Bitcoin has staged an impressive 160% rebound in 2023, regaining over $500 billion in market value. According to Bloomberg, the investor appetite for risk has returned to the crypto market amid optimism that the first Bitcoin exchange-traded fund (ETF) could receive regulatory approval this month.
“The approval of the spot ETF is going to be a major catalyst, it’s definitely going to be a demand jolt” said Michael Saylor, co-founder of Bitcoin holder MicroStrategy Inc.
The pending decision by US regulators on the spot Bitcoin ETFs has been a major driver of Bitcoin’s price resurgence, according to crypto bulls. A positive outcome could significantly expand Bitcoin’s investor base. BTC has considerably outperformed traditional assets like stocks and gold in 2023.
In addition to potential ETF launches, supporters cite the upcoming Bitcoin “halving” event in 2024 as a catalyst. This quadrennial event curbs BTC supply growth, providing fundamental support for its price.
Bitcoin’s Resilience Amidst Legal Challenges
While optimism has returned to crypto, detractors argue that digital assets still lack inherent value and remain a haven for criminals. Ongoing legal troubles in the crypto industry highlight risks that persist. However, the crypto derivatives market saw record activity in 2023, indicating strengthening infrastructure.
Binance remains the largest trading venue leading crypto exchange, though its market share has declined as other exchanges picked up share. Liquidity and market depth have yet to recover fully but show signs of improvement since the FTX collapse. Improved crypto market structure may revive peak interest levels from the pandemic stimulus boom.
Top crypto stocks like Coinbase, MicroStrategy, and crypto miners Marathon and Riot have massively outperformed BTC, underscoring the bullish outlook. Investors are looking past near-term legal troubles to focus on long-term growth potential.
Decentralized finance protocols focused on staking and liquidity have also attracted strong interest, though the sector has struggled since the collapse of TerraUSD. Non-fungible token trading volumes have likewise rebounded from October lows, pointing to a gradual recovery in crypto demand.
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