Investors of virtual digital currencies, popularly known as cryptocurrencies, have experienced a roller coaster ride in the year 2023. However, cryptocurrencies have given profitable returns this year. The grand old cryptocurrency, Bitcoin price has jumped 160% this year, which is second best to over 350% generated during 2020.
This year, the crypto space has witnessed a myriad of regulatory onslaught that tested investors’ nerves. But, this hard to categorise asset class has literally dwarfed any other asset category when compared with returns it has generated and rewarded investors in minting money.
At the beginning of this year, the sector was plagued with many obstacles. Be it FTX, TerraLuma debacle, inviting regulatory ire, suits filed against many leading exchanges, several countries shutting the doors fearing the consequences – losing or rather handing over economic power into the hands of private currencies, etc.
These concerns filled the air of negativity in market pricing. It is this situation that caught the eye of savvy investors – the large asset backed institutional investors.
BlackRock, Fidelity, Valkyrie, many others jumped in with spot bitcoin exchange traded funds (ETF), clearly indicating the huge institutional appetite waiting to grab their share.
According to a private surveyor, it is expected that approximately $60.6 billion could flow into Bitcoin from the combined stock and bond ETFs, and about $9.9 billion from the gold market, totalling around $70.5 billion in potential new capital influx.
Currently, the total market capitalisation of cryptocurrencies stands at $1.66 trillion.
Year 2024 holds many promises for crypto assets. Artificial intelligence or AI is set to go on stream which will create immense potential for the blockchain ecosystem. The decentralised ledger technology (DLT) will play a crucial role in the financial sector. Hence, building a suitable regulatory environment will be a top priority.
These are some of the areas that were dwelled into during 2023 and are slowly and surely getting addressed.
In fact, the deliberations over several key issues during the World Economic Forum held in India and across the globe helped alleviate some concerns. There is consensus over building a global framework to regulate cryptocurrencies.
Meanwhile, the bitcoin mining company Micrastrategy’s CEO Michael Saylor continued to accumulate bitcoins and he is now believed to be sitting on profits. Saylor began buying the crypto more than three years ago and at last check held more than 158,000 bitcoins, worth approximately $4.7 billion.
His firm has so far sold only once – A 708 bitcoin sale in December 2022, worth $11 million at the time.
There are a few reasons behind Saylor accumulating bitcoin. ETF approval by Securities Exchanges Commission (SEC) and bitcoin halving in April.
According to Saylor, mainstream investors have lacked a “high bandwidth” compliant channel for investing in Bitcoin, a gap that the spot Bitcoin ETF is poised to fill.
Following spot bitcoin ETF approval, the next important event is a supply shock during April’s halving, reducing daily Bitcoin production from 900 to 450.
Cryptocurrencies are still in nascent stages of growth. There are issues that need to be tackled on an immediate basis such as investor security, while certain others, mainly fixing the final responsibility in case of the protocol or the private virtual currency goes burst.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.