SBF, Ordinals and more: What defined crypto markets in 2023
As 2023 comes to a close, here is a round up of the top narratives that moved markets this year
Artwork by Crystal Le
With bitcoin poised to end 2023 around 150% higher — and ether more than 80% in the green — crypto traders are heading into the new year in a positive mood.
Here are some of the top headlines and storylines that moved markets this year, and what to keep an eye on as we enter 2024.
Bitcoin NFTs come on the scene
Ordinal protocol developer Casey Rodarmor launched Bitcoin Ordinals in January 2023, bringing non-fungible tokens to the Bitcoin blockchain.
Data from CryptoSlam shows that Ordinal sales peaked in May 2023 with $452 million in transactions before dipping to around $3 million by August.
While demand has ebbed and flowed, Ordinals have also made transactions on the network more expensive and slower to settle. Over the past year, the average transaction fee has soared upwards of 25x, according to Blockworks research. Meanwhile, the Bitcoin mempool continues to face unprecedented levels of congestion.
Fans are still confident that Ordinals show Bitcoin still has use cases to be discovered, but skeptics question whether Ordinals are efficient enough and allege they could “spam” the blockchain.
Congress was busy — sort of
Lots of bills made to the floor this year, but none made it as far as a full vote.
Even so, some of the language of pending legislation has the industry concerned about the future of crypto regulation in the US.
Many crypto fans found one bi-partisan bill co-sponsored by Sen. Elizabeth Warren, D-Mass., that focuses on crypto and money laundering.
The legislation would require digital asset wallet providers, miners, validators and others to follow anti-money laundering rules under the Bank Secrecy Act. Critics say many of these actors are unable to meet these requirements, and asking them to would hinder innovation in the US.
Five new Senators, including three on the Banking Committee, signed on as cosponsors to the bill this month, potentially setting it up for a floor vote when Congress resumes in 2024.
The Senate is scheduled to reconvene in 2024 on Jan. 8 while the House will be back in session on Jan. 9. The House is currently scheduled to recess the week of Jan. 22. Both the House and the Senate will be tasked with greenlighting a spending package for the 2024 fiscal year before Feb. 2, 2024.
SBF found guilty
FTX founder Sam Bankman-Fried was found guilty on seven federal counts of fraud and conspiracy in November, one year to the day that CoinDesk published a leaked version of Alameda’s balance sheet. Bankman-Fried is scheduled to be sentenced in March 2024.
FTX’s native FTT rallied 365% between the start of Bankman-Fried’s trial to mid December, likely fueled by optimism that the bankrupt exchange may reboot in the new year.
Many crypto fans celebrated Bankman-Fried’s conviction, saying that ridding the industry of bad actors and fraudulent operations opens the door for innovation and effective regulation.
Policy advocates however say the impacts of FTX’s collapse can still be felt on Capitol Hill, where some lawmakers use the situation as an example of why harsher guardrails are needed.
Bitcoin ETF mania
Growing institutional interest and promising court rulings have investors counting on a bitcoin spot exchange-traded fund hitting the market sometime soon. Analysts say the optimism has been enough to move markets, although what will happen to the price of bitcoin if and when a product gets approved remains to be seen.
Asset manager BlackRock filed for a spot bitcoin exchange-traded fund in June. Since then, BlackRock has met with the US Securities and Exchange Commission five times to discuss the planned product.
Grayscale continued its fight with the SEC to convert its Bitcoin Trust product into an ETF. The crypto asset manager received a major legal win in August when the DC Court of Appeals essentially ruled that the SEC cannot deny spot bitcoin ETFs under reasons it has given in the past.
Also this year, Volatility Shares launched the first leveraged bitcoin futures ETF in the United States, plus the SEC gave ether futures funds the green light — two years to the month after the first BTC futures ETFs hit the market.
Fake news still moves markets
After hovering around $26,000 for most of the month, bitcoin briefly topped $30,000 in mid-October following a false rumor that a spot ETF product had been approved in the US.
The rumor, circulated via the X account of crypto media outlet Cointelegraph, triggered a $2,000 price surge that prompted sector-wide volatility and resulted in hourly liquidations topping $100 million. The post remained up for close to an hour before it was deleted.
Other ETF analysts and news outlets, including Blockworks, quickly confirmed the report was false.
Immediately following the post, bitcoin surged across trading venues. The Binance BTC/USDT market, which accounts for 8% of BTC 24-hour volume, opened at $27,883 at 9 am ET and topped at $30,000 — a 7% candle in roughly a half hour.
Get the news in your inbox. Explore Blockworks newsletters:
- Blockworks Daily: Unpacking crypto and the markets.
- Empire: Crypto news and analysis to start your day.
- Forward Guidance: The intersection of crypto, macro and policy.
- 0xResearch: Alpha directly in your inbox.
- Lightspeed: All things Solana.
- The Drop: Apps, games, memes and more.
- Supply Shock: Bitcoin, bitcoin, bitcoin.
