House of Crypto is a prerequisite for mass adoption and couldn’t be avoided.
Ethereum, Layer-2s and Solana mania
Ethereum has had a rough year, even by bear market standards. While it’s up since January of 2023, it’s hard to find a coin that isn’t, and the ETH/BTC chart is at a yearly low, down 30% since January 2023. We’re a long way off from the Flippening.
However, look deeper and you’ll see that Ethereum has wrapped another year of reinvention and reinforcement. Last year’s Merge was followed up by this year’s Shanghai upgrade, which made unstaking ETH possible, and next year’s EIP4884 (expected this year) will bring the first stage of sharding, proto-danksharding, to Ethereum and its army of layer-2s.
Meanwhile, Solana has had a late and crazy surge after its Breakpoint conference, multiplying its market cap by 5x in Q4 and beating Ethereum by most metrics, be it active addresses, DEX volume, and NFT sales. This is largely due to nearly a year of uninterrupted uptime, new projects like Bonk, Pyth, Jito, Jupiter and MadLads stirring things up and injecting new life and liquidity into the original Ethereum killer, as well as a new announcement about its Firedancer protocol. Also, a slew of massive airdrops sent farmers rushing over to SolanaLand. Don’t underestimate the importance of Ethereum however, as it continues to be the leading Layer 1 chain in DeFi and smart contracts, locking in over $46 billion of TVL compared to Solana’s $1.5 billion according to DeFiLlama.
Ether has been lagging behind many other Top 10 coins during the recent rally, but if you’re highly invested in Layer 2 protocols and tokens, you probably didn’t notice. Vitalik himself has been very focused on improving the role L2 chains play in the DeFi space, noting important applications that work in finance, require privacy, or interact with social media or gaming would not mind slightly slower transaction times in exchange for lower fees.
Layer 2 chains such as Arbitrum (ARB), Optimism (OP), and Polygon (MATIC) are helping solve the scalability, privacy, transaction speed, and cost issues of operating on Ethereum by rolling up transactions and processing them in bulk. Underestimating Ethereum in 2024 would be a terrible mistake, but protocols that build on ethereum and make it more affordable and accessible to DeFi users and traditional financial services seem like a guaranteed way to stay in the green next year.
Memecoins never left
After Elon Musk appeared on live television talking about DOGE and the price immediately plummeted, you might have assumed memecoins would not appear for some time. PEPE emerged during the middle of the bear market this year in April and caught everyone off guard, creating a horde of bear market millionaires before transactions became too expensive to justify trading the frog token on a DEX any longer (thanks Ethereum).
Memecoins continue to pop up unexpectedly, as currently dogs are once again the favorite animal of meme traders, with Solana being the new favorite place to trade, thanks to transactions remaining cheap and fast. Tokens such as BONK and dogwifhat (WIF) are exploding with popularity as Solana NFT bros and memecoin traders unite to make short-term profits.
Will the markets follow the predictable pattern of BTC, to alt coins, to memecoins, to dumping, or have animal tokens just replaced NFTs as a way of traders bored of low volatility to speculate while markets go sideways? We will hopefully find out in 2024, but with any luck the markets will mature and retail traders will retain enough capital for the bull run just beginning to show signs of life.
If you are still here at the end of 2023, you’ve already done better than a large number of investors that aren’t welcome home for the holidays after convincing their family to buy Bitcoin at $60,000 USD two years ago. If you convinced them to buy SOL last month, they would already be up over 100%. But who knows, they might be down next month. Staying informed on narratives and industry trends still created many millionaires overnight this year, and this will be no less true as we ring in the new year and welcome in 2024.
Expect the major events next year such as the Bitcoin halving, a likely Bitcoin ETF, predicted rate cuts by the US government, and the American election to cause volatility that will make 2023 look like a walk in the park.
If you’re worried about getting shaken out when markets get rough, why not get a CoolWallet? It’s the world’s most convenient crypto hardware wallet, made for everyone from DeFi degens to Bitcoin HODLers. With an EAL6+ secure element, biometric verification and Web3 transaction anti-phishing smart scanning, it keeps your crypto safe while you’re on the go. And unlike some of our biggest competitors, we’re open-source, we don’t collect personal data and we remain highly diligent on all possible attack vectors.
CoolWallet has HUGE plans for 2024, so if you haven’t started yet, download our CoolWallet App, create a hot wallet if you can’t afford our hardware wallets just yet, and start playing around.
Thanks for supporting us in 2023, and see you in 2024!
To the Moon!