As 2023 unfolded, remnants of the rotten apples from the 2022 bear market lingered, casting a shadow on the crypto industry’s outlook. On top of that, the United States Securities and Exchange Commission injected fear and uncertainty into the U.S. crypto industry amid calls for regulatory clarity. Nonetheless, the market began to shift as anticipation grew around the possible approval of the first spot Bitcoin exchange-traded fund (ETF) in the United States. 

Furthermore, not only did Bitcoin ( BTC ) reward long-term holders through geopolitical tensions that continue to devour traditional markets, but the cryptocurrency is also well-positioned for a bull market with a halving event closing in .

The Chinese philosophy of yin and yang defined 2023 as a place where two opposite forces collided to find a balance. In the crypto universe, the behavior of Bitcoin decides if the markets are leaning toward the light or the dark. So, how did 2023 behave? Is crypto in the light or the dark?

Happy New Year, Bitcoin!

As exploding fireworks marked the birth of 2023, Bitcoin surprised the depressed markets, indicating the good things to come. The first month of 2023 saw the price of Bitcoin rise almost 50% from $16,600 to nearly $24.000.

Bitcoin daily candle graph with volume indicators for January 2023. Source: TradingView

On-chain data seemed to detect the activity of whales purchasing collectively. The injection of demand pressure signaled the possible bottom for the price of BTC.

#Bitcoin has now surpassed $22.7k for the first time since August 18, 2022. The price rise has come as the large whale tier group of addresses holding 1,000 to 10,000 $BTC has collectively accumulated 64,638 ($1.46 billion) $BTC in the past 15 days. https://t.co/H6jCsZDgUR pic.twitter.com/RaN2I48ybg

— Santiment (@santimentfeed) January 20, 2023

To the disbelief of many crypto advocates, the excellent BTC price results drove Goldman Sachs to rank Bitcoin as the best-performing asset of 2023 in January.

Year-to-date market performance, January 2023. Source: Goldman Sachs

Days prior, the leading global investment bank declared gold a better asset than Bitcoin to diversify a portfolio, but the battle between gold and BTC has a clear winner in 2023. As of Dec. 29, Bitcoin has rallied 157%, significantly outpacing gold’s 13% gain.

We may never see this type of dominance in financial markets ever again. pic.twitter.com/D4TwQhflzI

— Pomp (@APompliano) December 6, 2023

The SEC becomes the party pooper

The SEC, led by Gary Gensler, dampened the spirits of the crypto resurgence. The agency charged against staking-as-a-service programs in the United States. Gensler explained the issue to the American public in a legendary video, letting everybody know he spoke about “S-T-A-K-E, not S-T-E-A-K.”

Today @SECGov charged Kraken for the unregistered offer sale of securities thru its staking-as-a-service program.

Whether it’s through staking-as-a-service, lending, or other means, crypto intermediaries must provide the proper disclosures safeguards required by our laws.

— Gary Gensler (@GaryGensler) February 9, 2023

In a Feb. 9 announcement, the SEC said it charged Kraken with “failing to register the offer and sale of their crypto asset staking-as-a-service program,” which the commission claims qualified as securities under its purview. The crypto firm agreed to cease operations of its staking program for U.S. customers as well as pay $30 million in disgorgement, prejudgment interest and civil penalties.

In March, Coinbase received a Wells notice, which typically precedes an enforcement action. However, Coinbase co-founder and CEO Brain Armstrong announced the public company would take this battle to court.

Regarding the SEC complaint against us today, we're proud to represent the industry in court to finally get some clarity around crypto rules.

Remember:
1. The SEC reviewed our business and allowed us to become a public company in 2021.
2. There is no path to "come in and…

— Brian Armstrong ️ (@brian_armstrong) June 6, 2023

The U.S. crypto industry has highlighted the lack of regulatory guidelines from the SEC. Additionally, the SEC has received criticism for its approach of enforcing through action instead of through regulation.

Coinbase became the voice of the crypto industry when it pushed the SEC to set clear rules to ensure adequate legislation on cryptocurrency used as securities. However, the SEC seems to be gaslighting the rulemaking dispute.

Today the SEC denied Coinbase’s petition for rules for crypto. After 18 months of silence, we went to court to get the response the law requires. With appreciation for the Third Circuit, later today we'll again seek its help by challenging the SEC’s abdication of its duty. ⬇️ pic.twitter.com/tFjiW53eF7

— paulgrewal.eth (@iampaulgrewal) December 15, 2023

Gensler’s regulation style has been criticized by the industry, politicians and even from within the SEC itself. SEC Commissioner Hester Pierce has been vocal about her disagreement with Gensler’s inconsistent approach.

The actions by the SEC sparked doubts among crypto users and companies, particularly concerning the legal status of staking in the United States. But the fear and doubt spreading through the crypto market would find a new, unexpected hero, shifting the mood.

BlackRock spot Bitcoin ETF to the rescue

The darkness spread by the SEC’s actions was countered by the brightest light of the year. At the mid-point of 2023, BlackRock officially filed for a spot Bitcoin ETF.

Holy crap, they did it! BlackRock has officially filed for a spot bitcoin ETF. Huge. Huge h/t to @CoinDesk for calling it. pic.twitter.com/sE12hktwjW

— Eric Balchunas (@EricBalchunas) June 15, 2023

BlackRock is the largest asset manager in the world, with around $9.4 trillion in assets under management. The multinational investment company has an impressive ETF application record, with a success rate of 575 approvals to one denial.

For crypto investors, when BlackRock submitted its spot Bitcoin ETF to the SEC, the question transformed from if to when a spot Bitcoin ETF would be approved.

Many companies have knocked on the SEC’s door for a spot Bitcoin ETF approval. Valkyrie, WisdomTree, VanEck and Grayscale are some of the companies waiting in line to be approved. The presence of the new kid on the block pushed other companies to file their own ETF applications, such as ARK Invest and 21Shares and Franklin Templeton.

The total assets under management by all companies with filings submitted for a spot in Bitcoin ETF reach more than $17 trillion.

Another crucial aspect of the BlackRock spot Bitcoin ETF filling was the selected custodian.

A segment of the BlackRock ETF filing highlighted by Eric Balchunas. Source: X (formerly Twitter)

The behemoth asset manager chose Coinbase as the custodian of its iShares Bitcoin Trust nine days before the SEC case against the cryptocurrency exchange for its staking program. The crypto market assumed that if BlackRock wasn’t afraid to partner with Coinbase for its ETF, it might be confident that the SEC intervention would fail. 

In a small window of time, Gensler’s attempts to block a cryptocurrency ETF received more pressure as BlackRock doubled down on its crypto bet when it filed for an Ether ETF .

Due to BlackRock’s efficient ETF approval rate, the crypto markets understood this event as the catalyst for a new bull market and a possible defeat for the SEC.

SEC vs. Ripple

The SEC shook the market when it sued Ripple and its co-founder, Chris Larsen, and CEO, Brad Garlinghouse, in December 2020.

The SEC vs. Ripple case revolves around the agency’s claims that the executives held an initial public offering (IPO) of XRP ( XRP ), which was an unregistered security at the time of raising capital.

The Ripple case is important for the crypto market. If XRP were considered a security, many other tokens could be placed into the same basket. If the SEC won, thousands of altcoins, such as the projects born out of initial coin offerings, could be indicted for the same reason. A hot debate also emerged about whether Ether ( ETH ) could be considered a security if XRP were to be regarded as one.

Ripple secured several victories in the case. On July 13, Judge Analisa Torres ruled XRP was not a security when sold on digital asset exchanges, and on Oct. 4, Torres denied the SEC’s motion to appeal its loss against Ripple Labs.

The SEC made a serious mistake going after Brad Chris personally – and now, they’ve capitulated, dismissing all charges against our executives. This is not a settlement. This is a surrender by the SEC. https://t.co/TOsG64ZdEx

— Stuart Alderoty (@s_alderoty) October 19, 2023

For Ripple chief legal officer Stuart Alderoty, the SEC dropping the charges was a clear surrender . According to Alderoty, the consecutive wins for Ripple made the SEC claims seem weak, and therefore, the agency may have thrown the towel.

Crypto rotten apples exit the spotlight

Ghosts of the 2022 bear market lurked throughout 2023, and new threats popped up.

Do Kwon: Catch me if you can

Do Kwon, the co-founder and former CEO of Terraform Labs, played a game of “catch me if you can” for months with Interpol and several national authorities following the collapse of the Terra ecosystem.

Terra’s fall put the crypto industry on edge, with several crypto companies going bankrupt in its aftermath, shattering the core of the crypto industry in a domino effect. In September 2022, South Korean authorities issued an arrest for Kwon for violating the country’s capital markets law. Kwon became officially a fugitive, leading to an international manhunt and speculation about his whereabouts.

Kwon was arrested on March 23 while trying to board a private plane at an airport in Podgorica, the capital of Montenegro. He was allegedly using fake documents while attempting to board the flight to Dubai. The South Korean is now sitting in jail awaiting his extradition , either to the United States or to South Korea.

Sam Bankman-Fried: The fall from grace

In 2022, SBF was considered one of that year’s most influential people. One year later, on Nov. 3, Bankman-Fried was found guilty of all seven fraud charges , including two counts of wire fraud, two counts of wire fraud conspiracy, one count of securities fraud, one count of commodities fraud conspiracy and one count of money laundering conspiracy.

Changpeng Zhao forced to step down from Binance

Soon after SBF’s trial concluded, Binance made the headlines. Binance and its now former CEO, Changpeng “CZ” Zhao, were accused of conducting an unlicensed money-transmitting business and violating the International Emergency Economic Powers Act.

On Nov. 21, the U.S. Justice Department announced that CZ and Binance had agreed to a plea deal connected to criminal charges of violating the U.S. Bank Secrecy Act. On the same day, CZ announced that he was stepping down as CEO of the exchange , and he posted a bond of $15 million to a United States district court to be released from custody . CZ’s sentencing hearing is scheduled for Feb. 23, 2024.

Today, I stepped down as CEO of Binance. Admittedly, it was not easy to let go emotionally. But I know it is the right thing to do. I made mistakes, and I must take responsibility. This is best for our community, for Binance, and for myself.

Binance is no longer a baby. It is…

— CZ BNB (@cz_binance) November 21, 2023

CZ was ordered to stay in the U.S. until his sentencing in February, with a federal judge determining there’s too much of a flight risk if he is allowed to return to the United Arab Emirates. CZ faces an uncertain future, as the chairman of the Commodity Futures Trading Commission, Rostin Behnam, said the former Binance CEO will eventually end up in jail.

Bitcoin bull market shines brighter than gold

Major events scheduled for early 2024 could impact the price of Bitcoin.

The Bitcoin halving is set to occur in April 2024, reducing the block subsidy reward received by miners by 50%, further tightening the supply of new BTC. BlackRock’s spot Bitcoin ETF application and several others could be approved as early as Jan. 10, 2024.

The rise in the price of BTC during 2023 has already muted the voices against Salvadoran President Nayib Bukele’s decision to make Bitcoin legal tender in El Salvador, as well as his decision to use government funds to purchase BTC. Co-founder and executive chairman of MicroStrategy, Michael Saylor, used his company to start purchasing BTC in 2020, and it currently holds over $8 billion in Bitcoin.

The perfect storm is forming for a new bull market cycle. Popular analyst PlanB cited the stock-to-flow and market cycle model, which he says shows Bitcoin is “beyond the point of no return.” The predictions for 2024 are piling up.

PlanB predicts Bitcoin to reach $532,000. Source: YouTube

Predicting Bitcoin’s future path by historical data may not be a precise science, but as Mark Twain said, “History doesn’t repeat itself, but it often rhymes.” Happy new Bitcoin year!

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