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  • Writer's pictureBabak S.

In-Depth Summary on Bitcoin from the "Full-Year 2023 & Themes for 2024" Report by Binance Research

Overview and Market Dominance

In 2023, Bitcoin experienced a significant resurgence, reclaiming its position in market dominance and the headlines. Innovations such as Ordinals, Inscriptions, and BRC-20 tokens marked a new era for Bitcoin, contributing to a rise in its market dominance from 40.4% to 50.2%, thus commanding over half of the total crypto market capitalization​

Key Metrics and Developments

  • Market Cap: Grew from $321.3 billion on January 1, 2023, to $827.8 billion by December 31, 2023, marking a 158% increase.

  • Trading Volume: Increased by 77% over the year.

  • Network Transactions: Saw a 126% increase in daily transactions.

  • Active Addresses: Dropped by 9%.

  • Average Transaction Fee: Skyrocketed by 1433%.

  • Lightning Network Capacity: Improved by 148%.

  • Mining Hash Rate and Difficulty: Both metrics showed over 100% growth, indicating increased resources dedicated to Bitcoin mining and enhanced network resiliency

Correlation with Traditional Finance

Bitcoin outperformed other traditional finance investments in 2023, registering a 159% gain. In comparison, gold, often considered an alternative to Bitcoin, rose only by 11%​Bitcoin's correlation with traditional financial markets like the S&P 500 significantly declined in 2023. Historically fluctuating between -20% and 20%, the correlation peaked at around 75% in May 2022. In 2023, it dropped to its lowest in more than three years, hovering around 1%, thus reinforcing Bitcoin's potential as a portfolio diversifier​.

Technological Innovations: Ordinals, Inscriptions, and BRC-20s

A pivotal development in 2023 was the introduction of Ordinals and Inscriptions, enabling the tracking of individual Satoshis (the smallest unit of Bitcoin) and their use for embedding arbitrary content like text, images, and videos. This development led to the creation of Bitcoin NFTs. The emergence of BRC-20s further expanded Bitcoin's capabilities, allowing the minting and transferring of fungible tokens on the Bitcoin blockchain. By December 2023, over 53 million Inscriptions were minted, generating over $230 million in fees​​. Incrypt recognized the potential early on and minted our own inscription to mark this innovation. Follow this link to view it:

Spot ETFs

2023 marked significant progress towards the realization of U.S.-regulated spot Bitcoin ETFs. Notable developments included the favorable resolution for Grayscale in converting its Bitcoin Trust into a spot ETF, prompting other major players to file their applications. The market anticipates the approval of these ETFs, with the earliest decision deadlines set in the first half of 2024​​.

Halving Event

The upcoming Bitcoin halving in April 2024 is a crucial event where block rewards will halve from 6.25 BTC to 3.125 BTC per block. This event is significant for Bitcoin's economic model and is expected to have a substantial impact on miner income and the overall market dynamics​​.

Bitcoin Price Performance Compared to Gold

The report highlights Bitcoin's substantial outperformance compared to gold in 2023. While Bitcoin's value soared by 159%, gold saw a modest increase of 11%. This comparison emphasizes Bitcoin's potential as a diversification tool and its growing prominence as a distinct asset class in the investment landscape. The decrease in correlation with traditional financial markets and its superior performance compared to traditional and alternative investments positions Bitcoin as a unique and attractive investment option​​.

Future Expectations

Looking ahead, the focus will be on the development of Bitcoin Layer-2 solutions to address the increase in block size and transaction fees caused by innovations like Ordinals and BRC-20s. These developments have been positively received, especially for their impact on securing the Bitcoin network through miner incentives​​.

In summary, Bitcoin's journey through 2023 was marked by technological advancements, increased market dominance, and an evolving relationship with traditional financial markets. The anticipation of the halving event and potential regulatory advancements such as spot ETFs set the stage for an exciting 2024 in the Bitcoin ecosystem.


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